The Wallet Allocation Rule: Winning the Battle for Share by Timothy L. Keiningham & Lerzan Aksoy & Luke Williams & Alexander J. Buoye

Author:Timothy L. Keiningham & Lerzan Aksoy & Luke Williams & Alexander J. Buoye [Keiningham, Timothy L.]
Language: eng
Format: epub
ISBN: 9781119037286
Publisher: Wiley
Published: 2015-02-03T23:00:00+00:00

The Wallet Allocation Rule Is Not a Panacea

Unfortunately, the HomeBanc story, although tragic, is not unique. In fact, in our first book, Return on Quality (with Roland Rust and Anthony Zahorik) published in 1994, we noted several other similar high-profile catastrophes: The Wallace Company, Florida Power & Light, Centennial Medical Center, and IBM.14 At the time, each of these firms had offered some of the most highly regarded customer service programs in the world. And each met with disastrous consequences.

Fortunately, several of these companies have recovered from their self-inflicted wounds. The Wallace Company—the first small business to win the Malcolm Baldrige National Quality Award—did not.15 Its market share increased from 10.4 percent to 18 percent. Unfortunately, it was losing $300,000 per month.16 As a result, it was forced to declare bankruptcy shortly after winning the award and went out of business.17

As these business tragedies make clear, managers should never use the pursuit of higher satisfaction or NPS scores to justify making bad business decisions. The same is true for the pursuit of greater share of wallet.

Although the Wallet Allocation Rule makes it possible to strongly link satisfaction (and other commonly used customer loyalty metrics) to share of wallet, greater share of wallet is not a panacea. Managers must make sure that efforts to improve their brand's rank will result in not just greater share of wallet, but also in a positive return on investment.

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