Edited by Roland T. Rust and Ming-Hui Huang
Chapter 9: It's not your score that matters: the importance of relative metrics
Timothy L. Keiningham, Lerzan Aksoy, Arne De Keyser, Bart Lariviére, Alexander Buoye and Luke Williams
In recent decades, customer loyalty has gained both academics' and practitioners' attention as being one of the most important determinants of company growth. Arguably the most important manifestation of this loyalty as it relates to firm growth is the share of category spending (that is, share of wallet) that customers allocate to the various brands that they use. A great deal of research has examined the drivers of share of wallet (SOW). Most of this research has focused on the relationship between metrics like customer satisfaction, recommend intention, and repurchase intention on SOW. Yet while researchers agree that these variables are antecedents to SOW, research consistently finds weak relationships between satisfaction/intentions and SOW. We argue that the primary cause for these weak relationships is not the metrics per se, but rather how these metrics are most typically analyzed. In particular, satisfaction and intentions are typically analyzed using absolute ratings. Instead, we propose that researchers and managers use relative metrics (that is, the focal brand in comparison with competitive alternatives) when linking to SOW.
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