The Wallet Allocation Rule^® is a breakthrough approach for growing share—backed by rock-solid science.

Unfortunately, there is one overwhelming problem. The metrics managers use to measure and manage the customer experience—such as customer satisfaction and Net Promoter Score—don’t link to what matters most: share of wallet (i.e., the percentage of spending in a category that customers give to a brand). Without this linkage, it is virtually impossible to make efforts to improve the customer experience pay off. As a result, the returns on investments from these efforts is frequently trivial, even negative.

With the Wallet Allocation Rule^®, managers finally have the missing link within their grasp: the ability to link their current metrics to the spending customers allocate to their brands.

The Wallet Allocation Rule^® is proved to link the most common satisfaction and loyalty metrics to share of wallet. It was created by a team of leading academic and business researchers, and has been vetted in numerous peer reviewed scientific publications (see Rock-Solid Science).

Perhaps more important for managers, it is also very easy to see that the metrics managers are currently tracking do not link to share of wallet.

It Is Easy to Prove that Satisfaction and NPS Are Very Weak Predictors of Share of Wallet

It is easy for managers to see for themselves that the correlation between satisfaction/NPS and share of wallet is very weak by using simple spreadsheet software such as Microsoft Excel. Simply input customers’ satisfaction (or NPS) levels for your firm or brand in one column, and their corresponding share of category spending (share of wallet) in another column. Then compute the R-square, the squared correlation coefficient. The percentage of variance explained (i.e., R-square) is almost always less than 5 percent and is typically around 1 percent.

Looking at the relationship between satisfaction and NPS to share of wallet always results in bad news. The percentage of variance explained will almost always be less than 5 percent—typically around 1 percent—meaning that 95 percent or more of the variation in your customers’ spending is completely unexplained by the satisfaction or NPS metric your firm is tracking.

The Wallet Allocation Rule^® solves this problem. With the Wallet Allocation Rule^®, managers are able to strongly link their current loyalty metrics to share of wallet. As a result, managers can identify precisely what it takes to gain a greater share of their customers’ wallets.

For example, most managers consider a rating of “9” (where “10” is the best) to be a good score. Using the Net Promoter Score, customers who rate your brand a 9 or 10 are considered Promoters, which is the goal of the approach. The problem is that our research finds if a customer is a Promoter for your brand and also uses one or more competing brands, 80 percent of the time the customer is also a Promoter for the competition—and frequently the competitor is rated higher despite the customer being classNameified as a Promoter for both organizations. Clearly, a system that cannot distinguish winners from ties and losers has major flaws.

Our research has found a very simple solution to this problem. Instead of focusing on a customer’s absolute satisfaction (or NPS) level, focus instead on the relative rank that this satisfaction level represents vis-à-vis the competitors the customer also uses. To see how this works, imagine that your firm has two customers, John and Mary, who both rate your brand a “9”.

Using the Net Promoter classNameification system, both John and Mary are Promoters of your brand. John and Mary, however, also use two of your brand’s competitors: Brand A and Brand B. John rates his level of satisfaction with Brand A a “9” and his satisfaction with Brand B a “10”. On the other hand, Mary rates her level of satisfaction with Brand A a “7” and with Brand B an “8.”

Despite the fact that John and Mary both rate your brand a “9”, with Mary your brand is her clear first choice. With John, your brand is tied for last. The result of this difference in rank is that Mary allocates a substantially higher share of her category spending with your brand than John does.

By using the Wallet Allocation Rule^® to transform rank into predictions of customers’ share of wallet levels, managers can finally bridge the missing link between the loyalty metrics they are tracking and customers’ spending behaviors.

Different Ranks Result in Different Wallet Shares!

This shift to relative rank, however, has serious implications for identifying where companies should focus their scarce resources to improve the customer experience. That’s because it turns out that what drives share isn’t what drives satisfaction or NPS.

For example, compare the drivers of satisfaction with the drivers of share of wallet for Ziraat Bank, one of the largest banks in Turkey (see figure below). If Ziraat Bank were to follow a model solely based on driving satisfaction, it would see no meaningful change in the share of wallet its customers allocate to the bank. Ziraat’s top driver of satisfaction has a 0% impact on driving share of wallet. Similarly, its top driver of wallet share (customer service) would likely have been ignored altogether as it represents the fifth strongest satisfaction driver.

Drivers of Satisfaction and the Drivers of Share of Wallet for the Ziraat Bank in Turkey