A Longitudinal Analysis of Customer Satisfaction and Share of Wallet
Bruce Cooil, Timothy L. Keiningham, Lerzan Aksoy, & Michael Hsu
A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics
Customer loyalty is an important strategic objective for all managers. Research has investigated the relationship between customer satisfaction and loyalty in various contexts. However, these predominantly cross-sectional studies have focused on customer retention as the primary measure of loyalty. There has been little investigation into the impact on share of wallet. Using data from the Canadian banking industry, this research aims to (1) provide the first longitudinal examination of the impact of changes in customer satisfaction on changes in share of wallet and (2) determine the moderating effects of customer age, income, education, expertise, and length of relationship. Data from 4319 households using 12,249 observations over a five-year period indicate a positive relationship between changes in satisfaction and share of wallet. In particular, the initial satisfaction level and the conditional percentile of change in satisfaction significantly correspond to changes in share of wallet. Two variables, income and length of the relationship, negatively moderate this relationship. Other demographic and situational characteristics have no impact.
ustomer loyalty is an important strategic objective of managers around the world. A worldwide survey of chief executive officers conducted by the Conference Board (Bell 2002) found that customer loyalty and retention was the most important challenge that chief executive officers believed they faced. Despite managers’ emphasis on loyalty, however, brand loyalty is widely reported to be declining (Chancy 2001). Compared with the more exclusive loyalty of the past, consumers increasingly hold polygamous loyalty to brands (Bennett and RundleThiele 2005; Rust, Lemon, and Zeithaml 2004; Uncles, Dowling, and Hammond 2003; Uncles,
A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics
Customer loyalty is an important strategic objective for all managers. Research has investigated the relationship between customer satisfaction and loyalty in various contexts. However, these predominantly cross-sectional studies have focused on customer retention as the primary measure of loyalty. There has been little investigation into the impact on share of wallet. Using data from the Canadian banking industry, this research aims to (1) provide the first longitudinal examination of the impact of changes in customer satisfaction on changes in share of wallet and (2) determine the moderating effects of customer age, income, education, expertise, and length of relationship. Data from 4319 households using 12,249 observations over a five-year period indicate a positive relationship between changes in satisfaction and share of wallet. In particular, the initial satisfaction level and the conditional percentile of change in satisfaction significantly correspond to changes in share of wallet. Two variables, income and length of the relationship, negatively moderate this relationship. Other demographic and situational characteristics have no impact.
ustomer loyalty is an important strategic objective of managers around the world. A worldwide survey of chief executive officers conducted by the Conference Board (Bell 2002) found that customer loyalty and retention was the most important challenge that chief executive officers believed they faced. Despite managers’ emphasis on loyalty, however, brand loyalty is widely reported to be declining (Chancy 2001). Compared with the more exclusive loyalty of the past, consumers increasingly hold polygamous loyalty to brands (Bennett and RundleThiele 2005; Rust, Lemon, and Zeithaml 2004; Uncles, Dowling, and Hammond 2003; Uncles,
References: Customer Satisfaction and Share of Wallet / 81 Maheswaran, Durairay (1994), “Country of Origin as a Stereotype: Effects of Consumer Expertise and Attitude Strength on Product Evaluations,” Journal of Consumer Research, 21 (September), 354–65