Is share of wallet exclusively about making customers happy or having more customers? Exploring the relationship between satisfaction and double jeopardy

Abstract

Purpose – The satisfaction and loyalty research argues that customer satisfaction is an antecedent to share of wallet (SOW). The double jeopardy view, however, argues that satisfaction and SOW levels are driven exclusively by penetration levels. Customer satisfaction and penetration, however, are not always positively related. The purpose of this paper is to explore the relevance and validity of these two divergent perspectives to creating growth in customer share of spending. Design/methodology/approach – The authors examine a series of models evaluating the impact of both the relative penetration of a brand, and the satisfaction ratings of its customers on SOW using data covering 11 industry sectors, 188 brands, and 4,263 customers. Findings – The authors find that part of the problem in reconciling these two views has been in how satisfaction is measured and analyzed. When using absolute satisfaction ratings of the firm/brand, the explanatory power of satisfaction on SOW is very weak at both the individual and firm level. When using satisfaction metrics relative to other competing brands, however, satisfaction is a strong predictor of customers’ share of category spending. Research limitations/implications – As predicted by double jeopardy, penetration is a strong predictor of firm-level SOW, but has almost no explanatory power at the individual level. Practical implications – Managers need to focus on both improving penetration/reach and becoming the preferred brand in a customer’s usage set. Originality/value – The research examines if (and if yes, how) satisfaction and penetration contribute to customers’ SOW allocations both at the individual and brand level.