Document Type
Conference Proceeding
Conference Track
Marketing Research/ Demographics/ Consumer Behavior
Publication Date
2016
Abstract
In a competitive market environment, share of wallet is a key measure for customer relationship management. Share of wallet analysis enables the firm to be more proactive in their ability to target customers to increase additional spending. Although share of wallet is important as a measure of customer loyalty, there is a dearth of research which focuses on share of wallet per se. In this paper, we briefly review the share of wallet literature in the context of its value to loyalty researchers. We illustrate some issues regarding share of wallet in identifying loyalty and then discuss the development of a methodology to alleviate the issues by introducing an adjusted share of wallet approach, “Share of Wallet Index” (SOWI). SOWI is calculated by multiplying by the square root of the percent that each customer is above and below the median spend in the category times the raw share of wallet measure.
The SOWI approach offers a useful tradeoff between modeling total dollars and modeling raw share of wallet by taking into account both category spend and category share. It also contributes to the literature on customer relationship management and loyalty and advances the empirical analysis on the customer loyalty behavior. This research provides several managerial implications. First, this share of wallet index may help firms to identify additional revenue opportunities when more effort is used with specific customers. Second, firms can understand their relative competitive positions in the market place. We discuss limitations and future research opportunities.
Copyright Statement / License for Reuse
Digital Commons@Georgia Southern License
Recommended Citation
Allaway, Arthur W.; Kim, Kyoungmi; and Berkowitz, David, "Share of Wallet in Loyalty Research: Issues and a Methodology to Address Them" (2016). Association of Marketing Theory and Practice Proceedings 2016. 9.
https://digitalcommons.georgiasouthern.edu/amtp-proceedings_2016/9
About the Authors
Dr. Arthur W. Allaway is Nelems Professor of Marketing at the University of Alabama. He earned his Ph.D. in Marketing from the University of Texas at Austin. His research focuses on New Product Development, Business-to-Business Marketing, Spatial Diffusion and Market Area Analysis. He has been published numerous academic journals including Journal of Marketing, Journal of Retailing, Journal of Business Research, Growth and Change, Economic Geography, the Journal of General Management, Journal of Marketing Analytics, and the Research in Marketing series.
Dr. Kyoungmi (Kate) Kim is a recent Ph. D graduate of Marketing at the University of Alabama. Her research interests include New Product Adoption, Retailing Strategies and Customer Relationship Management. She has published refereed journal articles in the Journal of Consumer Marketing, Journal of Marketing Analytics, and European Management Journal.
Dr. David Berkowitz is Dean of Graduate Studies and Professor of Marketing at the University of Alabama in Huntsville. He earned his Ph.D. in Marketing and Applied Statistics from the University of Alabama. His research focuses on Innovation, Product Development and Supply Chain for Complex Long Lifecycle products. His research has appeared in journals such as the Journal of Retailing, Journal of Advertising Research, Journal of Advertising, European Journal of Marketing, Defense Acquisition Review Journal and the Journal of Product Innovation Management.