Guest blogger Judy Wang is a researcher at the Customer Contact Council, a sister program of the Market Research Executive Board.
Recently, the Harvard Business Review published an article introducing the “Wallet Allocation Rule.” As the name suggests, this new metric measures the share of wallet that is allocated to companies – or simply, how a customer divides their spending among a company and its competitors.
The theory behind this metric is simple:
- think about how much your customer prefers your company, and then
- consider the number of competitors your customer is choosing between.
Knowing these two things will let you understand how your customers spend money, and how your company is doing relative to others. For instance, if you were the customer’s first choice and there is one competitor, then your position is different than if you were the second choice but there are many, many others behind you. Understanding this difference can help define strategy and hone in on certain initiatives.
To me, the key lesson that stood out in general is that metrics can’t be evaluated in a vacuum. It’s nice to know that your company is performing well, but when you discover that the “well” is less well than your competitors, the story changes. It’s important, then, to understand performance in its broader context.
So take customer effort for example. Even though the Customer Effort Score is the best predictor of customer loyalty, merely measuring it in isolation can paint an incomplete picture. More than just evaluating the score by itself, it’s important to consider the context surrounding it.
- How does the score stack up against others in your industry, your geography? (CCC members, use our interactive benchmarking tool to understand how your peers are performing. )
- Does the score change or remain static over time? (Track your score and compare against past performance.)
- What are the causes to a high effort score, and why do they exist? (Craft good survey questions to understand what about the interaction was creating effort.)
More than just a static number, the Customer Effort Score can reveal a lot about your company and your performance if you analyze it in context. To the point made in the HBR article, you aren’t getting the whole story if you aren’t looking at the context.
Related MREB Resources:
- Driving Action with NPS® and Other Loyalty Metrics: Focusing on Key Success Factors
- Ask your peers for their opinions on metrics on our Primary Research Forum
- Get vendor recommendations from our Supplier Feedback Forum