Linking satisfaction to share of deposits: an application of the Wallet Allocation Rule
Abstract
Purpose
Despite the fact that customer satisfaction is among the most widely used metrics by managers, the link with share of deposits tends to be weak. Using a recent innovative approach termed the “Wallet Allocation Rule (WAR)” this research investigates whether measuring satisfaction relative to other competitors used exhibits a stronger correlation to share of deposits compared to measuring absolute satisfaction with the focal firm/product.
Design/methodology/approach
A survey approach was used with a sample of 4,712 banking customers across the USA. Using the WAR, each respondent's satisfaction ratings were transformed into relative rankings and used to estimate their share of deposits.
Findings
The results confirmed that at both the individual and the aggregate level examining relative ranked satisfaction correlates strongly with customers’ share of deposits. At the individual level relative satisfaction explains 55 percent of the variance in share of deposits, as opposed to only 9 percent for absolute satisfaction.
Practical implications
The findings indicate that managers need to rethink their current approach to satisfaction measurement and consider measuring their customers’ satisfaction relative to competitors used. Furthermore, using aggregate level absolute satisfaction in managerial decision making can be misleading.
Originality/value
This research provides a significant contribution to both the banking literature and the scientific literature in general by examining the robustness of a relative metrics approach within the retail banking and credit union market.
Keywords
Acknowledgements
Lerzan Aksoy would like to thank the Filene Research Institute for supporting this research, and its commitment to the peer review process for the academic researchers with whom it works. This paper is based on a report entitled “Linking Member Satisfaction to Share of Deposits: Applying the Wallet Allocation Rule in Credit Unions,” written by Lerzan Aksoy (2013), available at: http://filene.org/research/reports. It presents a much abridged version of the report and has also been revised to provide a firm theoretical foundation and increased managerial relevance across financial sectors.
Citation
Aksoy, L. (2014), "Linking satisfaction to share of deposits: an application of the Wallet Allocation Rule", International Journal of Bank Marketing, Vol. 32 No. 1, pp. 28-42. https://doi.org/10.1108/IJBM-03-2013-0025
Publisher
:Emerald Group Publishing Limited
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