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Wallet Allocation Rule vs. Net Promoter Score

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Wallet Allocation Rule vs. Net Promoter Score
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Sometimes you work really hard for a small break. Other times serendipity shows its face and good things fall into your lap.

I’ve been lucky over the past month. First, I had the opportunity to interview Rob Markey, co-author with Fred Reichheld of The Ultimate Question 2.0, an update of the first version of the book which familiarized us with the Net Promoter Score. The book hit the market this month and you can find a good review of it on the Kobie Marketing blog, The Muse.

During October, Loyalty Truth will be featuring a three part blog series covering my interview with Mr. Markey. Stay tuned as I think you’ll find his comments interesting as well as see how Net Promoter Score has developed from a scoring metric to a practical management system that has been implemented with good results by many well-recognized brands.

The second piece of good fortune was my attendance at the ShopperTech Lead Marketing Conference. Al McClain and the good folks at RetailWire organized an afternoon of panels and I was able to participate in a discussion of loyalty marketing with BJ Emerson of Tasti D-Lite, Dan Frechtling of DS-IQ, and Bill Nasshan from Bi-Lo supermarkets. An executive summary of the conference can be found here.

To my surprise, one of the keynote sessions was given by Matthew McNerney and Tim Keiningham of IPSOS Loyalty. The two presented a new measure of customer loyalty, The Wallet Allocation Rule, which will be profiled in October in the Harvard Business Review.

The Wallet Allocation Rule correlates customer loyalty to share of wallet, and the executives from IPSOS report that “the correlation between a brand’s Wallet Allocation Rule score and its share of wallet was greater than .9 – a perfect correlation score being 1.0″. The score takes the relative ranking of competitors into consideration and is proposed as a new way to tie customer loyalty scores to wallet share and ultimately profitability.

Let’s give the marketplace time to absorb the IPSOS article in HBR (they are said to have the cover) and the new book by Messrs. Markey and Reichheld. The ensuing debate over how best to predict customer loyalty through these two scoring metrics will be one to watch.

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