The Impact of Customers Satisfaction on Share-of-Wallet in a Business-to-Business Environment

The Impact of Customers Satisfaction on Share-of-Wallet in a Business-to-Business Environment

The paper of Timothy L. Keiningham and Tiffany Perkins-Munn describes the problems concerning the lack of research when it comes to the relation between customer satisfaction and share-of-wallet. The defined problems include inability to collect the share-of-wallet data and the lack of definitions and metrics regarding share-of-wallet.

The authors describe the importance of making such measurements and what kind of forces which have an impact on customer satisfaction. According to the authors, there is a clear correlation between customer satisfaction (and therefore also customer behavior) and business result. Forces which affect customer satisfaction are for example purchase intention, customer retention, financial performance and word of mouth.
The definition of share-of-wallet is, according to the authors, the “the percentage of the volume of total business conducted with the firm by a client organization within a period”, i.e. it should help managers to understand the amount of business a company gets from a specific customer.
However, the description of scientific study made on a financial institution is starts with two main hypothesizes about the relation between customer satisfaction and share-of-wallet. The first proclaims that the relationship should be asymmetric and nonlinear based on former studies on customer satisfaction compared with the some of the factors that have an impact on share-of-wallet: repurchase intentions, word of mouth and customer repurchase.

The second hypothesis is that depending on which kind of buying group we investigate it will show different results concerning the relationship between their satisfaction and share-of-wallet. The corporate buying behavior should vary since buyers have different roles in the company. These roles induce interest and motivation, influencing the purchase decisions which are related to expertise and form of authority. Some individuals might have more influence than others.

The study was made on three client groups: an information department (A), a product management department (B) and a purchasing department (C). A is responsible for the flow of information in the whole company, information is received and interpreted as intelligence by B to be able to decide which bundle of products/services fits best to the clients objectives. C receives orders for particular products/services from department B, to select the right supplier.

The analysis confirmed the two hypothesizes. To test these hypotheses they used three methods: the first one concerned the use of previous theory and research to inform current analyses; the second one worked through the examination of residual scatterplots; the last one tested different curvilinear models to find which best fit the data.

Using this analysis they found that the first hypothesis is correct: the equation that best fit the data showed a positive correlation between the two variables; moreover the equation is a cube one and it’s no a linear one, that means a nonlinear and asymmetric correlation. Through CHAID analysis one could immediately see how it’s important to reach a significant level of consumer satisfaction: CHAID lead to divide the all group of buyers in two groups, one with a satisfaction level minor or equal to eight and one with a satisfaction level major or equal to nine. This division showed the difference existing in the share-of-wallet for the group with the least level of satisfaction and the other one: nine is a critical level in which the share-of-wallet increased very rapidly.

About the second hypothesis we can see that is it true too. Indeed results show that there’s a significant difference of the correlation between the two variables among the groups. Every group had a different reaction to the satisfaction: they are groups in which the correlation between satisfaction and share-of-wallet is stronger than other ones.
The paper conclusion teach us that customer satisfaction affect in a positive, nonlinear and asymmetric way the share-of-wallet; knowing these information a manager should decide to improve satisfaction of a customer trying to reach that level that allows to have a significant increase of the share-of-wallet.

The second thing that we have understood is that inside a buying center we must consider how the decisional process is: we learned that every department has a different reaction to satisfaction and we have to understand which of these are the more important to satisfy. The analysis shows that the role of the purchasing department is the most important because it has the task to make the final purchasing decision.