A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics
Journal of Marketing, Vol. 70, No. 4, October 2006
Posted: 18 Jul 2006
Customer loyalty is one of the most important strategic objectives of managers globally. Research has investigated the relationship between customer satisfaction and loyalty in a variety of contexts. These predominantly cross-sectional studies however have focused on customer retention as the primary measure of loyalty. The impact on share of wallet has been much less investigated. This research aims to 1) provide the first longitudinal examination of the impact of changes in customer satisfaction on changes in share of wallet and 2) determine the moderating effects of customer age, income, education, expertise and length (age) of relationship using data from the Canadian banking industry. Data from 4319 households using 12,249 observations over a five-year period indicates a positive relationship between changes in satisfaction and share of wallet: in particular, the initial satisfaction level and the conditional percentile of change in satisfaction significantly correspond to changes in share of wallet. Two variables, income and length of the relationship, were found to negatively moderate this relationship. Other demographic and situational characteristics were found to have no impact.
Keywords: Customer Satisfaction, Share of Wallet, Demographics, Loyalty, Consumer Behavior, Latent Class Regression
JEL Classification: M31, D12, C23
Suggested Citation: Suggested Citation