An examination of relative satisfaction and share of wallet

What is it about?

Relative satisfaction metrics perform better than absolute satisfaction metrics (i.e., ratings) even after controlling for country and customer characteristics.

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Why is it important?

Many managers still rely on satisfaction ratings and metrics like net promoter score to manage their business, even though these metrics do not align well with customers' spending. Relative metrics provide a much stronger link. Despite this disparity, managers may be reluctant to switch to a relative metrics approach because they perceive that it requires asking for more information. But there are other pieces of information that managers should collect to properly benchmark absolute ratings, which are not necessary when using relative metrics. So the perception that relative metrics require more information is not really accurate.