Compare methods

	Customer Equity Modeling	Share of Wallet Analysis
Field	Marketing	Marketing
Family	Process / pipeline	Process / pipeline
Year of origin	2004	2007
Originator	Robert Blattberg & John Deighton; Roland Rust, Katherine Lemon & Valarie Zeithaml	Bruce Cooil, Timothy Keiningham, Lerzan Aksoy & colleagues
Type	Strategic valuation and resource-allocation framework	Loyalty and category-spend measurement pipeline
Seminal source	Rust, R. T., Lemon, K. N., & Zeithaml, V. A. (2004). Return on Marketing: Using Customer Equity to Focus Marketing Strategy. Journal of Marketing, 68(1), 109-127.	Cooil, B., Keiningham, T. L., Aksoy, L., & Hsu, M. (2007). A Longitudinal Analysis of Customer Satisfaction and Share of Wallet: Investigating the Moderating Effect of Customer Characteristics. Journal of Marketing, 71(1), 67-83.
Aliases	Customer Equity Analysis, Return on Marketing Customer Equity, Customer Equity Test, Customer-Based Firm Valuation	SOW Analysis, Share-of-Wallet Measurement, Wallet Share Analysis, Wallet Allocation Rule
Related	4	4
Summary	Customer equity modeling treats a firm's customers as financial assets and defines the value of the firm's customer base as the sum of the discounted lifetime values of its current and future customers. The idea was crystallized by Robert Blattberg and John Deighton, who proposed managing marketing by the 'customer equity test,' asking of any initiative whether it will grow customer equity, and who showed how to balance spending between acquiring new customers and retaining existing ones. Roland Rust, Katherine Lemon and Valarie Zeithaml extended the framework into a strategic, driver-based model, decomposing customer equity into value equity (objective perceptions of quality, price and convenience), brand equity (subjective and emotional brand perceptions) and retention equity (the strength of the customer relationship and loyalty programs). Their 'Return on Marketing' approach links each marketing action through these drivers to brand-switching probabilities, to changes in lifetime value, and ultimately to the change in customer equity it produces, so competing strategies can be compared on projected financial return. Customer equity modeling thus connects customer-level analytics to firm-level valuation and budget allocation, providing a common currency for marketing decisions.	Share of wallet (SOW) analysis measures the proportion of a customer's total category spending that a particular brand or firm captures, shifting attention from how many customers a firm has to how much of each customer it owns. Unlike overall market share, share of wallet is a customer-level loyalty metric: a customer might buy from you regularly yet give most of their category budget to a competitor, a vulnerability that absolute sales figures hide. Bruce Cooil, Timothy Keiningham, Lerzan Aksoy and colleagues established in longitudinal work that changes in customer satisfaction drive changes in share of wallet, moderated by customer characteristics. Building on this, Keiningham and colleagues introduced the Wallet Allocation Rule, which predicts a customer's share of wallet from how the brand ranks against the competitors that customer uses and how many brands they use, arguing that relative rank, not absolute satisfaction, is what governs spending allocation. Share of wallet analysis thus combines measurement (estimating each customer's category spend and the slice you capture) with a predictive rule that turns competitive standing into expected wallet share, helping firms find growth inside their existing customer base.