Results
The researchers found that firm and industry characteristics did have an effect on financial performance (so it was good that the authors controlled for them!).
Above and beyond these characteristics then, the six behavioral measures also explained additional variance, from a low of 1% (for Total Shareholder Return) to a high of 16% (for market share).
Below is how well the each of the six customer satisfaction and loyalty metric explained the variance in the six business performance measures. The customer feedback metrics are listed in the order of their predictive power.
- Average Customer Satisfaction Score. This metric was statistically significant across all six business performance measures. It explained from 5% (net operating cash flow) to 16% (market share) of the variance in these performance measures.OK, let's move to the discussion and implications of these results.
- Top 2 Box Customer Satisfaction Score. This was statistically significant across 5 of the 6 performance measures and approached significance on the 6th one as well (Total Shareholder Return). It explained from 5% (net operating cash flow) to 16% (market share) of the variance in these performance measures.
- Proportion of Customers Complaining. This was statistically significant across 4 of the 6 performance measures (except Total Shareholder Return and Net Operating Cash Flow). It explained 4% (TSR) to 13% (market share).
- Repurchase Likelihood. This was statistically significant across 4 of the 6 performance measures (except Total Shareholder Return and Net Operating Cash Flow). It explained 4% (TSR) to 15% (market share).
- Number of Recommendations. This was statistically significant only across 2 of the 6 performance measures (Gross Margin & Profit Share). But the gross margin coefficient is negative! It explained 1% (TSR) to 12% (Tobin’s Q).
- Net Promoters. This was not statistically significant across any of the 6 performance measures… none! It explained from 2% (market share) to 12% (sales growth) of the variance in these performance measures.
*** Information in this post adapted from Morgan, N. & Rego, L. Marketing Science, Vol. 25, No. 5, September–October 2006, pp. 426–439.
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Tags: Net Promoter Score word of mouth Word-of-Mouth Marketing WOM Loyalty marketing communication
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