IDEAS home Printed from https://ideas.repec.org/a/eee/ijrema/v32y2015i2p195-206.html
   My bibliography  Save this article

The predictive ability of different customer feedback metrics for retention

Author

Listed:
  • de Haan, Evert
  • Verhoef, Peter C.
  • Wiesel, Thorsten

Abstract

This study systematically compares different customer feedback metrics (CFMs) – namely customer satisfaction, the Net Promoter Score, and the Customer Effort Score – to test their ability to predict retention across a wide range of industries. We classify the CFMs according to a time focus (past, present, or future) and whether the full scale of the CFM is used or whether the focus is only on the extremes (e.g., top-2-box customer satisfaction). The data for this study represent customers of 93 firms across 18 industries. Multi-level probit regression models, which control for self-selection bias of respondents, investigate firm-, customer-, and industry-level effects simultaneously. Overall, we find that the top-2-box customer satisfaction performs best for predicting customer retention and that focusing on the extremes is preferable to using the full scale. However the best CFM does differ depending on industry and the unit of analysis (i.e., comparing customers or firms with one another). Furthermore, combining CFMs, along with simultaneously investigating multiple dimensions of the customer relationship, improves predictions even further.

Suggested Citation

  • de Haan, Evert & Verhoef, Peter C. & Wiesel, Thorsten, 2015. "The predictive ability of different customer feedback metrics for retention," International Journal of Research in Marketing, Elsevier, vol. 32(2), pages 195-206.
    • Handle: RePEc:eee:ijrema:v:32:y:2015:i:2:p:195-206
    DOI: 10.1016/j.ijresmar.2015.02.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167811615000324
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijresmar.2015.02.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ittner, CD & Larcker, DF, 1998. "Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 1-35.
    2. Risselada, Hans & Verhoef, Peter C. & Bijmolt, Tammo H.A., 2010. "Staying Power of Churn Prediction Models," Journal of Interactive Marketing, Elsevier, vol. 24(3), pages 198-208.
    3. Jan-Benedict E. M. Steenkamp & Inge Geyskens, 2014. "Manufacturer and Retailer Strategies to Impact Store Brand Share: Global Integration, Local Adaptation, and Worldwide Learning," Marketing Science, INFORMS, vol. 33(1), pages 6-26, January.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. Sunil Gupta & Valarie Zeithaml, 2006. "Customer Metrics and Their Impact on Financial Performance," Marketing Science, INFORMS, vol. 25(6), pages 718-739, 11-12.
    6. Yeung, Matthew C.H. & Ramasamy, Bala & Chen, Junsong & Paliwoda, Stan, 2013. "Customer satisfaction and consumer expenditure in selected European countries," International Journal of Research in Marketing, Elsevier, vol. 30(4), pages 406-416.
    7. Neil A. Morgan & Lopo Leotte Rego, 2006. "The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance," Marketing Science, INFORMS, vol. 25(5), pages 426-439, September.
    8. Sandra Streukens & Ko de Ruyter, 2004. "Reconsidering Nonlinearity and Asymmetry in Customer Satisfaction and Loyalty Models: An Empirical Study in Three Retail Service Settings," Marketing Letters, Springer, vol. 15(2_3), pages 99-111, July.
    9. van Doorn, Jenny & Leeflang, Peter S.H. & Tijs, Marleen, 2013. "Satisfaction as a predictor of future performance: A replication," International Journal of Research in Marketing, Elsevier, vol. 30(3), pages 314-318.
    10. Dong, Songting & Ding, Min & Grewal, Rajdeep & Zhao, Ping, 2011. "Functional forms of the satisfaction–loyalty relationship," International Journal of Research in Marketing, Elsevier, vol. 28(1), pages 38-50.
    11. Lemmens, A. & Croux, C., 2006. "Bagging and boosting classification trees to predict churn," Other publications TiSEM d5cb664d-5859-44db-a621-e, Tilburg University, School of Economics and Management.
    12. Dominique M. Hanssens & Koen H. Pauwels & Shuba Srinivasan & Marc Vanhuele & Gokhan Yildirim, 2014. "Consumer Attitude Metrics for Guiding Marketing Mix Decisions," Marketing Science, INFORMS, vol. 33(4), pages 534-550, July.
    13. Marc Vanhuele & Shuba Srinivasan & Koen Pauwels, 2010. "Mindset Metrics in Market Response Models: An Integrative Approach," Post-Print hal-00528411, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonas R. Jahnert & Hato Schmeiser, 2022. "The relationship between net promoter score and insurers’ profitability: an empirical analysis at the customer level," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 944-972, October.
    2. Thomas A. Burnham & Jeffrey A. Wong, 2018. "Factors influencing successful net promoter score adoption by a nonprofit organization: a case study of the Boy Scouts of America," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 15(4), pages 475-495, December.
    3. Peter C. Verhoef & Martin Heijnsbroek & Joost Bosma, 2017. "Developing A Service Improvement System for the National Dutch Railways," Interfaces, INFORMS, vol. 47(6), pages 489-504, December.
    4. Sunghun Chung & Donghyuk Shin & Jooyoung Park, 2022. "Predicting Firm Market Performance Using the Social Media Promoter Score," Marketing Letters, Springer, vol. 33(4), pages 545-561, December.
    5. Ashley S. Otto & David M. Szymanski & Rajan Varadarajan, 2020. "Customer satisfaction and firm performance: insights from over a quarter century of empirical research," Journal of the Academy of Marketing Science, Springer, vol. 48(3), pages 543-564, May.
    6. van Dijk, Mathilde & Van Herk, Hester & Prins, Remco, 2019. "Choosing your charity: The importance of value congruence in two-stage donation choices," Journal of Business Research, Elsevier, vol. 105(C), pages 283-292.
    7. Yi-Chun Ou & Peter C. Verhoef & Thorsten Wiesel, 2017. "The effects of customer equity drivers on loyalty across services industries and firms," Journal of the Academy of Marketing Science, Springer, vol. 45(3), pages 336-356, May.
    8. Agag, Gomaa & Durrani, Baseer Ali & Shehawy, Yasser Moustafa & Alharthi, Majed & Alamoudi, Hawazen & El-Halaby, Sherif & Hassanein, Ahmed & Abdelmoety, Ziad H., 2023. "Understanding the link between customer feedback metrics and firm performance," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    9. Raassens, N. & Haans, Hans, 2017. "NPS and online WOM investigating the relationship between customers’ promoter scores and eWOM behavior," Other publications TiSEM 931e7761-7c6e-40ee-8976-2, Tilburg University, School of Economics and Management.
    10. Rajkumar Venkatesan & Alexander Bleier & Werner Reinartz & Nalini Ravishanker, 2019. "Improving customer profit predictions with customer mindset metrics through multiple overimputation," Journal of the Academy of Marketing Science, Springer, vol. 47(5), pages 771-794, September.
    11. Blessing, Gerald & Natter, Martin, 2019. "Do Mystery Shoppers Really Predict Customer Satisfaction and Sales Performance?," Journal of Retailing, Elsevier, vol. 95(3), pages 47-62.
    12. J. Andrew Petersen & V. Kumar & Yolanda Polo & F. Javier Sese, 2018. "Unlocking the power of marketing: understanding the links between customer mindset metrics, behavior, and profitability," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 813-836, September.
    13. Sven Baehre & Michele O’Dwyer & Lisa O’Malley & Nick Lee, 2022. "The use of Net Promoter Score (NPS) to predict sales growth: insights from an empirical investigation," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 67-84, January.
    14. Cambra-Fierro, Jesús & Gao, Lily (Xuehui) & Melero-Polo, Iguácel & Trifu, Andreea, 2021. "How do firms handle variability in customer experience? A dynamic approach to better understanding customer retention," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    15. Huayan Shen & Zhiyong Ou & Kexin Bi & Yu Gao, 2023. "Impact of Customer Predictive Ability on Sustainable Innovation in Customized Enterprises," Sustainability, MDPI, vol. 15(13), pages 1-18, July.
    16. Gijsenberg, Maarten & Verhoef, Pieter, 2018. "Moving Forward," Research Report 2018003-MARK, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    17. Cambra-Fierro, Jesús & Gao, Lily (Xuehui) & Melero-Polo, Iguácel, 2021. "The power of social influence and customer–firm interactions in predicting non-transactional behaviors, immediate customer profitability, and long-term customer value," Journal of Business Research, Elsevier, vol. 125(C), pages 103-119.
    18. Rahhal El Makkaoui, 2023. "Nature of Customer Experience in the Sharing Economy [La nature de l'expérience client dans l'économie collaborative]," Post-Print hal-04450139, HAL.
    19. Lily (Xuehui) Gao & Evert Haan & Iguácel Melero-Polo & F. Javier Sese, 2023. "Winning your customers’ minds and hearts: Disentangling the effects of lock-in and affective customer experience on retention," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 334-371, March.
    20. Hafiz Muhammad Naveed & Yao Hongxing & Muhammad Akhtar & Muhammad Usman Anwer & David Alemzero, 2020. "The Impact of Customer Feedback on Organizational Health when Employee Empowerment works as a moderator: Evidence from Pakistani Fast Food Industry," Business and Economic Research, Macrothink Institute, vol. 10(3), pages 65-89, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J. Andrew Petersen & V. Kumar & Yolanda Polo & F. Javier Sese, 2018. "Unlocking the power of marketing: understanding the links between customer mindset metrics, behavior, and profitability," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 813-836, September.
    2. Agag, Gomaa & Durrani, Baseer Ali & Shehawy, Yasser Moustafa & Alharthi, Majed & Alamoudi, Hawazen & El-Halaby, Sherif & Hassanein, Ahmed & Abdelmoety, Ziad H., 2023. "Understanding the link between customer feedback metrics and firm performance," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    3. Sven Baehre & Michele O’Dwyer & Lisa O’Malley & Nick Lee, 2022. "The use of Net Promoter Score (NPS) to predict sales growth: insights from an empirical investigation," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 67-84, January.
    4. Baehre, Sven & O'Dwyer, Michele & O'Malley, Lisa & Story, Vicky M, 2022. "Customer mindset metrics: A systematic evaluation of the net promoter score (NPS) vs. alternative calculation methods," Journal of Business Research, Elsevier, vol. 149(C), pages 353-362.
    5. Polo, Yolanda & Sese, F. Javier & Verhoef, Peter C., 2011. "The Effect of Pricing and Advertising on Customer Retention in a Liberalizing Market," Journal of Interactive Marketing, Elsevier, vol. 25(4), pages 201-214.
    6. Ghanbarpour, Tohid & Gustafsson, Anders, 2022. "How do corporate social responsibility (CSR) and innovativeness increase financial gains? A customer perspective analysis," Journal of Business Research, Elsevier, vol. 140(C), pages 471-481.
    7. Anselmsson, Johan & Bondesson, Niklas, 2015. "Brand value chain in practise; the relationship between mindset and market performance metrics: A study of the Swedish market for FMCG," Journal of Retailing and Consumer Services, Elsevier, vol. 25(C), pages 58-70.
    8. Cain, P.M., 2022. "Modelling short-and long-term marketing effects in the consumer purchase journey," International Journal of Research in Marketing, Elsevier, vol. 39(1), pages 96-116.
    9. Guenther, Miriam & Guenther, Peter, 2021. "The complex firm financial effects of customer satisfaction improvements," International Journal of Research in Marketing, Elsevier, vol. 38(3), pages 639-662.
    10. Raassens, N. & Haans, Hans, 2017. "NPS and online WOM investigating the relationship between customers’ promoter scores and eWOM behavior," Other publications TiSEM 931e7761-7c6e-40ee-8976-2, Tilburg University, School of Economics and Management.
    11. Gabriel Marín Díaz & Ramón Alberto Carrasco & Daniel Gómez, 2021. "RFID: A Fuzzy Linguistic Model to Manage Customers from the Perspective of Their Interactions with the Contact Center," Mathematics, MDPI, vol. 9(19), pages 1-27, September.
    12. Rajkumar Venkatesan & Alexander Bleier & Werner Reinartz & Nalini Ravishanker, 2019. "Improving customer profit predictions with customer mindset metrics through multiple overimputation," Journal of the Academy of Marketing Science, Springer, vol. 47(5), pages 771-794, September.
    13. Terpstra, Maarten & Verbeeten, Frank H.M., 2014. "Customer satisfaction: Cost driver or value driver? Empirical evidence from the financial services industry," European Management Journal, Elsevier, vol. 32(3), pages 499-508.
    14. Frison, Steffi & Dekimpe, Marnik G. & Croux, Christophe & De Maeyer, Peter, 2014. "Billboard and cinema advertising: Missed opportunity or spoiled arms?," International Journal of Research in Marketing, Elsevier, vol. 31(4), pages 425-433.
    15. Zenetti, German & Klapper, Daniel, 2016. "Advertising Effects Under Consumer Heterogeneity – The Moderating Role of Brand Experience, Advertising Recall and Attitude," Journal of Retailing, Elsevier, vol. 92(3), pages 352-372.
    16. Venkatesh Shankar & Pablo Azar & Matthew Fuller, 2008. "—: A Multicategory Brand Equity Model and Its Application at Allstate," Marketing Science, INFORMS, vol. 27(4), pages 567-584, 07-08.
    17. Jae-Woong Jeong & Heon-Hwi Lee & Hun Park, 2022. "A Study on the Effect of Knowledge Services on Organizational Performances Based on the Concept of Balanced Scorecards for the Sustainable Growth of Firms: Evidence from South Korea," Sustainability, MDPI, vol. 14(19), pages 1-19, October.
    18. Eva Ascarza & Bruce G. S. Hardie, 2013. "A Joint Model of Usage and Churn in Contractual Settings," Marketing Science, INFORMS, vol. 32(4), pages 570-590, July.
    19. Arno de Caigny & Kristof Coussement & Koen W. de Bock & Stefan Lessmann, 2019. "Incorporating textual information in customer churn prediction models based on a convolutional neural network," Post-Print hal-02275958, HAL.
    20. Sunghun Chung & Donghyuk Shin & Jooyoung Park, 2022. "Predicting Firm Market Performance Using the Social Media Promoter Score," Marketing Letters, Springer, vol. 33(4), pages 545-561, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ijrema:v:32:y:2015:i:2:p:195-206. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/international-journal-of-research-in-marketing/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.