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Selection versus scale: Loyalty indices for brand management

Author

Listed:
  • Takumi Kato

    (Meiji University)

  • Nobu Takenaka

    (M-Force, Inc.)

  • Rie Ito

    (M-Force, Inc.)

  • Kazuki Nishiguchi

    (M-Force, Inc.)

Abstract

As a loyalty index, the net promoter score (NPS) has attracted much attention. The simplicity of this index has been overwhelmingly well received by industry, and many organizations have adopted it. However, studies using NPS are less frequent and, often, they reach a negative conclusion about the effectiveness of the index. This outcome is mainly because NPS does not have a particularly good explanatory power for business performance, compared with satisfaction and other loyalty indices. Despite academic criticism, industry still relies on NPS because no other simple and robust index has been proposed. Therefore, this study proposes a new index, the next purchase intention brand (NPI), as an alternative loyalty index. Unlike existing indices, NPI identifies the one brand that the customer would most likely continue purchasing using a single answer. Only brands with high loyalty receive scores; the survey results are unaffected in markets targeting countries with intermediate response tendencies. For six consumer goods categories (beer, deodorant, green tea, instant noodles, nutrition drink, and shampoo) in Japan, the NPI index has a higher explanatory power for market share than general loyalty indices. The study recommends that corporate practitioners re-examine the items that demand extensive marketing research.

Suggested Citation

  • Takumi Kato & Nobu Takenaka & Rie Ito & Kazuki Nishiguchi, 2023. "Selection versus scale: Loyalty indices for brand management," Journal of Marketing Analytics, Palgrave Macmillan, vol. 11(4), pages 836-853, December.
    • Handle: RePEc:pal:jmarka:v:11:y:2023:i:4:d:10.1057_s41270-022-00191-6
    DOI: 10.1057/s41270-022-00191-6
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