Selection is superior to scale: determining brand loyalty highly correlated to market share

Despite the extensive research on loyalty, academic discussions on simple and effective loyalty indices are surprisingly scarce. One of the few suggestions for loyalty indices is the net promoter score (NPS). Approximately two-thirds of Fortune 1000 companies currently use this index due to its overwhelming simplicity. However, scholars have criticized NPS for being inferior to other loyalty indices. Accordingly, scholars have mainly used Likert scales that cannot compare products/services using a single question and are subject to a response bias due to cultural differences. To fill this gap, we address the following four main criticisms of NPS: First, its advantages over the Likert scale of preferences and recommendation and purchase intentions are unproven; second, it cannot compare a competing product or service using a single question; third, its threshold setting is subjective; and fourth, it suffers from a cultural response bias tendency. This study asks the following research question: “Is brand selection superior to Likert scales in explaining sales performance?” To form a generalized conclusion, we examine 100 brands selected from 20 industries in the US market. The results of randomized controlled trials prove the superiority of selection over scale. Thus, brand selection should be emphasized to measure brand loyalty.