The Net Promoter Score (NPS) and the American Customer Satisfaction Index (ACSI) are metrics used to predict sales, profit and share price change. We identify problems with the design of both the NPS and the ACSI. In particular, we find that the NPS does not measure negative word of mouth effectively, and we argue that the ACSI is similarly insensitive to dissatisfaction. This is because ex-customers and never-customers are not sampled in these metrics, and these are the people who express most of the negative sentiments about brands/companies. We propose a method of measuring the effect of word of mouth using the volume and mean impact on purchase probability of both the positive and the negative word of mouth expressed by users of the category.
Get full access to this article
View all access options for this article.
References
1.
AhluwaliaR. (2002) How prevalent is the negativity effect in consumer environments?Journal of Consumer Research, 29, 2, pp. 270–279.
2.
AksoyL., CooilB., GroeningC., KeininghamT.L., & YalcinA. (2008) The long-term stock market valuation of customer satisfaction.Journal of Marketing, 72, 4, pp. 105–122.
3.
AndersonE.W., FornellC., & LehmannD.R. (1994) Customer satisfaction, market share, and profitability.Journal of Marketing, 58, 3, pp. 53–66.
4.
AndersonE.W., FornellC., & MazvancherylS.K. (2004) Customer satisfaction and shareholder value.Journal of Marketing, 68, 4, pp. 172–185.
5.
ArndtJ. (1967) The role of product-related conversations in the diffusion of a new product.Journal of Marketing Research, 4, 3, pp. 291–295.
6.
ChandonP., MorwitzV.G., & ReinartzW.J. (2005) Do intentions really predict behavior? Self-generated validity effects in survey research.Journal of Marketing, 69, 2, pp. 1–14.
7.
ChevalierJ.A., & MayzlinD. (2003) The effect of word of mouth on sales: online book reviews.Journal of Marketing Research, 44, 3, pp. 345–354.
8.
CowleyE. (2008) The perils of hedonic editing.Journal of Consumer Research, 35, 1, pp. 71–84.
9.
DimsonE., MarshP., & StauntonM. (2004) Low-cap and low-rated companies.Journal of Portfolio Management, Summer, pp. 1–12.
10.
EastR., HammondK., & LomaxW. (2008) Measuring the impact on brand purchase probability of positive and negative word of mouth.International Journal of Research in Marketing, 25, 3, pp. 215–224.
11.
EastR., HammondK., & WrightM. (2007) The relative incidence of positive and negative word of mouth.International Journal of Research in Marketing, 24, 2, pp. 175–184.
12.
FornellC. (1992) A national customer satisfaction barometer: the Swedish experience.Journal of Marketing, 56, 1, pp. 6–21.
13.
FornellC., JohnsonM.D., AndersonE.W., ChaJ., & BryantB.E. (1996) The American Customer Satisfaction Index: nature, purpose, and findings.Journal of Marketing, 60, 4, pp. 7–18.
14.
FornellC., MithasS., & MorgesonF.V. (2009) The statistical significance of portfolio returns.International Journal of Research in Marketing, 26, 2, pp. 162–163.
15.
FornellC., MithasS., MorgesonF.V., & KrishnanM.S. (2006) Customer satisfaction and stock prices: high returns, low risks.Journal of Marketing, 70, 1, pp. 3–14.
16.
GrucaT.S., & RegoL.L. (2005) Customer satisfaction, cash flow, and shareholder value.Journal of Marketing, 69, 3, pp. 115–130.
17.
JacobsonR., & MizikN. (2009) Financial markets and customer satisfaction: re-examining possible financial market mispricing of customer satisfaction.Marketing Science, 28, 5, pp. 820–825.
18.
JusterF.T. (1966) Consumer buying intentions and purchase probability: an experiment in survey design.Journal of the American Statistical Association, 61, 315, pp. 658–696.
19.
KahnemanD., & TverskyA. (2000) Choices, Values and Frames.New York: Russell Sage Foundation.
20.
KeininghamT.L., CooilB., AndreassonT.W., & AksoyL. (2007) A longitudinal examination of ‘net promoter’ and firm revenue growth.Journal of Marketing, 71, 3, pp. 39–51.
21.
LuoX. (2007) Consumer negative voice and firm-idiosyncratic stock returns.Journal of Marketing, 71, 3, pp. 75–88.
MorganN.A., & RegoL.L. (2006) The value of different customer satisfaction and loyalty metrics in predicting business performance.Marketing Science, 25, 5, pp. 426–439.
24.
O'SullivanD., HutchinsonM.C., & O'ConnellV. (2009) Empirical evidence of the stock market's (mis)pricing of customer satisfaction.International Journal of Research in Marketing, 26, 2, pp. 154–161.
25.
PingitoreG., MorganN.A., RegoL.L., GigliottiA., & MeyersJ. (2007) The single-question trap.Marketing Research, 19, 2, pp. 9–13.
26.
ReichheldF.F. (2003) The one number you need to grow.Harvard Business Review, 12, pp. 46–54.
27.
ReichheldF.F. (2006) The microeconomics of customer relationships.Sloan Management Review, 47, 2, pp. 73–78.
28.
RomaniukJ. (2007) Word of mouth and the viewing of television programs.Journal of Advertising Research, 47, 4, pp. 462–471.
29.
RosenE. (2009) The Anatomy of Buzz Revisited.New York: Doubleday Publishing Group.
30.
SamsonA. (2006) Understanding the buzz that matters: negative vs positive word of mouth.International Journal of Market Research, 48, 6, pp. 647–657.
31.
TobinJ. (1969) A general equilibrium approach to monetary theory.Journal of Money, Credit, and Banking, 1, 1, pp. 15–29.
32.
WrightM., & MacRaeM. (2007) Bias and variability in purchase intention scales.Journal of the Academy of Marketing Science, 35, 4, pp. 617–624.
