The Predictive Ability of Different Customer Feedback Metrics for Retention

International Journal of Research in Marketing, Forthcoming

42 Pages Posted: 24 Feb 2015  

Evert de Haan

University of Groningen - Department of Marketing & Marketing Research

Peter C. Verhoef

University of Groningen - Department of Marketing & Marketing Research

Thorsten Wiesel

University of Muenster

Date Written: February 23, 2015

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.

Keywords: Customer feedback metrics, Customer satisfaction, Net Promoter Score, Customer Effort Score, Customer retention, Firm performance

JEL Classification: M31

Suggested Citation

de Haan, Evert and Verhoef, Peter C. and Wiesel, Thorsten, The Predictive Ability of Different Customer Feedback Metrics for Retention (February 23, 2015). International Journal of Research in Marketing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2568613

Evert De Haan (Contact Author)

University of Groningen - Department of Marketing & Marketing Research ( email )

Netherlands

Peter C. Verhoef

University of Groningen - Department of Marketing & Marketing Research ( email )

Netherlands

Thorsten Wiesel

University of Muenster ( email )

Schlossplatz 2
Muenster, D-48149
Germany

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