1 s2.0 S0969698923000486 Main

Journal of Retailing and Consumer Services 73 (2023) 103301
Contents lists available at ScienceDirect
Journal of Retailing and Consumer Services

journal homepage: www.elsevier.com/locate/jretconser
Understanding the link between customer feedback metrics and

firm performance
Gomaa Agag a, b, *, Baseer Ali Durrani a, Yasser Moustafa Shehawy c, d, Majed Alharthi e,
Hawazen Alamoudi f, Sherif El-Halaby g, Ahmed Hassanein h, i, Ziad H. Abdelmoety j, k
a
Department of Marketing, Nottingham Business School, Nottingham Trent University, Nottingham, United Kingdom
b
Department of Marketing, University of Sadat City, Sadat City, Menofia, Egypt
c
College of Business Administration, Jazan University, Saudi Arabia
d
Faculty of Tourism and Hotels, University of Sadat City, Menofia, Egypt
e
Finance Department, King Abdulaziz University, College of Business, Rabigh, Saudi Arabia
f
Department of Marketing, King Abdulaziz University, College of Business, Rabigh, Saudi Arabia
g
MSA university, 6th of October City, Egypt
h
Gulf University for Science and Technology, Kuwait
i
Faculty of commerce, Mansoura University, Egypt
j
School of Business, University of Dundee, 1-3 Perth Rd, Dundee DD1 4JW, UK
k
Business Administration, Department of Faculty of Commerce-Assiut University, Egypt
A R T I C L E I N F O A B S T R A C T
Handling Editor: Prof. H. Timmermans Practitioners utilise customer feedback metrics (CFM’s) to monitor business performance. However, the influence
of CFM’s on firm performance has been ignored. Thus, this paper aims to examine the effects of CFM’s on firm
Keywords: performance. Our study collected data about CFM’s, marketing efforts, and financial performance over the period
Consumer feedback metrics 2005–2020 from American Customer Satisfaction Index. The present study used a multiple regression panel
Net promoter scores
analysis to investigate the influence of different CFMs (i.e., SAT, Top-2-Box, NPS proportion, NPS value, and CES)
Consumer satisfaction
on firm performance (i.e., gross margin, sales growth, and Tobin’s Q), moderating by operating environment
Customer effort score
Marketing efforts factors (i.e., munificence, power, and dynamism). Our results revealed that Top-2-box is the best predictor CFM’s
Financial performance to compare firms in online booking, hotels, and online shopping industries, while consumer satisfaction is the
best predictor for electronic and fixed telecom industries. CES is the best CFM’s to compare companies in res
taurants industries. Moreover, NPS is the best metric to compare different companies in holiday parks industries.
The results provide considerable managerial implications for effective use of resources regarding investing in
most suitable CFM’s to enhance firm performance.
1. Introduction Kim and Lee, 2020; Sun and Kim, 2013; Tueanrat et al., 2021).
De Haan et al. (2015) labelled CFM’s, comprising consumer effort
In the present business environment, in-order to retain customers, score (CES) (Dixon et al., 2010), net promoter score (NPS) (Reichheld,
firms have to differentiate themselves to gain competitive advantage. 2003), consumer satisfaction (Aboul-Dahab et al., 2021; Morgan and
Since the attention on customer relations created a shift from trans Rego, 2006). These metrics are the best predictor of firm performance,
actional to relationship marketing (Gummesson, 2017; Ji and Prentice, motivating leading firms in different fields to utilise them (Agag, 2019;
2021; Schmitz et al., 2020; Sun and Kim, 2013), various researchers Fis and Cetindamar, 2020). Academic studies defy these promises (e.g.,
have utilised CFM’s to monitor firm performance and in the process Agag et al., 2022; Singh and Jang, 2020; Yi et al., 2021). Academic
created benchmarks based on CFM’s to help businesses retain their studies suggested purchase intentions and consumer satisfaction (e.g.,
customers and improve firm performance (e.g., Abdelmoety et al., 2022; Fornell, 1992; Goić et al., 2021; Sun and Kim, 2013), while consultants
* Corresponding author. Department of Marketing, Nottingham Business School, Nottingham Trent University, Nottingham, United Kingdom.
E-mail addresses: [email protected] (G. Agag), [email protected] (B.A. Durrani), [email protected], [email protected]
(Y.M. Shehawy), [email protected] (M. Alharthi), [email protected] (H. Alamoudi), [email protected] (S. El-Halaby), [email protected]
(A. Hassanein), [email protected] (Z.H. Abdelmoety).
https://doi.org/10.1016/j.jretconser.2023.103301
Received 20 December 2022; Received in revised form 28 January 2023; Accepted 16 February 2023
Available online 5 March 2023
0969-6989/© 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
G. Agag et al. Journal of Retailing and Consumer Services 73 (2023) 103301
suggested consumers recommendation (e.g., Eger and Mičík, 2017; However, based on CFM’s literature, there lies a research gap to
Reichheld, 2003). Meantime, in practice, the firms use “Top 2 Box” accurately identify the best metric for driving firm performance.
satisfaction (Agag and Eid, 2019; Raassens and Haans, 2017; Zhang Moreover, the application of CFM’s is only limited towards specific
et al., 2021). contexts, settings and industries, because these studies utilise different
Table 1
Literature review on the consequences of CFM’s.
Study CFM’s considered Outcomes Mechanisms Level of Study context Key findings
analysis
Crosby et al. Relationship quality Behavior (anticipation CFM’s ➔ Customer Life insurance (B2C) Relationship quality (satisfaction and
(1990) (customer of future interactions) Behavior level trust) has a positive influence on a
satisfaction and and Performance (sales customer’s anticipation of future
trust) effectiveness) interaction with the salesperson. It does
not have an impact on sales effectiveness.
Anderson and Customer Behavior (Repurchase CFM’s ➔ Customer Various: Swedish Customer Repurchase intentions are positively
Sullivan satisfaction and intentions) Behavior level Satisfaction Barometer (B2C) influenced by the level of customer
(1993) service quality satisfaction and by service quality
(through satisfaction). High satisfaction
insulates firms from changes in quality and
satisfaction.
Olsen (2002) Customer Behavior (Repurchase CFM’s ➔ Customer Seafood products (B2C) There is a strong positive relationship
satisfaction and loyalty) Behavior level between customer satisfaction and loyalty.
service quality Service quality influences loyalty through
its impact on satisfaction.
Agustin and Customer Behavior (share of CFM’s ➔ Customer Retail clothing and airline Customer satisfaction and trust have
Singh satisfaction, trust, wallet, repeat purchase Behavior level travel (B2C) positive effects on loyalty. Satisfaction
(2005) and relational value and spending) presents a decreasing rate of return, while
trust is associated with an increasing rate
of return.
Homburg Customer Behavior (Willingness CFM’s ➔ Customer Restaurant and education Customer satisfaction has a positive effect
et al. satisfaction to pay) Behavior level (B2C) on willingness to pay. The relationship is
(2005) non-linear (concave for low levels of
satisfaction, convex for high levels of
satisfaction).
Anderson and Customer Performance (Credit CFM’s ➔ Firm level Various: American Customer Higher customer satisfaction is associated
Mansi satisfaction ratings and cost of debt) performance Satisfaction Index (B2C) with higher credit rating (a 1% increase in
(2009) the satisfaction index leads to a 6%
increase in credit rating) and lower cost of
debt (firms with high customer satisfaction
have a 2% lower cost of debt, or savings of
about $5 million).
Tuli and Customer Performance CFM’s ➔ Firm level Various: American Customer A positive change in customer satisfaction
Bharadwaj satisfaction (Shareholder value performance Satisfaction Index (B2C) results in negative changes in overall and
(2009) –stock returns risk: downside systematic risk and overall and
systematic and downside idiosyncratic risk.
idiosyncratic risk)
Luo et al. Customer Performance (Firm CFM’s ➔ Firm level Various: American Customer Customer satisfaction has a direct and
(2010) satisfaction value –abnormal return, performance Satisfaction Index (B2C) positive effect on abnormal returns and a
systematic risk, direct and negative effect on risk.
idiosyncratic risk) Customer satisfaction also leads to better
and less dispersed analyst
recommendations, which again improve
firm value.
De Haan et al. Customer Customer retention CFM’s ➔ Customer Various: American Customer The results indicate that the top-2-box
(2015) satisfaction, Net customer level Satisfaction Index. customer satisfaction performs best for
promoter scores, retention predicting customer retention and that
Customer Effort focusing on the extremes is preferable to
Score 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).
Fornell et al. Customer Performance CFM’s ➔ Firm level Various: American Customer Stock returns on customer satisfaction are
(2016) satisfaction (Shareholder value performance Satisfaction Index significantly above the market. During a
–stock returns) period of 15 years, the cumulative returns
on satisfaction were 518%, compared with
31% for the S&P 500.
Petersen et al. Satisfaction, Service Profitability CFM’s ➔ Firm level Two distinct contexts, a B2B The results demonstrate that these
(2018) quality, Loyalty profitability high-tech firm and a B2C unobservable CMMs have a significant and
intentions. telecommunications firm. multi-dimensional impact on customer
behavior and customer profitability.
Furthermore, we compute the increases in
customer behavior and customer
profitability that each firm can expect due
to increases in CMMs to help firms improve
resource allocation and make better
decisions about how much (and when) to
invest in CMMs.
2
research settings, units of analysis, methodologies, and dependents variance aspects of the link, and have different consequences (De Haan
factors. This represent a critical gaps in marketing literature for several et al., 2015; Leon and Choi, 2020). Therefore, it’s necessary to examine
reasons. First, while previous studies have suggested that CFM’s work as multiple CFM’s to obtain actual understanding of their different effect
an instrument for developing deeper customer relationships (e.g., Agag on performance and their relative importance in determining firm per
et al., 2020; Morgan et al., 2005; Raassens and Haans, 2017; Thakur, formance. Based on these identified research gaps, the present research
2019), however, research lacks in-terms of identifying which CFM’s help builds a model at the firm level to explain the influence of different
the firms to develop and protect consumer relationships (Agag and Eid, CFM’s on firm performance.
2020; De Haan et al., 2015). Second, the ability to identify CFM’s that In order to cover this research gap, our paper explores the impor
drive firm performance can help to develop an effective marketing tance of different CFM’s in driving financial performance in various
control system for monitoring performance and setting goals (Agag and situation, to enhance our understanding of these CFM’s and to assist
Colmekcioglu, 2020; Morgan and Rego, 2006; Shokouhyar et al., 2020), companies’ managers in selecting the best CFM’s based on various sit
and enable managers to take immediate reformative action where uations. Specifically, this research examines the link between marketing
necessary (Fornell, 1992; Kim et al., 2020; Morgan and Rego, 2006). efforts, customer feedback metrics, and firm performance, therefore, it
Third, previous studies in the accounting context revealed that by helps companies to incorporate information about consumers views and
accurately forecasting the best applicable CFM’s not only can enhance opinions into their consumer management strategies to understand its
firm performance, but also provide investors with valuable information effects on firm performance, distinguish between consumers, and assign
besides the accounting information, and thus provide contributions to resources more efficiently. Thus, this paper examines the direct influ
the financial markets efficient functioning (Agag and El-Masry, 2016; ence of CFM’s on firm performance that can assist companies in re
Lee et al., 2022; Petersen et al., 2018). sources allocation decisions and in guying marketing effectiveness.
Our stsudy aims to provide insights into the influence of different In this paper we contribute to the literature in four key areas. First,
CFM’s (CES, SAT, Top-2-Box, CES, NPS value, and NPS proportion), we strengthen to the theoretical foundations of customer feedback
including which customer feedback metric a company should monitor, metrics related research by proposing the use of three models that
how to explain changes in CFM’s, and how this varies at the firm and explicitly investigate the relationship between marketing efforts, CFMs,
industry levels. Therefore, the present study contributes the following to and firm performance. These models provide a theoretical foundation is
the marketing literature: first, our study investigates the impact of rooted in the consumer profitability models (Agag and Eid, 2020).
different CFM’s on financial performance at two various levels firm and Second, we contribute to the empirical research on the link between
industry levels in various contexts. The heterogeneity of consumers was CFMs and firm performance by evaluating the descriptive accuracy of
distinguished to identify an appropriate CFM for customer management the proposed models and by providing useful insights into the efficacy of
level. Whereas our study also recognises firm heterogeneity to identify CFMs. Third, we contribute to the empirical research in sixteen different
an appropriate CFM for driving firm performance. Second, the present industries, by providing insights into the way that CFMs, marketing ef
study is the first to utilise NPS and CES consistent with Reichheld (2003) forts, interact with firm performance. Finally, we propose sound meth
and Dixon et al. (2010) approach. These two metrics were introduced odological artefacts so that our study is both replicable and comparable
recently as key CFM’s. Finally, the present study predicted actual to related studies.
financial performance by examining the usefulness of CFM’s in pre We structured our paper into four parts. We developed a critical
dicting the financial performance, conversely, previous studies that literature review and developed our conceptual framework. We devel
examine only correlations (e.g., Agag and El-Masry, 2017; Chen, 2011; oped the utilised methodology and the data analysis. We also demon
Keiningham et al., 2007; Quach et al., 2021). strated our study findings, discussion, and implications.
Since 1980s, academics have studied CFM’s (e.g., CES, SAT, Top-2-
Box, CES, NPS value, and NPS proportion) from the lens of relation 2. Background
ship marketing. By integrating CFM’s with relationship marketing, firms
can achieve several benefits. For example, strong customer relationships 2.1. Conceptualizing customer feedback metrics (CFM’s)
can be achieved by having positive CFM’s which will subsequently
yields strong financial/non-financial results for the firm (Alsuwaidi In recent years, CFM’s has gained significant importance within the
et al., 2022; Petersen et al., 2018; Kaura, 2013; Talwar et al., 2020) field of Marketing. Different classifications of metrics are provided by
whereas, this will also provide competitive advantage to the firm (Agag academics. For example, Farris et al. (2006) has classified this metric as
et al., 2019; McKenna, 1993; Petersen et al., 2018; Ryu and Park, 2020). share-of-mind. However, within the domain of marketing, researchers
Table 1 provides summary of academic research regarding implications have also labelled these metrics as CFM’s (Morgan and Rego, 2006). As
of CFM’s. Although the valuable outcomes of CFM’s that these studies CFM’s provide indicators concerning future business growth and op
show, the detailed literature indicate significant research gaps. First, portunities therefore, from the managerial perspective, significant
understanding the outcomes of CFM’s continues fragmented, demon importance is given towards understanding and implementing appro
strating only an incomplete understanding about their effect on firm priate metrics, which can deliver future rewards (Petersen et al., 2018).
performance. To the best of authors knowledge, limited studies to date Within the domain of consumer behaviour, researchers have conducted
have investigated the effect of different CFM’s on firm performance. various studies to understand the impact of CFM’s. For instance, Gus
Second, prior studies concentrated on the effect of CFM’s on profitability tafsson et al. (2005) and De Haan et al. (2015) established a positive
at the individual level. Nevertheless, an examination of the firm and relation among the CFM’s and customer purchase intentions. Moreover,
industry level influences is crucial to explain how the return on mar amid growing concern towards marketing accountability, researchers
keting to a firm is affected by CFM’s. Third, prior research examined paid more attention to explain the link among CFM’s, customer loyalty,
CFM’s at only one point time. Nevertheless, Palmatier et al. (2013) intentions and how this impact firm performance (Fornell et al., 2016;
revealed that CFM’s are dynamic which requires a longitudinal method Mjahed Hammami et al., 2021; Otto et al., 2019). It is thus critical for
to measure their influences on firm performance over time. Fourth, most practitioner to understand and implement CFM’s appropriately within
of these studies examined the outcomes of CFM’s either at the customer their firms.
level or firm level. However, prior research ignored the drivers of CFM’s. Most common feedback metrics used by managers includes customer
Thus, our study covers this gap by investigating the influence of mar overall satisfaction, behavioural loyalty and Top-2-Box (Morgan et al.,
keting efforts on CFM’s. Finally, prior research exploring the link be 2005; Reichheld, 2003). It is therefore important to understand and
tween CFM’s and firm performance, have paid more attention to one effectively implement various CFM’s, by doing so, managers can further
metric (customer satisfaction). Nevertheless, different CFM’s capture enhance the firm future profitability. Furthermore, Stewart (2009) has
3
assessed the important aspects of CFM’s in-terms (1) relevancy (address surveyed highlighted the fact that they did not experience any service
pending actions), (2) Predictability (future outcome can be predicted delight during their recent interaction with the firm. One of the reasons
accurately), (3) objective (quantitative procedures are supported), (4) highlighted by Dixon et al. (2010) for this service expectation gap is that
reliable (demonstrate stable attributes over time, (5) Simplicity, (Results in-order to gauge customer satisfaction level, the customer services or
can be interpreted easily), and (6) transparent (open to independent ganisations were using customer satisfaction score as a metric to un
audit). Based on the results attained through these metrics, not only firm derstand customers experiences with the firm, which according to Dixon
future effectiveness can be calculated but also managers can effectively et al. (2010) is an inappropriate metric and does not provide accurate
adapt measures for improving business performance. It is therefore vital results concerning customer satisfaction. Keeping this in mind, a new
for the managers to implement CFM’s within their organisations. metric is developed by Dixon et al. (2010) known as Customer Effort
Prior studies have utilised different metrics to predict consumer Score (CES).
behaviour and firm performance in the marketing field. Our study CES primarily focuses on the service interaction in-terms of solving
classified these metrics based on the time span and how these metrics consumer problems quickly and easily. Based on the customer com
can be used (e.g., Agag and Eid, 2020; Bolton et al., 2004; Dixon et al., plaints analysis, it was noted that customers find it frustrated to contact
2010). Regarding the time span, our study distinguished between these company repeatedly in-order to get their issues resolved. Therefore, by
metrics according to the present, the past, and the future focus. For applying the CES metric managers can resolve such issues, and in pro
example, net promoter score (NPS) focuses on the future because it cess enhance customer loyalty towards their companies. CES metrics use
describes customers willingness to recommend a company based on scales rating from 1 to 5 where 5 represents very high effort to solve
customers future preferences towards the firm. Customer effort score customer problems. In-order to analyse the impact of CES on customer
(CES) reflects past focus while, customer satisfaction represents a more loyalty, Dixon et al. (2010) has compared this new metric against
present focus. The second category focuses on how these metrics are “customer satisfaction” (SAT) and “net promoter score”. It was noted
used. Practitioners should look at the proportion of individuals that CES was the best predictor of customer loyalty. “CES is measured by
responding either positively or negatively at the value of the metrics. asking a single question How much effort did you personally have to put
Top-2-box customer satisfaction represents an example of this, which forth to handle your request” and is measured on a scale from “1 (very
focuses on the percentage of consumer that seek to select the highest and low effort) to 5 (very high effort)”. It was noted that customers with low
the lowest scores related to customer satisfaction (Agag and Eid, 2020; effort were most likely to remain with the same company and demon
Barnes et al., 2021; De Haan et al., 2015; Lee et al., 2020; Luong et al., strated intentions to repurchase from the same firm. However, within
2021; Spaid and Matthes, 2021). the literature, concerning loyalty and purchase intentions, CES as a
“NPS” is designed by Reichheld (2003) and provides a comprehen metric does not have efefct on the firm performance (Agag and Eid,
sive understanding towards measuring loyalty, which eventually leads 2020; Kuppelwieser et al., 2021).
towards predicting company future growth. In addition, “net promoter Top 2 Box is another metric used by managers to understand
score” (NPS) is commonly used as a marketing metric to measure customer satisfaction scores and their loyalty towards the firm (Morgan
customer loyalty built on loyalty question “How likely is that you would and Rego, 2006; Otto et al., 2019). Within the metric the focus is on the
recommend our company to a friend or colleague?” Based around the top 2 box scores from a scale of 1–5. Based on the research by Shamah
acquired responses, customers are categorised as “promoters, passives or et al. (2018) it is noted that only highly satisfied customers show loyalty
detractors” (Reichheld, 2003). According to (Reichheld, 2006) within in-terms of repeat purchase, paying price premium and recommending
the three consumer categories, promoters are most likely to recommend the firm product or service to others. Similarly, it is also suggested to
the company products, brands or services to others whereas detractors convert satisfied who ranked as 4 on the 5 Likert scale into highly
do not act as company ambassadors and thus are not involved in rec satisfied and thus the firm should devote its resources towards focusing
ommending company’s products. Reichheld (2003) also claims that NPS on the top extremes of the consumers in-order to maximize future
is one of the most accurate metrics to predict company’s future growth. growth (Agag and Eid, 2020; Peng et al., 2019).
Whereas, there is also a significant link between NPS and firm perfor
mance in various industries. However, these claims are being criticised 2.2. Customer feedback metrics (CFM’s) and firm performance
among the researchers (Baehre et al., 2022). Additionally, it is debated
that consumer satisfaction in comparison with NPS provides better Nowadays, practitioners pay more attention to make marketing more
indication of the company growth rate (Fergurson et al., 2021; Kei financially accountable by creating a direct link between CFM’s and firm
ningham et al., 2007; Celik and Yakut, 2021; Furrer et al., 2021; Mishra performance (Alyahya et al., 2023b; Kumar and Shah, 2009; Lee and
and Samu, 2021). Whereas Van Doorn et al. (2013) compared the NPS How, 2019; Petersen et al., 2018). Prior research used different mea
against other indices, it was noted that all the metrics performed equally sures of business performance such as cash flows, Tobin’s q, stock price,
the same and showed weak performance in-terms of predicting future and return on investment to examine the link between these measures
growth. Furthermore, until date, the NPS metric is most commonly used and CFM’s. The findings of these studies revealed a positive link between
metric by the managers in various industries (Alyahya et al., 2022; Butt CFM’s (most frequently consumer satisfaction) and firm performance.
et al., 2021; De Haan et al., 2015; Kacprzak and Dziewanowska, 2020). The CFM’s are directly linked with the company performance and help
However, the academic literature is scant concerning the use of NPS to predict future growth based on the results achieved (Alnawas and
metric within the different industries and therefore our study aims to fill Hemsley-Brown, 2019; Bendle et al., 2019; Burnham and Leary, 2018;
this gap by analysing the NPS scores in-terms of predicting future Hanssens et al., 2014; Liu et al., 2021; Tran and Nguyen, 2020). How
business growth across different industries industry. However, NPS is ever, based upon the different range of metrics available, it is important
not the only CFM available to managers. Other metrics which are also that marketing managers should be able to understand and interpret the
used are known as Top-2-box metric and Customer Effort Score (CES). results. If unable to do so, it is highlighted that firm may find it difficult
In-order to improve consumer satisfaction and loyalty, it is noted to achieve customer centric approach (Jang et al., 2018; Lim et al., 2021;
that during the service interactions firms need to delight the existing Shah et al., 2006; Park and Nicolau, 2019; Selim et al., 2022), which
customers by providing superior services than competitors (Alyahya negatively affects the firm performance in-terms of its marketing mix
et al., 2023a; Lee and Park, 2019). However, it is argued by Dixon et al. (Mintz and Currim, 2013). Moreover, the use of metrics also depends
(2010) that providing superior services does not always result in having upon the firms strategic and market orientation which will further guide
loyal customers. Based on their survey from 100 service heads, it was the managers in-terms of adopting a particular metrics (Agag and Eid,
noted that 89 adopted a strategy based on delighting consumers. 2020; De Haan et al., 2015; Shaalan et al., 2022b).
Whereas on the contrary to the service heads, 84% of the customers Recently, academic literature has shifted towards establishing direct
4
link between the CFM’s and the firm performance outcomes. For growth rate of the firm (Agag and Eid, 2020).
instance, Hult et al. (2019) find that the stock value gap can be mini Nevertheless, the appropriateness in-terms of predicting profits
mised by having enhanced customer satisfaction. Similarly, it is noted by based on different measures within different metrics is questioned
Otto et al. (2019) that one-point increase in consumer satisfaction can among the academics (Bendle and Bagga, 2016; Fazli-Salehi et al., 2022;
increase the firm cash flow by $55 million. As CFM’s are closely related Rohden, and de Matos, 2022; ShabbirHusain and Varshney, 2022). For
to firm performance, however depending upon the metric used within example, De Haan et al. (2015) investigated the impact of CFM’s on
the firm, unit of analysis is also deemed important, and therefore are three different levels, namely firm, industry and customer in-order to
differentiated based on two dimensions. According to Bolton et al. explain the influence of these individuals’ levels on firm performance.
(2004) one of the dimensions is termed as backward-looking (including The results indicated that NPS and top-2-box metric provides more ac
present) whereas Zeithaml (2000) has coined the second dimension as curate measures concerning customer satisfaction which can potentially
forward-looking which focus on consumer future plans and therefore be used to affect firm performance. This finding is supported by Siering
suggest way for the firm to improve its performance within the market. et al. (2018) whereas, it is also noted that the backward-looking metric
For example, NPS is forward looking metric which indicates consumers (CES) should not be used by managers because it does not provide ac
ability to recommend the firm to others which can ultimately impact the curate measure in-terms of customer satisfaction and therefore is not
firm performance based on future occurrences (De Haan et al., 2015; useful in many industries (Ji and Prentice, 2021).
Mecredy et al., 2018). Whereas CES metric focus on the past and present Furthermore, in-terms of predicting future business growth, it is
performance of the firm by highlighting the firm service performance noted by (Ji and Prentice, 2021) that all the metrics provide weak results
based on past customer experiences (Agag and Eid, 2020; Ji and Pren concerning predicting future business growth based on the evaluation of
tice, 2021; Youssef et al., 2022). customer satisfaction metrics. The same notion is backed by (Petersen
Alternatively, forward looking metric use consumer responses based et al., 2018) who argued that academic literature does not provide
on their answers concerning their recommendation of firm products to enough insights concerning the use and application of CFM’s in pre
others. For example, NPS focuses on future desired responses of cus dicting business performance. As there are mixed results concerning the
tomers which can serve as an indicator through which firm can enhance impact of CFM’s within the academia, it is therefore important to
and devise appropriate strategies to improve customer satisfaction (De conduct our research to further understand how valuable different
Haan et al., 2015). Similarly, in-line with NPS, top-2-box metric is also CFM’s are in driving firm performance in different industries.
used to predict future performance however, as opposed to NPS metric To understand the critical role of CFM’s in predicting firm perfor
which consists of multiple scales, the scales used in top-2-box metrics mance, we developed a model on the relationships between these met
uses extremes towards analysing consumer satisfaction rate (Blessing rics, marketing efforts, and firm performance (see Fig. 1). Our
and Natter, 2019). The responses are taken as either satisfied or highly conceptual framework was developed based on prior research models of
satisfied in-terms of predicting firm future performance. Also, using consumer profitability, which suggest that companies can invest in
multiple scales can serve as good indicators in-order to drive future marketing initiatives to effect consumer behaviour, which in turn,
Fig. 1. The link between customer feedback metrics, marketing efforts, and performance. Model 2: The Moderating Effects Model. Model 3: The Mediating Ef
fects Model.
5
impacts consumer profits and performance (e.g., Agag and Eid, 2020; Table 2
Gupta et al., 2006; Kumar et al., 2022; Petersen et al., 2018; Verhoef, Number of initial observations by industry.
2003). Thus, our study extends the customer profitability models to Industry Firms N SAT Top- NPS NPS CES
include CFM’s to address the paucity of a theoretical model to investi 2-box value
gate and understand the links among CFM’s, marketing efforts, and firm Online 42 484 5.83 0.51 − 0.39 7.39 2.08
performance. shopping
We take a look at how consumer feedback metrics can be used for Banks 19 389 6.19 0.49 − 0.25 6.21 2.76
customer management goals by comparing and contrasting data from Airlines 31 404 7.32 0.54 − 0.41 6.88 3.10
Mobile 48 463 5.29 0.48 − 0.32 5.90 1.98
different customers. Much earlier research have already analysed this telecom
extensively (e.g., Agag and Eid, 2020; De Haan et al., 2015). To what Drugstores 33 420 5.81 0.62 0.02 7.30 3.20
extent these variables can identify loyal from disloyal customers, and Energy 21 398 7.12 0.44 − 0.41 6.59 2.76
how those differences manifest themselves, can be gleaned from this Online 48 456 6.20 0.56 − 0.27 5.88 3.98
booking
level of study is what we learn. In this way, these indicators can be used
Electronics 60 449 5.39 0.67 − 0.39 7.54 2.73
to identify loyal and disloyal customers inside an organisation. Department 42 438 4.30 0.48 − 0.21 7.30 1.09
In the present research, we investigate how the company’s compet stores
itive status might be analysed using consumer feedback measures. This Holiday parks 66 472 6.78 0.62 0.31 7.80 3.87
type of detail has received more focus in prior investigations (e.g., De Gasoline 29 399 5.12 0.49 − 0.29 6.36 2.22
Fixed telecom 17 383 5.47 0.55 − 0.04 5.55 1.74
Haan et al., 2015; Jang et al., 2018; Rego et al., 2013; Van Doorn et al., Hotels 61 468 6.20 0.61 − 0.21 6.40 3.07
2013). When compared with its rivals, a business that excels at customer Restaurants 86 505 4.89 0.59 − 0.37 5.48 2.66
satisfaction is more likely to attract new business and keep existing Furnishing 11 379 5.71 0.60 0.18 7.30 3.52
customers happy, as satisfied customers are more likely to recommend Travel 54 440 6.83 0.54 − 0.30 6.61 2.51
agencies
the business to their friends. Because customers can easily transfer to the
Total 668 11,547 5.84 0.51 ¡0.22 6.92 2.74
company with happier customers, positive word of mouth can have a
negative impact on the retention and spending rates of competitors.
Based on the preceding discussion and the consumer profitability number by industry.
models, our suggested model tests three perspectives. The first hypoth Data about the dependent variables (i.e., company’s gross margin,
esis examines the direct influence of both marketing efforts and CFM’s sales growth, and Tobin’s Q) and control variables (i.e., dynamism,
on firm performance, while, the second hypothesis examines the munificence, and power) were collected from each firm’s annual reports
moderating influences of CFM’s on the link among marketing efforts and and Compustat. To guarantee results that are relevant to a wide range of
performance. Furthermore, the third hypothesis examines the mediating business issues encountered by investors and managers, firm perfor
role of CFM’s on the link among marketing efforts and performance. mance was measured using three different measures such as company’s
Thus, we suggest the following hypotheses: gross margin, sales growth, and Tobin’s Q (e.g., Awasthi and Kumar,
2022; Morgan and Rego, 2006). Finally, 11,547 observations (without
H1. Both marketing efforts and customer feedback metrics have direct
violation of independence, normality, linearity, homoscedasticity, and
and separate influences on firm performance.
multicollinearity) were selected for the company’s gross margin, sales
H2. Customer feedback metrics moderate the relationship between growth, and Tobin’s Q. Thus, these three measures give indicators about
marketing efforts and firm performance. the most critical factors of a company’s long term (e.g., Tobin’s Q) and
short term (e.g., gross margin), utilising accounting information
H3. Marketing efforts drive customer feedback metrics, which in turn
–focused measures (e.g., gross margin) and financial market-based in
will effect firm performance.
formation (e.g., Tobin’s Q) and consumer market-based measures (e.g.,
Our proposed conceptual model addresses the various perspectives
sales growth).
in which marketing efforts can influence customer feedback metrics, and
The present study used operating environment as a control variables.
the mechanism that these influence its performance. Furthermore, the
Prior research asserted that the operating environment represents a
model investigates the influence of CFM on the firm short and long-term
critical variable when measuring firm performance (Jauch and Kraft,
profitability. We seek to examine which one of these three models best
1986; Theodoulidis et al., 2017). Furthermore, Berman et al. (1999)
fits our data for the sixteen industries. Furthermore, we used the oper
indicated that using operating environment as a control variable plays a
ating environment as a control variable in the three models to isolate
significant role in isolating their effects on firm performance and capture
their impact on financial performance (Theodoulidis et al., 2017).
the structural conditions for environmental uncertainty. In this study we
measured the operating environment utilising three constructs: munif
3. Research methods and data collection
icence, power, and dynamism (Berman et al., 1999; Theodoulidis et al.,
2017). Table 3 demonstrates an overview about the study variables and
3.1. Data collection and measures
measurements.
Heterogeneity one of this study challenge is related to the fact that
To examine the role of CFM’s in predicting firm performance, we
we have panel data from firms in sixteen different industries. This means
collected data about the study variables (i.e., “NPS proportion, NPS
that we observe multiple observations for each customer over time. We
value, SAT, Top-2 Box, and CES”) from the “American Customer Satis
take two different approaches in order to control for the potential of
faction Index” (ACSI). This study used the ACSI database due to various
within firms’ effects. We control for observed heterogeneity by intro
reasons. First, the American Customer Satisfaction Index provides us
ducing a set of variables (i.e., dynamism, munificence, power). We
with actual data that are consistent with the data available to firms’
control for unobserved heterogeneity in sets of models by allowing for
managers from their company “customer feedback systems”. The com
random effects.
panies included in the ACSI have a secondary data about their financial
performance. Furthermore, American Customer Satisfaction Index has
3.2. Model formulation
annual data from 800,000 U.S. customers. The final dataset consisted of
11,547 observations, demonstrating 668 firm over 16 years (from 2005
The present study used a multiple regression panel analysis to
to 2020). These sixteen industries were selected because the necessary
explore the influence of different CFM (i.e., “NPS proportion, NPS value,
data was available. Table 2 shows an overview about the observations
SAT, Top-2-Box, and CES”) on firm performance (i.e., gross margin, sales
6
Table 3 Table 3 (continued )

Measures and definitions. Variable Measures/definitions Source
Variable Measures/definitions Source
this time period were
Average “Average customer satisfaction (Ittner and Larcker, 1998; marginally above 0.7,
customer score is the arithmetic mean Van Doorn et al., 2013; De indicating that more than 70%
satisfaction score on the three specific Haan et al., 2015). of surveyed consumers rated
score indicators used to estimate the the average firm in the Top 2
ACSI latent satisfaction index. Boxes”.
These are consumer responses “Because some firms use Top
to questions concerning overall Box scores (the proportion of
satisfaction, expectancy their customers who are “very
disconfirmation, and satisfied”), we also
performance versus their ideal operationalized this using the
product or service in the proportion of each firm’s
category (e.g., Fornell et al., customers reporting scores of 9
1996). While we utilise the or 10 on the ACSI’s overall
average of the three items satisfaction question and
because of the superior obtained very similar results to
measurement properties of those obtained with the Top 2
multi-item scales, the Box measure”.
correlation with the single NPS (proportion) “The transformation to come to (Reichheld, 2003; De Haan
“overall satisfaction” indicator the official NPS also et al., 2015; Streukens and
is above 0.9, suggesting that distinguishes between very De Ruyter, 2004; Van Doorn
the scale is also a good proxy positive, moderate, and very et al., 2013; Oliver et al.,
for the single-item overall negative responses (Reichheld, 1997).
satisfaction metric used by 2003). Transformations can
many firms in practice. The theoretically be defended
mean and median average because research has shown
customer satisfaction scores for that customers mainly focus on
the firms in our data set over extreme experiences and
this time period were both therefore the effects of CFMs
slightly over 7.5 on a 10-point can be rather non-linear (e.g.,
scale”. Streukens and De Ruyter, 2004;
“We use the simple average of Van Doorn et al., 2013).
the three items because this is Moreover, service marketing
the metric most likely to be experts have pledged to delight
used by managers in practice. customers, implying that
The correlation between the customers will evaluate firms
simple average and the ACSI with extreme scores on the
latent variable is 0.985, and the CFM scales” (Oliver et al.,
results of our analyses hold 1997).
whether using the mean of the “How likely is it that you would
three items or the latent recommend [company X] to a
variable”. friend or colleague?” (0 = very
Top-2-box “Advocates suggest looking not (Ittner and Larcker, 1998; unlikely, 10 = very likely).
customer at the value of the scale but at Keiningham et al., 2007; Respondents who gave a score
satisfaction the proportion of people Morgan and Rego, 2006; of 0–6 are “detractors,” those
responding very positive and/ Van Doorn et al., 2013). who gave a 7 or 8 are “passives,
or very negative. An example of ” and those who gave a 9 or 10
this is the top-2-box customer are “promoters.” Subtracting
satisfaction, which measures the proportion of promoters by
the proportion of customers the proportion of detractors
filling in the two highest provides the NPS at the firm
scoring points of the overall level (Reichheld, 2003). At the
customer satisfaction scale ( customer level, the NPS
Morgan and Rego, 2006). reduces to a value of − 1 for
Morgan and Rego (2006) show detractors, 0 for passives, and
that this transformation serves +1 for promoters. At the firm
as a good predictor of business (industry) level, this translates
performance. to a score ranging from − 1
“Top 2 Box customer (only detractors) to +1 (only
satisfaction score refers to the promoters)”.
two highest-scoring points on NPS (value) “This is the untransformed NPS (Reichheld, 2003; De Haan
the five-point scale that firms score (0–10 range) provided by et al., 2015).
typically use to capture the customer. At the firm
customer satisfaction. Because (industry) level, this translates
the ACSI uses 10-point to the average NPS value given
satisfaction scales, we within the firm (industry)”.
operationalized this metric as Customer Effort “Did you try to contact (Reichheld, 2003; De Haan
the proportion of customers Score (CES) [company X] with any kind of et al., 2015).
surveyed that rated the firm in request?” (yes/no) If yes, the
the top 4 points on the 10-point following question is asked:
single-item “overall “How much effort did you
satisfaction” ACSI scale. The personally have to put forth to
mean and median Top 2 Box handle your request?” (1 =
customer satisfaction scores for very low effort, 5 = very high
the firms in our data set over effort). At the individual
customer level, we only have a
(continued on next page)
7
Table 3 (continued ) Table 3 (continued )

Variable Measures/definitions Source Variable Measures/definitions Source
dummy variable for the first the four-firm concentration

question and a score in the 1–5 level, calculated as the
range for the second question. percentage of sales generated
At the firm and industry level, by the top four firms relative to
we have the proportion of the total industry sales, also
people who answered yes to the following the same rolling
first question and the average window basis. Each operating
score of the second question”. environment variable was
Tobin’s Q Tobin’s Q has been calculated (Berman et al., 1999; calculated separately for each
as: Theodoulidis et al., 2017). of the four industries in the
Tobin’s Q = (mkvalt + pstkl + study.
dlc)/at (2) where mkvalt is the
market value, calculated as
shares outstanding * price of growth, and Tobin’s Q), moderating by operating environment factors
the stock, pstkl is the value of (i.e., munificence, power, and dynamism). Prior research indicated that
preferred stock, dlc is the
current debt and at is the total
using panel analysis can give more informative data, specify the time-
assets. varying influences of explanatory factors, alleviate estimation biases,
Marketing efforts The first variable we needed to Petersen et al. (2018). control for individual heterogeneity, and decrease multicollinearity is
identify is an instrumental sues (Chen, 2011; Theodoulidis et al., 2017).
variable, which can help us
control for the potential FPi,t = αi + β1 CFMi,t + β2 OEi,t + β3 Mktgi,t + εi,t (1)
endogeneity of marketing
efforts by the firms. The ideal
“where the subscript i indexes the firm, t describes the time period” (t =
instrument is one that can help
explain why firms are likely to 1 [2005], …,t = 16 [2020]), FPt refers to the dependent performance
increase (or decrease) factor for year t, either gross margin, sales growth, or Tobin’s Q, αi is the
marketing efforts to customers, “fixed firm-specific effect”, Mktg i,t refers to the firm’s marketing efforts to
but is unrelated to the consumer i in time t, OE i,t refers to the set of operating environment
performance at the specific
firm. In this case we obtained
factors, εi,t refers to the “error term” of the model, and β1, β 2, and β 3 are
the monthly marketing spend the model coefficients for the respective factors.
from the marketing Equation two was utilised to explore the moderating efefct of
departments of each firm that customer feedback metrics on the link between marketing efforts and
were given to allocate on all
financial performance.
customers for that given
month. We then used the FPi,t = αi + β1 CFMi,t + β2 OEi,t + β3 Mktgi,t + β4 Mktgi,t .CFMi,t + εi,t (2)
marketing budget spent on
these customers as an The present study also examines industry heterogeneity by using the
instrument of marketing effort.
following equation. Table 4 demonstrates the variables definitions in
We believe that this is a good
choice for an instrument since this equation.
we expect that increases in the ( ) ( )
marketing budget to these FPijk ηFP,ijk , πFP,ijk logit πFP,ijk = αx,0k + αx,1k . + CFMx,ijk − CFMx,jk
( ) (3)
customers is likely to be related + αx,2k . CFMx,jk − CFMx,k + εx,3ijk
to an increase in marketing
spending on average across all For standard regression assumptions, different tests were conducted
customers since marketing
such as heteroskedasticity, normality test, and Ramsey’s (1969) RESET
budgets are set for all
customers before allocating
test. The results indicated no issues regarding these assumptions viola
marketing efforts to individual tions. Furthermore, the Wu-Hausman F test and the
customers. This provides some Durbin-Wu-Hausman test were conducted for validating the study var
evidence that the marketing iables endogeneity (Lu et al., 2018; Sajons, 2020). Both tests indicated
budget is a good instrument to
use to help control for the
potential endogeneity of Table 4
marketing efforts. Variable definitions.
Operating For the purposes of this study, (Berman et al., 1999;
Variables Definitions
environment the operating environment was Theodoulidis et al., 2017).
measured using three CFMx,ijk Score on CFM x for customer i of firm j in industry k.
variables: munificence, CFMx,jk Average score on CFM x for firm j in industry k.
dynamism and power (Berman Average score on CFM x in industry k.
CFMx,k
et al., 1999). Munificence (MU)
αx,0k Captures the industry-level heterogeneity.
for year 2000 is the coefficient
αx,1k Captures the effect of differences between customers within the same
(slope) of the regression of
firm.
industry-level sales for the
αx,2k Captures the effect of differences between firms within the same
1995–1999 period. It was
industry.
updated using a rolling window
for every year in the data set Note.
until 2015. Dynamism (DY) is We investigate per industry which CFMs are useful for customer management
the standard error of the
within the firm (i.e., have a significant αx,1k ) and which CFMs are useful to
regression used to calculate
compare the focal firm’s competitive position with its competitors within the
munificence, divided by the
mean of industry sales for the same industry (i.e., have a significant αx,2k ). Furthermore, we indicate per in
corresponding period. Finally, dustry which CFM is the most useful (i.e., have the highest significance level) for
power (PO) was measured as these two levels of analyses.
8
satisfactory results, demonstrating that “NPS value, NPS proportion,
Marketing budget
CES, SAT, Top-2-Box, and marketing efforts” are endogenous at the 95%
confidence level.
4. Analysis and results
1.000
4.1. Descriptive statistics
Marketing cost
Table 5 demonstrates the descriptive statistics of the study constructs
(CFMs, FP, marketing efforts, and operating environment constructs) for
1.000
0.317
sixteen industries. The statistics show that the mean and median of
consumer satisfaction are both over 8.5 on a 10-point Likert scale. The
mean and median of Top-2-Box consumer satisfaction are almost 0.8,
Power
indicating that almost 80% of respondents rated the firms in the Top 2
1.000
0.453
0.488
Boxes. The results indicated that the mean of respondents who revealed
a complaint is 18% and the median is 19%. NPS mean and median are
around 0.4, Tobin’s Q was around $2.7 billion while the median was
Dynamism
around $2.6 billion. Table 5 also shows the mean of gross margin among
1.000
0.344
0.125
0.339
the firms was greater than 47% and the median was 43%.
Companies can use these descriptive statists to conduct a comparison
among industries. For example, Berman et al. (1999) revealed that a
Munificence
service industry has capital intensity (231.7) greater than
manufacturing sector (7.9), that can be justified by the massive in
1.000
0.128
0.209
0.347
0.209
vestments of the service sector in fixed assets buildings. Furthermore,
the service industry demonstrates munificence (MU) (1.5) greater than
manufacturing sector (0.01), that can be justified by the sales increase in
Top 2 Box
the service sectors over the years comparing to the manufacturing sector
1.000
0.477
0.332
0.483
0.485
0.234
(Theodoulidis et al., 2017).
Table 6 indicates the correlation matrix that provide us with initial
insights. Regarding the Tobin’s Q, the top-2-Box shows the greatest
1.000
0.443
0.549
0.127
0.293
0.436
0.230
relationship with Tobin’s Q, consistent with the non-linear association
SAT
between top-2-Box and Tobin’s Q revealed in prior studies (e.g., De
Haan et al., 2015). For the gross margin, of the five CFM’s, NPS value
1.000
0.495
0.470
0.401
0.446
0.200
0.471
0.234
associates best; This association is comparable in size to that of con
CES
sumer satisfaction. Moreover, CES had a significant effect on gross

margin, demonstrating that customers who made requests are willing to
NPS value
effect negatively on the firm performance. NPS and top-2-Box offers the
greatest correlation with sales growth. Both marketing budget and
1.000
0.452
0.580
0.417
0.583
0.235
0.289
0.345
0.328
marketing cost have a significant positive effect on performance
(Tobin’s Q, gross margin, and sales growth) and CFM (SAT, Top-2-Box,
CES, NPS proportion, and NPS value). Regarding the operating envi
NPS (proportion)
ronment factors, all operating environment factors had a significant

influence on Tobin’s Q except Dynamism. Gross margin and sales
growth were influenced significantly by all operating environment fac
1.000
0.539
0.490
0.551
0.484
0.519
0.128
0.437
0.120
0.408
tors. Furthermore, operating environment factors were related to CFM’s

(SAT, Top-2-Box, CES, NPS proportion, and NPS value).
Sales growth
Table 5
1.000
0.560
0.445
0.403
0.548
0.480
0.507
0.120
0.268
0.208
0.430
Descriptive Statistics (11,547 observations).

Variable Mean Median Std. dev. Min Max
Gross Margin
Firm performance
Tobin’s Q 2.741 2.660 4.184 1.383 10.280
1.000
0.471
0.570
0.456
0.634
0.566
0.463
0.610
0.320
0.120
0.393
0.208
Gross margin 0.479 0.435 0.207 − 0.532 0.736

Annual sales growth 0.389 0.342 1.745 − 0.480 2.409
Customer feedback
Correlations
NPS (proportion) 0.417 0.408 0.216 0.237 0.840

Tobin’s Q
NPS value 7.836 6.694 2.410 6.703 9.026

CES 0.174 0.182 0.135 0.031 0.429
1.000
0.528
0.397
0.474
0.463
0.389
0.428
0.347
0.360
0.209
0.302
0.120
0.402
SAT 8.601 8.573 0.640 7.204 9.217

Constructs correlations.
Top-2-Box (proportion) 0.818 0.831 0.162 0.664 0.870

Marketing efforts
Marketing budget
Marketing cost 0.261 0.237 0.106 0.219 0.420

NPS (proportion)
Marketing cost
Marketing budget 640.28 626.90 419.21 365.47 825.10

Gross Margin
Sales growth
Munificence
Operating environnent
Dynamism
Top 2 Box
NPS value
Tobin’s Q
Variable
Munificence (MU) 0.043 0.037 0.024 0.017 0.084

Table 6
Power
Dynamism (DY) 1.820 1.394 0.803 0.518 2.861

SAT
CES
Power (PO) 0.009 0.006 0.020 0.003 0.052
9
4.2. Panel regression results 4.3. Industry heterogeneity
Table 7 demonstrate the panel regression analysis results. The un Our study used equation (2) in order to examine the predictive power
standardized regression coefficients is indicated in the first column and of various customer feedback metrics across the sixteen industries. The
the robust standard errors in parentheses is indicated in the second final dataset included 82,850 observations at the customer level and
column. Moreover, operating environment factors were incorporated as 11,547 observations at the firm level, representing 668 firms over 16
control factors. years (from 2005 to 2020). Tables 8 and 9 provide us with insight about
Model 1a considers a restricted model and it focuses on examining the performance of CFM at both the consumer and firm levels for each
the direct influences of customer feedback metrics on firm performance industry. The predictive ability of CFM’s in predicting performance may
(Morgan and Rego, 2006). Model 1b is the full model and it represents vary between industries. Table 8 shows CFM’s performance at the
the direct influences of both customer feedback metrics and marketing customer level for the different industries. The results indicated that at
efforts on firm performance, including operating environment as control least one of CFM’s were found to be related to performance for the
variables. Models 1 and 2 can be utilised to test the first hypothesis (H1), sixteen industries. Top-2-box was found to be related to performance for
which suggests that marketing efforts and customer feedback metrics all industries and performed best for driving performance for airlines,
each have direct influences on firm performance. The findings revealed hotels, and casinos industries. Customer satisfaction was found to have a
that of the five factors of customer feedback factors, three are significant significant impact in ten sectors and is the best driver of customer
for Tobin’s Q: NPS (proportion), SAT, and Top-2-Box; two for gross feedback metrics in airlines, mobile telecom, hotels, holiday parks, and
margin: SAT and Top-2-Box; and four for sales growth: SAT, Top-2-Box, travel agencies. Based on our classification of customer feedback met
NPS proportion, and NPS value). rics, this demonstrates that in some industries where customers do not
Furthermore, operating environment and marketing budget have have frequent buying (i.e., airlines and hotels) consumer satisfaction is
significant influence on firm performance. Regarding hypothesis 2, the best predictor of firms’ performance. This means that customer
model 2 examines the moderating influences of CFMs on the link be positive experience in the present is the main predictor of business
tween marketing efforts and firm performance. Model 2 demonstrates all performance in these sectors.
the constructs in model 1b (full model and the interactions between Table 9 shows CFM’s at the firm levels for each industry. The results
marketing efforts and customer feedback metrics constructs. For Tobin’s indicate whether CFM’s were critical to compare different companies
Q, none of the CFMs constructs have a direct influence but it changed within specific sector. The findings demonstrate that Top-2-box is the
when including the interactions with marketing efforts. In this case, best predictor CFM’s to compare firms in online booking, hotels, and
satisfaction and Top-2-Box have a positive interaction with marketing online shopping industries, while consumer satisfaction is the best pre
efforts. For gross margin, a significant influence of marketing efforts was dictor for electronic and fixed telecom industries. CES is the best CFM’s
found and a significant influence of the interactions between NPS, SAT, to compare companies in restaurants industries. Moreover, NPS is the
and marketing efforts. Finally, for sales growth, we found two weak best metric to compare different companies in holiday parks industries.
interactions: an interaction between marketing efforts and NPS value,
and a significant positive interaction between marketing efforts and 4.4. Combining metrics analysis
SAT.
Model 3 investigates the link between marketing efforts and firm Each metric of the customer feedback metrics measures different
performance, mediated by customer feedback metrics. It is a restricted dimension and has its unique focus. For instance, CES focuses on the
model that includes only marketing efforts and operating environment past, customer satisfaction and Top-2-Box focus on the present, while
as control variables to test hypothesis 2. Customer feedback metrics NPS value and official NPS focus on the future. Therefore, managers can
were incorporated in the full model, Model 1b. Since constructs that are achieve better predictions about business performance by combining
significant in model 3 (marketing budget for Tobin’s Q, gross margin, customer feedback metrics. Table 10 demonstrates the findings of a
and sales growth) become significant in model 1b, or constructs that combination of customer feedback metrics. A combination of Top-2-Box
were not significant in model 3 were significant in model1b. Our results and consumer satisfaction and a combination of NPS and official NPS do
support the direct influence of customer feedback metrics (Model 1) and not enhance business performance due to the multicollinearity between
the moderating influence (Model 2) on the link between marketing ef the dimensions. We followed Agag and Eid (2020) procedure, so that we
forts and firm performance. can differentiate the CFMs’ efefct on firm performance at various levels
From the panel regression results of the selected industries shown in of analysis.
Table 7, we find support for the consumer profitability models (e.g., Our results indicate that the highest Gini coefficient (0.191) when
Agag and Eid, 2020; Gupta et al., 2006; Kumar et al., 2022; Petersen combining SAT, Top-2-Box, and NPS. These results revealed that man
et al., 2018; Verhoef, 2003), namely, Model 2 (moderated model) and agers could achieve better predictions about business performance by
Model 1 (direct effects model). combining these metrics (i.e., NPS, SAT, and Top-2-Box). Regarding the
In all three models, the wider environmental conditions for the hit rate, the hit rate enhances by combining SAT with Top-2-Box.
specific industry are captured with operating environment variables that Therefore, using a combination of customer feedback metrics is not
are defined at industry level and help to isolate their effects on firm necessary for the hit rate. With regard to the top-decile lift, a combi
performance (Petersen et al., 2018). Furthermore, the operating envi nation of Top-2-Box and CES achieve the bets predictions. Therefore,
ronment captures the structural conditions for environmental uncer combining Top-2-Box with CES could achieve incremental power.
tainty and, thus, it is measured at industry level (Agag and Eid, 2020).
Moreover, for the wider sector characteristics, as captured by the 5. Discussion and conclusion
operating environment, some sectors (i.e., restaurant, hotels, airlines)
shows a much higher munificence than others (i.e., department stores, 5.1. Key findings
furnishing) (1.5 versus 0.01), which can be explained by the fact that
these sectors (i.e., restaurant, hotels, airlines), especially the restaurant CFM’s as an area of study has consistently captured the attention of
industry, is performing much better in terms of increasing sales over the researchers and practitioners, particularly over the last decade where
years. increasing interest has been observed within the area of research (e.g.,
Agag and Eid, 2020; Morgan and Rego, 2006; Van Doorn et al., 2013; De
Haan et al., 2015; Otto et al., 2019; Shaalan et al., 2022a). Much of this
interest has been limited to the effectiveness and utility of these metrics.
10
G. Agag et al.
Table 7
Results of fixed-effects panel regressions.
Model 1a Model 1b Model 2 Model 3
Tobin Q Gross margin Sales growth Tobin Q Gross margin Sales growth Tobin Q Gross margin Sales growth Tobin Q Gross margin Sales growth
Constant 7.931** 0.630** 0.497** 7.931** 0.417** 0.308** 7.931** 0.417** 0.308** 8.217** 0.704** 0.329**
(1.103) (0.136) (0.105) (1.103) (0.106) (0.101) (1.103) (0.106) (0.101) (1.203) (1.046) (0.542)
Operating environment
Dynamism (DY) 5.571** 0.093 0.052 5.571** 0.093 0.052 5.571** 0.093 0.052 4.967** 0.104 0.2009
(2.590) (0.124) (0.108) (2.590) (0.124) (0.108) (2.590) (0.124) (0.108) (1.208) (0.045) (0.321)
Munificence (MU) − 0.769 − 0.017 − 0.036 − 0.769 − 0.017 − 0.036 − 0.769 − 0.017 − 0.036 − 0.438 − 0.152 − 0.057
(0.310) (0.013) (0.026) (0.310) (0.013) (0.026) (0.310) (0.013) (0.026) (0.216) (0.406) (0.031)
Power (PO) − 6.805*** − 0.419 − 0.610 − 6.805*** − 0.419 − 0.610 − 6.805*** − 0.419 − 0.610 − 7.740*** − 0.563 − 0.420
(3.861) (0.501) (0.573) (3.861) (0.501) (0.573) (3.861) (0.501) (0.573) (4.036) (0.217) (0.043)
Customer feedback metrics
NPS (proportion) 0.570*** 0.825** 0.319** 4.084*** 0.107 0.561** 3.429** 5.402*** 2.308**
(2.038) (0.104) (0.036) (2.610) (0.003) (0.107) (1.920) (2.036) (1.056)
NPS value 0.692** 0.513** 0.491** 0.102 0.106 0.743** 0.691** 0.475** 0.319**
(0.176) (0.216) (0.177) (0.004) (0.007) (0.143) (0.201) (0.105) (0.146)
CES 0.120 0.165 0.201 0.151 0.190 0.106 0.540** 0.341** 0.731**
(0.049) (0.067) (0.050) (0.092) (0.083) (0.030) (0.210) (0.137) (0.235)
SAT 8.073*** 3.946*** 6.905*** 7.830*** 5.048*** 3.490*** 6.403*** 8.432*** 6.237***
(2.619) (1.820) (3.008) (1.984) (0.894) (1.430) (2.102) (3.026) (1.287)
Top-2-box 4.984** 2.861*** 1.993** 1.973** 4.804*** 2.054** 4.036** 2.065** 4.126**
(0.705) (1.052) (1.780) (0.605) (0.843) (0.930) (0.682) (0.410) (1.047)
11
Mrktb 4.043** 0.070 0.318* 4.361** 1.659** 2.306** 3.073** 0.0437 0.251*
(0.016) (0.048) (0.097) (0.649) (1.395) (1.107) (0.410) (0.236) (0.203)
Interactions
Mrktb x NPS 1.490 0.257* 0.019
(1.025) (0.210) (0.104)
Mrktb x NPS value 2.034* 0.023 0.207*
(0.108) (0.001) (0.019)
Mrktb x CES 1.025 0.037 0.059
(0.013) (0.021) (0.056)
Mrktb x SAT 2.015* 0.315* 0.172*
(1.076) (0.031) (0.005)
Journal of Retailing and Consumer Services 73 (2023) 103301

Mrktb x Top-2-box 2.710* 0.034 0.016
(0.037) (0.002) (0.017)
Model Statistics
F 17.39 14.60 11.27 16.08 18.90 13.68 11.70 8.41 6.90 12.43 5.217 3.902
Prob > F 0 0 0 0 0 0 0 0 0 0 0 0
R2-within 0.58 0.39 0.51 0.49 0.61 0.54 0.56 0.50 0.41 0.34 0.21 0.19
R2-between 0.16 0.005274 0.12 0.15 0.00940 0.14 0.17 0.00341 0.15 0.13 0.0034 0.11
R2-overall 0.14 0.000792 0.11 0.12 0.000210 0.12 0.13 0.00065 0.13 0.10 0.0002 0.1
Sigma_u 0.086 1.36 0.098 0.074 1.45 0.065 0.060 1.42 0.070 0.037 1.023 0.004
Sigma_e 0.041 0.57 0.035 0.080 0.58 0.040 0.031 0.59 0.041 0.0061 0.43 0.027
Rho 0.87 0.83 0.84 0.88 0.82 0.85 0.89 0.86 0.82 0.68 0.71 0.64
Note:N = 11,547. Number of companies in the sample is 668. Unstandardized regression coefficients are shown. Robust standard errors are in parentheses.
***p < 0.1, **p < 0.01, *p < 0.05.
Table 8 different customer feedback metrics on firm performance. Coupled with

Customer feedback metrics performance per industry at the customer level (Obs this, our study developed an empirical application of the model in order
= 82,850). to better understand how CFM’s contributes to firm performance and
Industry SAT Top-2-box NPS NPS value CES profitability. Furthermore, We investigate the impact of marketing ef
Online shopping 0.982 1.000 0.793
forts on CFMs in order to help businesses enhance resource allocation
Banks 1.000 0.884 and make informed decisions about how much (and when) to invest in
Airlines 1.000 0.987 1.000 CFMs.
Mobile telecom 1.000 0.981 Empirical research has consistently assessed and evaluated the per
Drugstores
formance of feedback metrics (e.g., Agag and Eid, 2020; Raassens and
Energy 0.877 0.983
Online booking 0.988 1.000 0.889 0.995 Haans, 2017; Wang and Kim, 2017; Owen, 2019) and whilst the aca
Electronics demic community continues to further understand of this tool, practi
Department stores 0.957 0.794 tioners have been more concrete in their conclusions, regarding
Holiday parks 1.000 1.000 feedback metrics as the most effective and superior indicators of busi
Gasoline 0.971 0.993
Fixed telecom 0.780 0.988 1.000 0.877
ness performance (Otto et al., 2019; Wamba et al., 2019).
Hotels 1.000 1.000 The findings of our analysis confirm and support our initial hy
Restaurants 0.982 0.889 potheses, in as much that the adoption of various CFM’s (i.e., NPS, SAT,
Furnishing 0.788 NPS proportion, and Top-2-Box satisfaction) are closely correlated with
Travel agencies 1.000 0.893 1.000
high levels of firm performance (i.e., Tobin’s Q, gross margin, and sales
Significant 10/16 7/16 8/16 6/16 2/16
Best performing 5/10 3/16 4/16 1/16 0/16 growth). These findings support prior research conducted by Morgan
and Rego (2006) who argued for the use of CFM’s in enhancing the firm
performance. Furthermore, we find that the prediction capacity of
CFM’s varies based on the industry to which they are applied. Based on
Table 9
Customer feedback metrics performance per industry at the firm level (Obs =
the empirical nature of our study, it is critical to note that our results
11,547). have not yet been reported nor examined within existing research. From
this, we can conclude that no one feedback metric can be applied across
Industry SAT Top-2-box NPS NPS value CES
industries when predicting business performance. To better achieve this
Online shopping 0.881 1.000 0.881 end, it would be necessary to apply a combination of CFM’s as doing so
Banks 0.788 0.992
would result in greater precision. Managers are thus advised to apply a
Airlines 0.799
Mobile telecom combination of metrics should they be interested in predicting firm
Drugstores 0.997 0.890 0.889 performance.
Energy 0.966 One area in which our findings contradict prior research relates to
Online booking 1.000 0.884 the observation of the Net Promoter Score (NPS). Unlike Keiningham
Electronics 1.000 0.995
Department stores
et al. (2007), Morgan and Rego (2006), we find that the Net Promoter
Holiday parks 1.000 Score (NPS) is context dependent and thus not always incorrect. Our
Gasoline 0.884 1.000 results indicated that the NPS is indeed an effective driver of firm per
Fixed telecom 1.000 formance. We find further associations between indicators of firm per
Hotels 1.000 0.880
formance (i.e. Tobin’s Q, gross margin, and sales growth) and customer
Restaurants 0.973 1.000
Furnishing 0.990 satisfaction. For example, it emerges that a significant relationship exists
Travel agencies 0.795 between consumer satisfaction and Top-2-Box and Tobin’s Q perfor
Significant 5/16 6/16 4/16 6/16 3/16 mance. Further differences in relation to prior research emerges where
Best performing 2/10 3/16 1/16 1/16 1/16 Top-2-Box, sales growth and customer satisfaction are concerned; as
unlike Reichheld (2003) we find a solid relationship between customer
Recent calls for marketing accountability have thus highlighted the satisfaction, Top-2-Box, and sales growth. Other significant relation
existing gaps in knowledge related to CFM’s. The gap in question relates ships are noted between gross margins and customer satisfaction, in
to a lack of understanding surrounding the relationship between keeping with research offered by Morgan and Rego (2006). This finding
customer feedback metrics and firm performance (Petersen et al., 2018). is especially noteworthy as it highlights just how critical it is for firms to
Thus, the present study aims to bridge this existing gap in knowledge by ensure customer satisfaction, whilst further emphasising the importance
developing an integrative model focused on determining the influence of of doing as the effects remain long lasting.
Table 10
Predictive performance multi-customer feedback metrics models.
SAT Top-2-Box NPS proportion NPS value CES
SAT Gini coefficient 0.137

Top-decile lift 2.095
Hit rate 0.518
Top-2-Box Gini coefficient 0.126 0.147
Top-decile lift 2.190 1.826
Hit rate 0.527 0.670
NPS proportion Gini coefficient 0.149 0.148 0.150
Top-decile lift 2.061 1.629 2.092
Hit rate 0.528 0.561 0.578
NPS value Gini coefficient 0.162 0.162 0.176 0.169
Top-decile lift 1.827 1.702 1.927 1.826
Hit rate 0.570 0.518 0.513 0.537
CES Gini coefficient 0.170 0.158 0.191 0.162 0.168
Top-decile lift 2.104 2.490 1.825 1.920 1.783
Hit rate 0.518 0.507 0.512 0.593 0.561
12
Existing research casts an in-depth examination of customer com 5.3. Practical implications
plaining behaviour, its antecedents and drivers (Anderson, 1998; Singh,
1988; Morgan and Rego, 2006; Raassens and Haans, 2017). This study The findings of this study provide us with meaningful and valuable
emerges as one of the first to narrow this focus to just one sector as we insights into the predictive power of different CFM’s for business per
specifically examine the relationship between CES and firm performance formance across different industries at the firm and industry levels.
across different industries. Previously, Fornell and Wernerfelt (1988) Therefore, managers of these industries and other industries should
had revealed that by closely observing consumer complaints, it was acknowledge the significant role of customer feedback metrics in
possible to better manage consumers who were “at risk” therefore improving firms’ performance in the short and long terms. Table 11
acknowledging and documenting complaints was identified as being demonstrates a summary of the main managerial takeaways from the
crucial by the authors. Interestingly, amongst the participating firms present research.
that make-up our research sample, we find that managers were yet to The findings reveal customer feedback metrics have a positive
hear and note any consumer complaints. This is proceeded by a lack of impact upon business performance. Our study builds upon this by spe
management effort to reduce any negative impact that consumer com cifically highlighting which of these CFM’s can be applied across control
plaints could have on firm performance. Momentarily returning to systems within firms in order to boost financial performance both in the
existing research which regard customer complaints as a poor predictor short and long term. Five key CFM’s are thus positioned (“NPS propor
of satisfaction (TARP, 1986), the present study counters this by estab tion, NPS value, CES, SAT, and Top-2-Box”) by this study as being able to
lishing links among CES, customer satisfaction, and Top-2-Box scores, successfully predict firm performance. Our study also elaborates on the
revealing the former as a suitable performance indicator. net promoter score; firstly, by not only highlighting how this positively
influences variables such as annual sales growth and gross margin,
5.2. Theoretical implication rather it also brings to attention the positive influence this has on
Tobin’s Q.
The present study offers two-fold contributions to the study of Taking into consideration (Brown et al., 2005), observations that
customer relationship management. It adds to both literature of mar
keting as well as broadens our understanding of CFM’s within the
Table 11
context of firm performance. The paper indicates both the relationship Summary of managerial implications.
between marketing investments and financial impacts/outcomes of
Strategic decision Managerial implications from the suggested
these decisions as well as enhances understanding of how CFM’s directly
model
impact financial outcomes of a firm (Raguseo and Vitari, 2018; Srini
vasan and Hanssens, 2009). This is especially important given that thus Marketing accountability Our suggested model enables managers in
the selected industries (hotels, airlines,
far academic research has largely ignored CFM’s and their role in casinos, and restaurants) make investments
generating returns within a firm. Other areas that have also been in programs to build customer feedback
neglected up until now include the implications of these metrics and metrics more accountable by deriving their
how they utilised during resource allocation decisions (Bhattacharya contribution to firm performance and
business growth.
et al., 2021; Otto et al., 2019). In order to provide deeper insights
Investments in programs to build Our suggested model managers evaluate the
regarding the importance of CFM’s, our study has integrated these customer feedback metrics investment appeal of different relationship
metrics into the individual consumer profitability model for driving firm building programs by projecting the
performance and thus provides further details towards the role played contribution to profitability of these
by CFM’s. investments and comparing it with the cost
of implementing the program.
Second, several studies have investigated different CFM’s, and their Leveraging customer feedback Through the decomposition of the impact of
contributions to the firm performance (Fis and Cetindamar, 2020; metrics to improve performance customer feedback metrics on firm
Morgan et al., 2005; Raassens and Haans, 2017; Reichheld, 2003). performance, firms can identify the extent to
Nevertheless, these studies have given more attention to one metric which their investments in customer
feedback metrics affect performance. This
(consumer satisfaction) and none of them have examined the effect of
can help them understand the sources of
different CFM’s on firm performance in the long and short terms. Thus, marketing success and promote activities
our study results fill this vital gap by exploring the effect of different that leverage the impact of customer
customer feedback metrics on firm performance at the customer and feedback metrics on firm performance.
firm levels. Which customer feedback metrics to An improved understanding of the different
invest in impact on performance of different customer
Third, our research responded to the call by Kumar and Shah (2009) feedback metrics may help firms better
and Lemon and Verhoef (2016) on marketing financial accountability by design their relationship building programs
developing the association between customer feedback metrics and firm to improve specific aspects or components of
financial performance. Nowadays, companies invest large amounts of the firm performance (e.g., Tobin Q, or sales
growth).
resources in enhancing CFM’s (Petersen et al., 2018), indicating return
Customer selection and resource The proposed model indicates the need to
on marketing investment becomes a top priority. This research provides allocation integrate customer feedback metrics into the
us with a clear understanding of the link between firm investments in customer profitability model to improve
these metrics and its effects on firm financial performance. Fourth, we customer selection and resource allocation
used a unique actual data about different CFM’s and firm performance in decisions (e.g., customers with higher
customer feedback metrics are more
the short and long terms which reflect the validity of the findings. Thus, responsive to marketing activities and
our study findings can be compared with future research findings to necessitate a lower level of marketing
enhance the future studies quality in this specific research area. resources).
Finally, our study also contributes to the association between NPS Managing customer relationships at Our individual-level model enables firms
the individual level and firm level make decisions at the customer-level to
and firm performance in various ways. While prior research examined
improve the relationships with the best
the influence of NPS at a customer level, nevertheless, our research is the customers and maximize each customer’s
first to investigate the link between NPS and firm performance at the lifetime value. While, it enables firm make
firm level. Developing this relationship is crucial, as prior research decisions at the firm-level to tell which
revealed that NPS is the most widely used predictor of CFM’s in the consumer feedback metrics are most suitable
for competitive positioning.
systems of firms’ consumer feedback (Chandon et al., 2005).
13
consumer recommendations following a purchase yield the most bene firms should prioritise their profitable consumer base Rust et al. (2004).
fits for firms, we add that monitoring performance and setting goals on As the data is being collected from the ACSI database, which cannot
NPS worthwhile. As such, the empirical findings allow for the devel differentiate between consumers and deal with all consumers as equally
opment of more effective and robust marketing control systems which important. Fourth, we have only limited insights into the industry type.
ultimately will allow firms with performance enhancing opportunities From previous studies, we know that industry type influence customer
(Donada et al., 2019). satisfaction (Shaalan et al., 2022a), which in turn influence firm per
The findings of this research further highlight the fact that there is no formance. Therefore, future studies can examine the influence of CFM
link between CES and the firm performance within sixteen industries. As on firm performance between service and manufacture industries.
such, despite enhancing CES scores, there appeared to be no positive Finally, future studies can examine other consequences factors, such as
impact on firm performance within these sixteen industries. If these consumer lifetime value, consumer profitability, and cross buying (e.g.,
findings are to be granted consideration, then, customer satisfaction Agag and Eid, 2020; Shah et al., 2012). Exploring these variables helps
should not be ignored in sole favour of CES. Firms should refrain from managers to understand the influence of CFM’s on the value of their
relying on CES as the sole feedback metric, at least where the industry is consumer base and how to manage it effectively.
concerned. In regard to goal setting and performance monitoring, we
find that these should be based on a consumer feedback “scorecard” Declaration of competing interest
surrounding net promoter score “(NPS) (proportion), NPS value,
customer effort score (CES), customer satisfaction (SAT), and Top-2- The author declares that there is no conflict of interest.
Box”.
Because of this, businesses can boost certain parts of their customer Data availability
profitability model by investing in programmes that construct particular
CFMs. Firms might, for instance, boost the efficiency of their marketing Data will be made available on request.
campaigns by investing in customer satisfaction programmes. Business
owners can use our methodology to see how investments in CFMs might Acknowledgements
affect consumer behaviour and profitability. Companies can learn more
about the many channels via which their investments convert into (None).
customer profitability by dissecting the full impact of CFMs on profit
ability into its component parts (behavioural effect, marketing effec References
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Journal of Retailing and Consumer Services 73 (2023) 103301

Contents lists available at ScienceDirect

Journal of Retailing and Consumer Services

Understanding the link between customer feedback metrics and

Table 3 Table 3 (continued )

Table 3 (continued ) Table 3 (continued )

dummy variable for the first the four-firm concentration

satisfactory results, demonstrating that “NPS value, NPS proportion,

4. Analysis and results

sumer satisfaction. Moreover, CES had a significant effect on gross

ronment factors, all operating environment factors had a significant

tors. Furthermore, operating environment factors were related to CFM’s

Descriptive Statistics (11,547 observations).

Gross margin 0.479 0.435 0.207 − 0.532 0.736

NPS (proportion) 0.417 0.408 0.216 0.237 0.840

NPS value 7.836 6.694 2.410 6.703 9.026

SAT 8.601 8.573 0.640 7.204 9.217

Top-2-Box (proportion) 0.818 0.831 0.162 0.664 0.870

Marketing cost 0.261 0.237 0.106 0.219 0.420

Marketing budget 640.28 626.90 419.21 365.47 825.10

Munificence (MU) 0.043 0.037 0.024 0.017 0.084

Dynamism (DY) 1.820 1.394 0.803 0.518 2.861

Power (PO) 0.009 0.006 0.020 0.003 0.052

4.2. Panel regression results 4.3. Industry heterogeneity

Journal of Retailing and Consumer Services 73 (2023) 103301

Table 8 different customer feedback metrics on firm performance. Coupled with

SAT Gini coefficient 0.137

large firms. Consequently, future studies could improve our analyses by

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