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Invited Commentary—Net Promoter, Recommendations, and Business Performance: A Clarification on Morgan and Rego

IPSOS Loyalty, Morris Corporate Center 2, 1 Upper Pond Rd, Bldg D., Parsippany, New Jersey 07054
College of Administrative Sciences and Economics, Koç University, Rumeli Feneri Yolu, Sariyer 34450, Istanbul, Turkey
Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee 37203
Department of Marketing, Norwegian School of Management, Nydalsveien 37, P.O. Box 20, N-0442 Oslo, Norway
tim.keiningham{at}ipsos-na.com
laksoy{at}ku.edu
bruce.cooil{at}owen.vanderbilt.edu
tor.w.andreassen{at}bi.no

One of the most controversial findings in Morgan and Rego (2006) was that two widely advocated loyalty metrics, "Net Promoter" and "Number of Recommendations," have little or no value in predicting the financial outcomes of firms. We argue that neither measure was actually examined and that conclusions about the predictive value of these measures cannot be drawn from their analysis. A primary problem is that the measures used in Morgan and Rego (2006) do not adequately adjust for the presence of neutral word-of-mouth activity. Nevertheless, Morgan and Rego (2006) provide important information regarding other common customer metrics and firm financial outcomes. We are unaware of another longitudinal study that examines the predictive value of satisfaction and loyalty metrics in such a comprehensive way.

Key Words: Net Promoter; word-of-mouth; recommendations; financial performance; intentions; customer satisfaction; customer loyalty
History: Received: November 1, 2006;