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08-02-2022

Predicting Firm Market Performance Using the Social Media Promoter Score

Authors: Sunghun Chung, Donghyuk Shin, Jooyoung Park

Published in: Marketing Letters | Issue 4/2022

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Abstract

Customer loyalty and satisfaction increase product sales, protect market share, and lower marketing costs, which potentially leads to greater returns on investment and cash flows. Therefore, investors take customer feedback into account when making investment decisions. Online social media platforms such as Facebook and Twitter have emerged as alternative sources for obtaining customer feedback information promptly and at a low cost. This study develops a new measure, the Social Media Promoter Score (SMPS), which combines several indicators of customers’ attitudes toward a company derived from detailed sentiment and content analyses of social media. Using a semiparametric model of customer loyalty index based on the generalized additive model (GAM), we found that both positive and negative social media metrics about customers’ attitudes were significantly associated with the customer loyalty index. Importantly, SMPS was also significantly associated with an increase in firms’ market performance. These findings suggest that SMPS can be a valuable measure to complement the existing customer metrics such as the ACSI. Theoretical contributions to research on the marketing–finance interface and managerial implications are discussed.

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Footnotes
1
The literature (e.g., Haan et al., 2015; Lemon and Verhoef 2016) uses customer feedback as a broad term to refer to the consumer perception (e.g., satisfaction) of a firm and behavioral intention (e.g., willingness to recommend the firm to others). Accordingly, customer feedback metrics (CFM) include customer satisfaction metrics such as ACSI, as well as loyalty metrics such as NPS (Lemon and Verhoef 2016). Consistently, we use customer feedback to refer to customers’ loyalty, satisfaction, and attitude toward the company.
 
2
ACSI provides annual customer satisfaction by gathering data from a survey of about 70,000 households and utilizing a proprietary econometric model to calculate a customer satisfaction score. Research has shown that ACSI does influence stock returns, suggesting that investors are likely to use customer satisfaction information reflected in ACSI to determine the value of a stock. YouGov is a marketing research company that assesses brand perceptions on a daily basis through its BrandIndex panel (http://​www.​brandindex.​com). YouGov database includes positive and negative customer satisfaction scores. Malshe et al. (2020) showed that YouGov and ACSI are closely related to each other. YouGov is updated more frequently than ACSI, but it is difficult to access, as it is an expensive subscription-based private database.
 
3
Specifically, after applying keyword search to entire customer posts or comments, 28,511 out of 43,976 customer posts and 849,515 out of 1,385,984 customer comments were classified. For the remaining content (i.e., 15,465 customer posts and 536,469 customer comments), 10 undergraduate students were recruited, and each student classified 55,193 customer posts or comments. Because the study did not distinguish different types of complaints (quality, money, social complaint), each student focused on distinguishing between positive testimonials and complaints using the sentiment score from the previous sentiment analysis and classified 99.3% of customer posts and comments.
 
4
The study used the search function of Google Blogs Web site to find the contents on the focal firms. In the case of Twitter, we used the advanced search functions provided by Twitter to search positive tweets and negative tweets. The overall inter-rater reliability for coding conventional news, weblogs, and tweets was 0.98, suggesting a high level of agreement. The remaining 2%, on which the RAs did not reach an agreement, were labeled neutral.
 
5
Among our sample firms, it is worthwhile to list the SMPS of worldwide well-known companies: Samsung Electronics (5.64), Hyundai Motor Company (5.57), Korean Air (3.91), LG Electronics (4.83), Kia Motors (3.90), Asiana Airline (5.53), NHN—the biggest search engine portal in Korea (4.60), and Shinhan Bank—the biggest bank company in Korea (4.51).
 
6
Note that NPS is not publicly available but NCSI is. It is provided by the Korea Productivity Center (KPC).
 
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Metadata
Title
Predicting Firm Market Performance Using the Social Media Promoter Score
Authors
Sunghun Chung
Donghyuk Shin
Jooyoung Park
Publication date
08-02-2022
Publisher
Springer US
Published in
Marketing Letters / Issue 4/2022
Print ISSN: 0923-0645
Electronic ISSN: 1573-059X
DOI
https://doi.org/10.1007/s11002-022-09615-w