Reports

Satisfaction Surveys or Online Sentiment: Which Best Predicts Firm Performance?

Evert de Haan, 2020, 20-101

Customer satisfaction is an important driver and predictor of purchase behavior and firm performance. Managers traditionally use customer satisfaction surveys and increasingly use eWOM sentiment in predicting future firm performance. The question is, which performs better?

Evert de Haan investigates the question with customer satisfaction data from the American Customer Satisfaction Index (ACSI) and eWOM sentiment data. He scrapes and analyzing more than 8.4 million firm-specific tweets, and 13 financial performance indicators from 46 firms over an eight-year span.

With a series of regression models, he shows that customer satisfaction and eWOM sentiment are only slightly correlated with each other, that is, they each contain much unique information about the customer base. Growth in negative eWOM is overall the best predictor of future firm performance, although other measures, including the ACSI, are useful in predicting future firm performance. Combining survey and eWOM measures is, in some cases, better than just using one predictor.

Put into Practice

  • eWOM offers a rich and real-time information stream to help firms better monitor the customer base, the brand, and the firm as a whole.
  • Managers should collect and analyze eWOM data on top of survey-based measures to monitor customer opinions and the brand’s image, which in turn helps to better predict (and potentially manage) firm performance.
  • The additive effect of different measures and data sources suggests that managers should combine eWOM data with survey measures to create a customer feedback dashboard to monitor and measure the impact of firm and marketing activities.

 

 

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