Marketing Executives Networking Group Learns Customer Satisfaction Comes Out On Top in Battle with 'Word Of Mouth' Research

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Research presented to the Marketing Executives Networking Group by Neil A. Morgan proves customer satisfaction research still MVP in marketers' toolkit for predicting future business performance.

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Neil's research showed our members how to focus their research budgets on metrics that will be most predictive of future business profitability rather than metrics that have no correlation with business performance.

As part of the Marketing Executives Networking Group's (MENG) exclusive "Business School Webinar" series, Indiana University Marketing Professor Neil A. Morgan presented a summary of his research comparing a variety of customer satisfaction metrics and newer loyalty-based metrics and their ability to predict firms' future business performance. Results showed that customer satisfaction metrics do a much better job of predicting a company's business performance than newer loyalty-based metrics, directing marketers to focus their research budgets on understanding customer satisfaction.

It is a generally accepted marketing principle that a firm's business performance is driven, in large part, by how well it serves its customers. As a result, most firms have customer feedback systems to capture the post-purchase perceptions of their customers, and marketing executives use this data to construct metrics they believe to be predictive of the firm's future market and financial performance.

But while there has been growing research evidence of a link between customer satisfaction and firm performance, many marketers have been moving away from using satisfaction metrics and towards the use of loyalty metrics concerning customers' word-of-mouth (WOM) intentions and behaviors (such as Net Promoter ScoresTM). In fact, there appears to be a growing belief among many managers that WOM intention is the only customer feedback metric that predicts a firms' business performance. Yet, there has been remarkably little empirical examination of this assumption and the most widely cited "evidence" consists of anecdotal single-industry case studies and the outcomes of simple correlation studies reported by consulting firms with a vested interest in the answer.

In his presentation to MENG Professor Morgan discussed some of his recent research projects in which he used data from the American Customer Satisfaction Index and J.D. Power and Associates to systematically examine the relationship between a number of word-of-mouth related variables and firms' business performance and compare this relationship with that of other commonly-used satisfaction- and loyalty-related customer feedback metrics. The result was that back-to-basics customer satisfaction scores had a much greater ability to predict business performance than newer word-of-mouth statistics.

As Richard Guha, Chairman of MENG said, "Neil's research showed our members how to focus their research budgets on metrics that will be most predictive of future business profitability rather than metrics that have no correlation with business performance."

This webinar is part of an ongoing series offered exclusively to Marketing Executives Networking Group members by Professors from the leading Business Schools in the country. MENG has a series of webinar programs like this, along with an extensive range of information available only to members, which help its members succeed in their careers.

The Marketing Executive Networking Group (MENG) is the premier organization of senior level marketing professionals who have reached at least the VP level in their organization. This 1,700 member not-for-profit networking community fosters career and personal success by sharing information and relationships for mutual assistance across virtually all industries and marketing specialties. Eighty four percent of the members have Fortune 500 experience and 70% have earned graduate degrees, the majority of which are from top-20 Business Schools. To learn more go to http://www.MENGonline.com.

Neil A. Morgan has published widely on strategic marketing and management topics. His research appears in Journal of Marketing, Marketing Science, Journal of Operations Management, Decision Sciences, Journal of the Academy of Marketing Science, Journal of Business Research, Journal of Product Innovation Management, Industrial Marketing Management, Journal of Strategic Marketing, Journal of Marketing Management, British Journal of Management, European Journal of Marketing, Journal of Professional Services Marketing, and Long Range Planning. He serves on a number of journal boards and program committees and is also the author of the book Professional Services Marketing, published by Heinemann.

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Richard Guha, MENG Chairman

Lisa Petrilli, MENG Program Director
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