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Predicting Firm Market Performance Using the Social Media Promoter Score

Author

Listed:
  • Sunghun Chung

    (Leavey School of Business, Santa Clara University)

  • Donghyuk Shin

    (W. P. Carey School of Business, Arizona State University)

  • Jooyoung Park

    (University Town, Nanshan District)

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.

Suggested Citation

  • Sunghun Chung & Donghyuk Shin & Jooyoung Park, 2022. "Predicting Firm Market Performance Using the Social Media Promoter Score," Marketing Letters, Springer, vol. 33(4), pages 545-561, December.
    • Handle: RePEc:kap:mktlet:v:33:y:2022:i:4:d:10.1007_s11002-022-09615-w
    DOI: 10.1007/s11002-022-09615-w
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    References listed on IDEAS

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