Emin Babakus

Although the lay appeal of the Net Promoter Score (NPS) is undeniable, scholars have noted concerns over its use based on conceptual and empirical grounds. We address these concerns through an examination of three research questions: (1) To what extent do NPS responses correspond to actual word-of-mouth behaviors? (2) Do NPS responses exhibit measurement invariance across key demographic groupings? (3) How well does NPS perform (as opposed to customer satisfaction scores) as a predictor of financial performance? Study results show that NPS scores correspond to reported word-of-mouth exposure for most, but not all, product categories; NPS responses are invariant across demographic groupings; and that when examined separately, both customer satisfaction and NPS are significant predictors of differences in financial performance, but customer satisfaction explains slightly more variance. We discuss the managerial and theoretical implications arising from these results.