What drives customer propensity to recommend a brand?

This paper investigates the drivers of customer propensity to recommend a brand. DFS, a leading UK retailer, has provided Staffordshire University with access to its large data set of responses to customer satisfaction surveys. We use the Net Promoter Score methodology to differentiate between different levels of customer loyalty (i.e. “detractors”, “passive” and “promoters”). We then use a logistic regression model to determine what influences the likelihood of a customer becoming a “promoter”. We use factor analysis to reduce the large number of survey questions to a manageable number of explanatory variables. The most important factors identified are (i) satisfaction with product quality, (ii) satisfaction with the sales experience and (iii) the ability of the company to exceed customers’ expectations. We find that the law of diminishing returns applies; i.e., when average satisfaction is already high, management should expect lower returns on investment in additional improvements. In addition, we find that satisfaction is a better predictor of true loyalty than previous purchase.