Abstract
The Net Promoter Score (NPS) concept, which is widely used among practitioners, assumes that there is a positive and nonlinear linkage between intention to recommend a firm (positive word of mouth) and Customer Lifetime Value. However, this critical assertion for customer portfolio management has not yet been empirically proved. This study uses a data set from a financial service provider to analyze the link between customers' intention to recommend a firm and Customer Lifetime Value. It reveals that intention to recommend a firm increases contribution margins but it neither enhances customer loyalty nor Customer Lifetime Value. However, satisfaction has a significant influence on Customer Lifetime Value. Thus, the expected nonlinear link between intention to recommend and Customer Lifetime Value cannot be proved, so the significance of the NPS concept for customer management cannot be verified.
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