From Sentiment to Strategy: Measuring the Impact of Customer Feedback on Firm Performance

Abstract

In the digital era, customer feedback, particularly online reviews and social media engagement, has become increasingly important for firms. This study examines the influence of online reviews and social media engagement on a firm's performance. Online reviews from some applications on the App Store were extracted using the analytical website appfollow.io. Data on social media engagement are gathered from firms' official Instagram accounts. This study focuses on the Kompas100 Index from 2018 to 2022. The findings of the study reveal that online reviews negatively impact firm performance, while social media engagement has a positive effect on firm performance. This research may contribute to the body of knowledge on the importance of customer feedback in the digital era. The findings offer valuable insights for firms, providing guidance on how to leverage online positive reviews and social media engagement to enhance firm performance and gain a competitive advantage.