Despite the slow economy in America, customer satisfaction is showing signs of rebounding, according to the American Customer Satisfaction Index (ACSI), which monitors consumer satisfaction and spending in the US.
Following a drop at the end of 2002, the ACSI gained 1.2% overall during the first quarter of 2003, now standing at 73.8 (out of a possible 100).
"Sharp increases in aggregate customer satisfaction are unusual," explained Professor Claes Fornell, director of the University of Michigan Business School's National Quality Research centre, which compiles and analyses the ACSI data. "In previous instances, both consumer spending and economic growth surged around the same time."
Good indicator
If customer satisfaction can be taken as a rule-of-thumb guide to economic growth, the first-quarter results bode well. A satisfied customer is more likely to come back for more, buy more frequently, and be less price sensitive, all of which combine to boost consumer spending.
Except for the US Postal Service, none of the 11 industries measured by the ACSI during the first quarter showed a decline in satisfaction with the quality of products and services. Fornell predicts that, barring unforeseen events, consumer spending should increase by as much as 3.8% in the second quarter of 2003.
Major improvements
Customer satisfaction has increased for airlines, telecommunications, hotels, hospitals, broadcasting, newspapers, and motion pictures, and is remaining unchanged for energy utilities, parcel delivery and cable television providers.
Two-thirds of the companies whose ACSI scores were updated this time around have either improved or remained the same. A number of companies that had faced financial difficulties, accounting issues, or serious customer service problems, have also showed improvements in customer satisfaction.
Sector highlights
For the second year running, customer satisfaction with airlines improved and the industry's ACSI score of 67 is now at its highest point since 1997. Once again, Southwest Airlines achieved the best score (75), followed by Continental (68), Delta (67), and American (67).
The telecommunications industry improved its ACSI score for a second consecutive year and now stands at 72. AT&T's score of 76 leads the industry, with BellSouth (74), Verizon (74), and Sprint (72) not far behind.
Qwest, whose score increased by 11%, is still at the lower end of the table with a score of 62. However, according to Jack West, past president of the American Society for Quality, the firm should be encouraged by its gain in customer satisfaction after eight years of declining ACSI scores.
And, although the overall energy utility industry score (73) did not change, many energy utilities have improved their scores, including a 14% gain by Pacific Gas & Electric (66), a 7% increase by PacifiCorp (76), and a 6% gain by DTE Energy (72). For the fourth year running, the Southern Company had the highest utilities score (82), followed by PPL Corp. (80), and CMS Energy (78).
Like the energy utilities sector, the parcel delivery/express mail and cable/satellite television industries registered no change in their overall customer satisfaction scores. Parcel delivery, which consistently ranks among the highest-scoring industries in the ACSI, scored 79, while the cable companies came in at 61.
"The scores for cable TV remain dismal. No other industry in the ACSI has lower scores," Fornell said. "Comcast and Charter Communications both score 55, which is lower than the Internal Revenue Service. That doesn't mean that people enjoy paying taxes more than they do watching cable TV, but in the context of what these organisations do, the IRS offers more satisfactory assistance and, unlike the cable companies, the IRS has no 'price' to increase."
The ACSI is produced by a partnership of the University of Michigan Business School, American Society for Quality, and CFI Group, and is supported in part by Market Strategies Inc. and ForeSee Results.
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