American Customer Satisfaction Index Releases Second-Quarter
Report
Autos, PCs, Household Appliances, Cable/Satellite TV: Consumer Spending
Should Remain Fairly Constant, Despite Less-Satisfied Customers
MILWAUKEE, Aug. 20 With customer satisfaction down only
slightly during the second quarter of this year, consumer spending should hold
fairly steady in late summer and early fall -- which may well save the economy
from going into a recession, according to the American Customer Satisfaction
Index (ACSI).
The ACSI, which dropped by 0.1 percent to a mark of 72.1 (out of a
possible 100), measured customer satisfaction levels this quarter in the
manufacturing durables (automobiles, personal computers, household appliances
and consumer electronics) and cable and satellite television industries.
Professor Claes Fornell of the University of Michigan Business School says
that a strong relationship exists between ACSI percentage changes for any
given quarter and changes in consumer spending for the following quarter. In
fact, he says, the ASCI alone accounts for 40 percent of the variation in
spending from one quarter to the next.
"Over the past six years (since the inception of the ACSI), the
relationship between ACSI and consumer spending appears to have been fairly
immune to changes in consumer wealth and debt," says Fornell, director of the
U-M Business School's National Quality Research Center, which compiles and
analyzes the ACSI data. "Instead, the consumer's decision to spend appears to
be driven more by personal gratification, irrespective of changes in
discretionary income or personal debt."
Fornell says that even in the face of a weakening economy, consumers are
still spending, although at a slower pace.
"Despite no second-quarter improvement in customer satisfaction among the
manufacturing durables sector, if the ACSI-consumer spending relationship
holds, then there should be only a slight negative impact on spending for the
next quarter," he says. "Once the tax rebate is factored in, it may well be
that growth in spending remains steady for the third quarter."
Among the industries rated by the ACSI during this past quarter, only the
automobile industry avoided an overall decline in customer satisfaction,
compared with its second-quarter score from last year. On the other hand, it
showed no improvement, either.
Once again, the automobile industry matched its record-high ACSI score of
80, set in 1995 and 2000. Although European automakers dropped somewhat (from
a score of 84 to 83), they still maintain a lead in customer satisfaction over
the Japanese (82) and domestic auto companies (79).
Cadillac has taken over the top spot from Mercedes Benz, with a score of
88. Mercedes Benz, BMW and Buick all came in with scores of 86.
"The high scores for Cadillac and Buick are surprising to some people, but
customer satisfaction is as much about good customer selection and
segmentation as it is about quality," Fornell says. "It is the fit between
what the product offers and what the customer desires that is the key.
Companies with tight homogeneous markets usually do better than companies with
more diverse markets."
The largest improvement, once again, was made by Korean automaker Hyundai
Motor Co., whose score has jumped from 68 in 1999 to 76 last year to 81 this
year -- a 19 percent surge in just two years.
"Hyundai's improvement in customer satisfaction has really paid off
nicely," says Jack West, past president of the American Society for Quality
(ASQ), a co-sponsor of the ACSI. "Sales are up dramatically and there are
even waiting lists to buy some models. Hyundai also has the best warranties
in the business and as the quality of its products has improved, warranty
claims have decreased and customer satisfaction has increased."
On the other end of the ACSI scale, Dodge had the biggest drop from last
year (about 5 percent) and its score of 77 is ahead of only Jeep-Eagle's mark
of 76.
Fornell says that the much-publicized Ford Motor Co. recall of Firestone
tires has had little impact on Ford's customer satisfaction, although its
Lincoln-Mercury division registered the second-largest drop (3.5 percent, from
a score of 85 to 82) within the auto sector.
While customer satisfaction in the automobile industry has held steady,
all other manufacturing durables measured in the second quarter showed overall
declines.
Personal computers, with an overall industry score of 71, fell 4 percent.
The scores for every PC company in the survey decreased, from Dell's high
score of 78 to Compaq's low of 69. Gateway registered the largest drop
(6 percent, from 78 to 73), followed by the 5-percent decline of IBM (from
75 to 71).
"In view of the fact that prices for PCs have dropped recently by almost
50 percent without much response in demand, it is uncertain just how
price-elastic the PC market is," Fornell says. "There is little doubt,
however, that demand is highly elastic with respect to customer satisfaction,
which, of course, includes price as well."
The PC industry, he adds, used to score higher than the national ACSI, but
despite improvement in product power, speed and range of application over the
years, there is no evidence that customer service has improved.
West says that PC makers should take a lesson from the automobile
manufacturers. "When you leave the door open for the competition to provide
superior customer service, you are vulnerable to losing hard-won market share.
The evidence is clear that superior value -- a combination of price, quality,
and service -- is a winning strategy even in the face of an overall decline in
demand. This is reflected in Dell's score."
Like the personal computers sector, household appliances and consumer
electronics have both declined in the ACSI since last year. Customer
satisfaction is down 3.5 percent (from 85 to 82) in the former and more than
2 percent (from 83 to 81) in the latter.
Despite the drop, household appliances remains one of the highest scoring
industries, led by the Kenmore brand, which scored its all-time high of 86 (up
1 percent from a year ago). General Electric, Maytag and Whirlpool all came
in with scores of 83, with the latter two showing declines of nearly 5 percent
and 4 percent, respectively.
In addition to the manufacturing durables, this quarter's ACSI also looked
at the cable and satellite television industry for the first time -- an
industry with nearly 100 million subscribers. According to West, however,
companies in this sector do not have high customer satisfaction.
"With a sector-wide score of 64, it is lower than many industries that
have had problems with customer satisfaction, including banks, phone
companies, utilities and the postal service," West says.
The scores range from EchoStar Communications' 71 and DirecTV's 70 to
63 for both AOL Time Warner and Charter Communications and an industry-low
62 for AT&T.
"As companies scramble for market share and continue to stretch their
resources by large investments in technology, there seems to be a
corresponding lack of attention paid to customers," Fornell says. "Price is
perceived as high and quality as poor. This is not true for all companies,
however, with customer satisfaction stronger for satellite companies, relative
to cable companies. Nevertheless, customer loyalty is not high and there has
been an increase in customer defections lately, possibly as a result of the
efforts from the multimedia companies."
The ACSI is a national economic indicator of customer evaluations of the
quality of goods and services available to household consumers in the United
States. It is updated each quarter with new measures for different sectors of
the economy replacing data from the prior year.
The index is produced by a partnership of the U-M Business School, the
American Society for Quality and CFI Group, and supported in part by Market
Strategies Inc., a major corporate sponsor.
Company scores can be found on the U-M Business School's Web site:
http://www.bus.umich.edu/acsi and on ASQ's Web site: http://www.asq.org .
The Web site for CFI Group is http://www.cfigroup.com
American Customer Satisfaction Index Over Time -- 2nd Quarter 2001
Previous First
U of M Business School Year Year
National ACSI
Q2/01 =72.1, % %
down 0.1 Change Change
1994 1995 1996 1997 1998 1999 2000 2001
MANUFACTURING -
DURABLES 79.2 79.8 78.8 78.4 77.9 77.3 79.4 78.7 -0.9 %-0.6%
PERSONAL
COMPUTERS 78 75 73 70 71 72 74 71 -4.1% -9.0%
Dell Computer
Corporation NM NM NM 72 74 76 80 78 -2.5% 8.3%
Apple Computer,
Inc. 77 75 76 70 69 72 75 73 -2.7% -5.2%
Gateway, Inc. NM NM NM NM 76 76 78 73 -6.4% -3.9%
Hewlett-
Packard
Company 78 80 77 75 72 74 74 73 -1.4% -6.4%
IBM 78 78 74 71 74 73 75 71 -5.3% -9.0%
Compaq
Computer
Corporation 78 77 74 67 72 71 71 69 -2.8% -11.5%
All Others NM 70 73 72 69 69 68 67 -1.5% -4.3%
HOUSEHOLD
APPLIANCES 85 82 82 80 83 82 85 82 -3.5% -3.5%
Kenmore NM NM NM NM NM 85 85 86 1.2% 1.2%
General
Electric
Company 81 84 81 78 80 80 83 83 0.0% 2.5%
Maytag
Corporation 85 87 83 85 84 84 87 83 -4.6% -2.4%
Whirlpool
Corporation 87 82 85 82 85 84 86 83 -3.5% -4.6%
All Others NM 78 81 79 79 80 78 80 2.6% 2.6%
CONSUMER
ELECTRONICS 83 81 81 80 79 83 83 81 -2.4% -2.4%
AUTOMOBILES 79 80 79 79 79 78 80 80 0.0% 1.3%
GM-Cadillac NM NM 88 84 88 85 86 88 2.3% 0.0%
Bayerische
Motoren Werke
AG (BMW) 82 81 81 80 86 86 84 86 2.4% 4.9%
DaimlerChrysler
AG-Mercedes
Benz 85 86 87 87 86 86 87 86 -1.1% 1.2%
GM-Buick NM NM 84 83 84 86 86 86 0.0% 2.4%
Honda Motor
Company, Ltd. 85 86 83 82 81 83 82 83 1.2% -2.4%
Toyota Motor
Corporation 86 84 84 84 85 83 82 83 1.2% -3.5%
Ford Motor
Company-
Lincoln-
Mercury 79 84 80 81 83 82 85 82 -3.5% 3.8%
Ford Motor
Company-Volvo 82 84 84 84 81 80 82 81 -1.2% -1.2%
GM-Oldsmobile NM NM 82 82 82 81 80 81 1.3% -1.2%
Hyundai Motor
Company 68 68 69 68 72 68 76 81 6.6% 19.1%
Volkswagen AG 74 76 76 79 78 82 83 81 -2.4% 9.5%
GM-Saturn 84 83 81 82 85 80 82 80 -2.4% -4.8%
Nissan Motor
Company, Ltd. 83 82 80 79 77 79 78 80 2.6% -3.6%
All Others NM 81 79 73 74 76 75 79 5.3% -2.5%
GM-GMC Truck NM NM NM 80 78 81 81 79 -2.5% -1.3%
DaimlerChrysler
AG-Chrysler/
Plymouth 81 82 80 80 80 79 80 78 -2.5% -3.7%
Ford Motor
Company-Ford 75 79 78 77 77 77 77 78 1.3% 4.0%
GM-Chevrolet 77 79 79 78 79 76 80 78 -2.5% 1.3%
GM-Pontiac 76 79 78 78 76 78 78 78 0.0% 2.6%
Mazda Motor
Corporation 78 77 75 74 77 76 78 78 0.0% 0.0%
DaimlerChrysler
AG-Dodge 80 77 77 77 78 75 81 77 -4.9% -3.8%
DaimlerChrysler
AG-Jeep/Eagle 78 77 76 74 77 77 75 76 1.3% -2.6%
TRANSPORTATION/
COMM./UTILITIES
CABLE &
SATELLITE TV 64 NA NA
EchoStar
Communications
Corp. 71 NA NA
DIRECTV, Inc. 70 NA NA
Comcast
Corporation 64 NA NA
AOL Time Warner
Inc. 63 NA NA
Charter
Communications,
Inc. 63 NA NA
All Others 62 NA NA
AT&T
Corporation 62 NA NA
