Satisfaction Is Up, Customers Party Like It's ... 1994?

The conventional wisdom is that customers are more demanding and harder to satisfy than ever. I've said so in my keynote speeches, so it must be true, right?

Maybe not.

The American Customer Satisfaction Index (ACSI) has been collecting data since 1994 across a wide range of industries. The "index" is a complicated model that attempts to relate customers' perceived quality, expectations and value to an composite measure of overall customer satisfaction (ACSI), which is in turn linked to loyalty (primarily repurchase likelihood). For more details on the methodology, see the ACSI web site.

As you can see from this chart, ACSI started at around 75 in 1994, then dropped like a stone for a couple of years. But since then, the trend has been mainly up. Consumers rejoice! We're back where we started, 13 years later.

ACSI 1994 to Q2 2007

What's significant about the ACSI is that it claims to be "predictive of both consumer spending and stock market growth." And, for the individual firm, ACSI data can predict "revenue and earnings growth."

Now, last time I checked, statistics don't prove a cause and effect relationship. When I spoke with Professor Claes Fornell, head of the ACSI at the University of Michigan, he said that you can see the future impact of ACSI changes by "lagging" the indicator. Here's an example that relates ACSI to earnings growth in SAP 500 companies.

Getting high ACSI scores appears to be a Good Thing, at least for big companies in the USA. I asked Fornell if he could draw any general conclusions about what distinguishes the top ACSI performers. His comments:

• Buyer/seller fit: "Find a good dancing partner"
• Quality of products and services: "Dissatisfied consumers can switch"
• Price: "The pain of the purchase" (less impact than the first two factors)

In recent results, Fornell says that ACSI growth has leveled off, which doesn't bode well for consumer spending.

And Detroit automakers are narrowing the gap with Asia automakers. Believe it or not, GM's Buick is No. 2 with an ACSI of 86, with Toyota's Lexus still leading the pack at 87.

In PCs, Dell is still in hell, while Apple has slipped a bit.

In portals and search engines, Yahoo! is making a comeback while Google slips back. Maybe not such a good time to buy GOOG at $500+ per share.

You can find out more about the results in the ACSI press release.