The American consumer is proving to be quite the determined shopper — continuing to spend despite widely publicized news reports of job cutbacks, falling corporate profits, tumbling stock portfolios and — most amazingly — a declining level of customer satisfaction, according to this quarter’s American Consumer Satisfaction Index.
“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,” professor Claes Fornell of the University of Michigan Business School said Monday, when the Index was released. “Once the tax rebate is factored in, it may well be that growth in spending remains steady for the third quarter.”
The ACSI is produced by a partnership of the University of Michigan Business School, the American Society for Quality and the CFI Group and is supported in part by Market Strategies, a corporate sponsor.
Declining Customer Satisfaction
Fornell said he is not surprised that consumer spending is holding steady despite eroding confidence in the economy. Ever since the ACSI was established six years ago, he said, it has been apparent that there is a disconnect between consumer spending and changes in personal wealth or debt.
“Instead, the consumer’s decision to spend appears to be driven more by personal gratification, irrespective of changes in discretionary income or personal debt,” he said.
More surprisingly, at least to those outside the industry, U.S. consumers continue to purchase goods and services even though they are becoming less and less pleased with their customer service experiences.
ACSI documented an overall decline in customer satisfaction this past quarter, compared with its second-quarter score from 2000, dropping 0.1 percent to 72.1 percent (out of a possible 100 percent).
This measurement is a significant one for retailers and other companies interested in customer service applications and strategies: The ACSI is one of the established indicators in this field, evaluating customers’ satisfaction levels with the quality of certain goods and services. It is updated each quarter with new measures for different sectors of the economy, replacing data from the previous year.
Auto Sector Holds Steady
Among the sectors studied this quarter, only the automobile industry retained its customer service satisfaction level — all others declined, according to the Index.
In this category, Cadillac has surpassed Mercedes Benz with a score of 88 percent. Interestingly, Buick, Mercedes Benz and BMW followed closely, with scores of 86 percent. “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 said. “It is the fit between what the product offers and what the customer desires that is the key.”
One automobile manufacturer that made big strides in its rating was Korean firm Hyundai Motor Co., whose score jumped from 76 percent last year to 81 percent this year. “Hyundai’s improvement in customer satisfaction has really paid off nicely,” Jack West, former president of the American Society for Quality, said.
Other industries saw a fall-off in consumer satisfaction. The personal computer industry’s score, for example, fell by 4 percent to 71 percent. Gateway registered the largest drop, falling 6 percent to 73 percent, followed by IBM’s drop of 5 percent to 71 percent.
Household appliances and consumer electronics also declined in the ACSI since last year, down by 3.5 percent and 2 percent, respectively.
Lackluster Wireless Performance
For the first time, ASCI looked at the cable and satellite television industry — and found that this sector does not have a high level of customer satisfaction, either.
The industry itself rated 64 percent, with individual companies scoring 71 percent (EchoStar Communications), 70 percent (DirecTV), 63 percent (both AOL Time Warner and Charter Communications) and an industry-low of 62 percent (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 said. “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.”