American_Customer_Satisfaction_Index

American Customer Satisfaction Index

The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the National Quality Research Center (NQRC) at the University of Michigan in Ann Arbor, Michigan.

The ACSI interviews about 80,000 Americans annually and asks about their satisfaction with the goods and services they have consumed. Respondents are screened to cover a wide range of business-to-consumer products and services, including durable goods, services, non-durable goods, local government services, Federal government agencies, and so forth. Results from data collection and analysis are released to the public each quarter. ACSI data is used by academic researchers, corporations and government agencies, market analysts and investors, industry trade associations, and consumers.

History

The ACSI was started in 1994 by NQRC researchers who worked with counterparts at the American Society for Quality in Milwaukee, Wisconsin, and CFI Group in Ann Arbor. The ACSI was based on a model originally implemented in 1989 in Sweden called the Swedish Customer Satisfaction Barometer (SCSB). Both the Swedish version and the ACSI were developed by Claes Fornell, now the Donald C. Cook Professor of Business Administration at the University of Michigan, and chairman of CFI Group. Fornell remains the director of the NQRC, and the principal researcher behind the ACSI.

Methodology

The ACSI uses two interrelated and complementary methods to measure and analyze customer satisfaction: customer interviewing and econometric modeling. Beginning with the interviewing, professional telephone interviewers working for a market research firm contracted by the ACSI and employing Computer-Assisted Telephone Interviewing (CATI) technology collect data (in the form of survey responses) from randomly selected and screened customers of companies and organizations. The random-digit dial method of sampling is used to identify potential respondents, guaranteeing an accurate representation of the U.S. consumer population.

ACSI researchers put the data into a causal/structural equation model, which provides scores for measured latent variable components (such as customer expectations, overall quality, perceived value, etc.), and the relationships (or "impacts") between these measured components. Most importantly, each measured company or organization is given a customer satisfaction index score (an "ACSI score") which reflects a weighted average of three satisfaction proxy questions. Each index score is on a 0-100 scale, and therefore a company can (hypothetically) receive any score ranging from 0 to 100. In practice, scores have tended to range from the low 50's to the high 80's. While slight differences between questionnaires administered to respondents across industries and sectors do exist, the three satisfaction questions used to create the ACSI score for each company are identical. Coupled with the standardized 0-100 index scale, these methods permit comparisons between companies and organizations.

Measurements

ACSI measures customer satisfaction annually for more than 200 companies in 43 industries and 10 economic sectors. Measurement is done on a rolling basis. During each quarter, data is collected for particular sectors and industries and used to replace data collected 12 months earlier. This data is then weighted by industry and sector to create a national ACSI score. The national ACSI score represents, albeit at some level of abstraction, the satisfaction of the "average American consumer." This broad perspective allows ACSI researchers to examine the impact of improving or declining satisfaction on future macroeconomic performance.

During each quarter, ASCI publishes new results for about one-fourth of the measured companies, industries and sectors, as well as the rolling-average National ACSI score. These results are released to the public through the ACSI website and a variety of media outlets about 45 days after the end of each fiscal quarter (i.e., in late May for Q1, August for Q2, November for Q3, and February for Q4).

The ASCI score is derived from three questions, each rated on a different 1-10 scale:

Manifest Variable 1 10
Overall satisfaction Very dissatisfied Very satisfied
Expectancy disconfirmation Falls short of your expectations Exceeds your expectations
Performance vs. the ideal Not very close to the ideal Very close to the ideal

An organization can incorporate these three questions into its own customer-satisfaction surveys for approximate comparisons to industry and corporate benchmarks Once the results have been collected, the ASCI score is calculated as follows, using the arithmetic mean for each question:

  ((Satisfaction-1)*.3885 + (Expectancy-1)*.3190 + (Performance-1)*.2925)/9*100

The actual weights used vary by industry and are proprietary. The weights used in the example are those of the state of Ohio.

Sector, industry and company-level findings

Thirteen years of ACSI data have shown that certain sectors, industries and companies perform well consistently, while others are almost always below average (with the national ACSI score reflecting the average). At the sector level, manufacturing industries — including both durable and non-durable goods manufacturers — have tended to perform well. The comparatively higher satisfaction performance by these sectors is understandable; industries within these sectors tend to be well established, "old economy" industries that have exhibited a longer-running focus on quality control procedures (such as TQM and Six Sigma), and (perhaps more importantly) industries that rely less on human intervention in the production and consumption processes. On the other hand, the "new economy" service sector industries, which rely more on customer service and human intervention in the consumption process, have tended to perform below average.

Some industries that have performed well over the years in ACSI include: e-commerce, personal care products, soft drinks, beer, consumer electronics, automobiles and household appliances. Some industries that have tended to perform poorly include: cable television providers, airlines and telecommunications industries. Among government agencies, the Internal Revenue Service has tended to perform below average, while other agencies - such as the Social Security Administration - have done better than expected.

Macroeconomic findings

One interesting set of findings discovered by ACSI researchers involve predictions of macroeconomic growth as functions of changes in aggregate customer satisfaction. ACSI researchers have argued that there is a robust relationship between this aggregate ACSI data (i.e. the national ACSI score discussed above) and some important macroeconomic indicators. For instance, Fornell has argued, the National ACSI score has proven to be a strong predictor of Gross Domestic Product (GDP) growth, and an even stronger predictor of Personal Consumption Expenditure (PCE) growth. This latter result is especially surprising, given that many economists continue to identify PCE growth as a "random walk" with no significant or consistent predictors.

Microeconomic findings

Finally, Fornell and his collaborators have shown that ACSI data predicts stock market performance, both for market indices and for individually traded companies. In a 2006 paper published in the Journal of Marketing, Fornell and his coauthors argued that a hypothetical, back-tested portfolio of stocks chosen based on their performance in ACSI outperformed the New York Stock Exchange (the Dow), the NASDAQ and the S&P 500, a finding that has since been supported by other researchers.

International adoption of the ACSI model

Research groups, quality associations and universities in several countries have adopted the ACSI model to create customer satisfaction indices for their own national economies. Recent additions to the list of countries that have adopted the ACSI model include Great Britain, China, Turkey, Singapore, Mexico and Colombia. Groups in several additional countries are in various stages of project implementation as well. The development of an international system of customer satisfaction measurement founded on a common methodology could soon permit comprehensive cross-national satisfaction benchmarking, something that will grow more significant as economic globalization advances.

Private and Public Sector Adaptation of ACSI

Only two companies have been licensed to apply the methodology of the ACSI for both the private and public sector: CFI Group, Inc.applies the methodology of the ACSI offline, and Foresee Results applies the ACSI to websites and other online initiatives.

ACSI literature

The following is a partial list of academic research by Fornell and his collaborators that has used ACSI data and drawn from ACSI findings. (For a more complete list of academic research, visit the ACSI website's Research Bibliography Page).

  • Fornell, Claes, (2007), The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. N.Y.: Palgrave Macmillan.
  • Fornell, Claes, Sunil Mithas, Forrest V. Morgeson III & M.S. Krishnan, (2006), "Customer Satisfaction and Stock Prices:High Returns, Low Risk," Journal of Marketing, Vol. 70, January, 3-14.
  • Fornell, Claes, David Van Amburg, Forrest Morgeson & Barbara Bryant, (2005). The American Customer Satisfaction Index at 10 Years Ann Arbor: The Stephen M. Ross School of Business.
  • Anderson, Eugene W., Claes Fornell & Sanal K. Mazvancheryl, (2004), "Customer Satisfaction and Shareholder Value," Journal of Marketing, Vol. 68, October, 172-185.
  • Fornell, Claes, (2001), "The Science of Satisfaction," Harvard Business Review, Vol. 79, 3 March, 120-121.
  • Fornell, Claes, Michael D. Johnson, Eugene W. Anderson, Jaesung Cha & Barbara Everitt Bryant, (1996), "The American Customer Satisfaction Index: Nature, Purpose and Findings," Journal of Marketing, Vol. 60, October, 7-18.
  • Anderson, Eugene W., Claes Fornell & Donald R. Lehmann, (1994), "Customer Satisfaction, Market Share and Profitability: Findings from Sweden," Journal of Marketing, Vol. 58, July, 53-66.

References

External links

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