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Customer satisfaction with the goods and services that Americans
buy continues to improve, but at a slower rate, according to a report
released today by the University of Michigan's American Customer
Satisfaction Index (ACSI). The ACSI is up 0.4% to an overall score of
75.2 on the ACSI's 100-point scale, the highest quarterly national
average in the ACSI's 14-year history.
However, although customer satisfaction growth in the aggregate
continues, the rate has slowed and many individual companies measured
this quarter are falling behind. Of the companies measured in the
first quarter of 2007, the ACSI saw more drops than gains in
satisfaction.
"In addition to the large number of decliners, the rate of
improvement in satisfaction has slowed," said Professor Claes Fornell,
director of the University of Michigan's National Quality Research
Center, which compiles and analyzes the ACSI data. "Companies don't
have much pricing power unless there is shrinking supply or higher
customer satisfaction. There are no signs of the former in most
industries, so the latter becomes more critical. Companies may begin
to see narrowing profit margins unless there is further improvement in
customer satisfaction."
ACSI has consistently predicted future consumer spending and is an
indicator of financial performance at both the company and industry
level. The latest ACSI data suggest that depending on the impact of
consumer debt burden, consumer spending growth will be in the range of
3.1% to 3.9% in the second quarter of 2007.
In the first quarter of every year, the ACSI measures customer
satisfaction with the quality of products and services in energy
utilities, airlines, express delivery, U.S. Postal Service, hospitals,
hotels, fast food restaurants, cable & satellite TV and
telecommunications services.
Telecommunications: Cable and Satellite TV Remain Low, Wireless
Continues to Improve
The telecommunications sector as measured by the ACSI is made up
for four industries: fixed-line service, wireless service, cable and
satellite television, and cell phones.
The fixed-line telephone providers maintain a consistent industry
score of 70. Qwest and Verizon see slight increases to 72, but Cox
drops six points to 70 and AT&T (70) and Comcast (67) drop as well.
Embarq improves two points to 66 but remains last in the category.
A second year of improvement in the wireless industry puts it at
an all-time high: up 3% to a score of 68. However, even with this
year's gain, wireless service remains one of the five lowest scoring
industries in ACSI. AT&T Mobility, the new incarnation of Cingular
Wireless, makes a big jump, up 8% to 68, while Verizon Wireless (71)
and T-Mobile (70) show gains of 3% and 1%, respectively. But not all
wireless providers are on the way up. Satisfaction with Sprint Nextel
is falling well behind competition (seven points behind the nearest
competitor), and now stands at 61, a 3% drop from a year ago.
The perennially low-scoring cable and satellite TV industry drops
2% to 62, the lowest level of customer satisfaction among all
industries covered by ACSI. None of the providers has improved on
customer satisfaction this year. Comcast (down 7% to 56), DirecTV
(down 6% to 67) and Time Warner Cable (down 5% to 58) all tumble.
In cell phones, Motorola and Nokia both advance to 72, but Samsung
falls three points to 70.
Airlines and Hotels: The Trouble with Travel
Trouble continues for the travel-related industries. The ACSI
score for airlines falls 3% to 63, its lowest level in 7 years. The
same problems that have pulled airline passenger satisfaction down the
past few years - disenchanted employees, increasing fuel costs,
bankruptcy, and now also record levels of lost, delayed, and damaged
luggage - cause it to drop again.
United Airlines suffers the largest fall in satisfaction. Down 11%
to 56, United is now the lowest scoring airline by a substantial
margin and is in fact, one of the lowest scoring companies measured by
the ACSI. Delta (59) also drops nearly 8%. Southwest Airlines stands
apart from the rest again this year. Up 3% to a score of 76, Southwest
leads the airline business in passenger satisfaction and
profitability.
The hotel industry also falls, down 5% to 71, its lowest score
since 2002. Most of this, however, is due to a decline among smaller
hotel chains. Marriott is the industry leader, up 5% to 79 - its best
score since 1994. Hyatt improved 2.7% to a score of 77, while Hilton
declined 3.6% to a score of 76.
Restaurants: Sit Down Restaurants Trump the Drive-Thru
The fast food industry is unchanged this year at 77. Only one
restaurant, Pizza Hut, registers a significant change - its customer
satisfaction score drops by 5% to 72. Starbucks and Wendy's lead the
category with a score of 78 and McDonald's brings up the rear with a
score of 64.
New to the ACSI this year is the category of full-service
restaurant chains, and not surprisingly, they have a higher average
satisfaction (81) than do fast-food restaurants (77). Olive Garden
leads the industry with a score of 80, and Outback Steakhouse (79) and
Red Lobster (78) trail just slightly. Chili's is at the bottom of the
industry with a score of 75.
Software: Microsoft falls
A year after its inclusion in ACSI, the computer software business
overall is statistically unchanged, down 1% to 73, but Microsoft has
dropped by 4% to 70. A year ago, the world's leading software producer
was even with the rest of the industry; now it is behind in customer
satisfaction.
Energy Utilities: Weather Woes Freeze Some
Overall customer satisfaction with energy utilities improves
slightly to 73, up 1%. Ameren suffers a huge fall in customer
satisfaction, down 23% to 57, one the largest drops in ACSI history.
Last year's record-breaking storm across Missouri and Illinois - one
of which set a record for the number of power outages could be the
source of the most recent of Ameren's troubles.
Overall, however, most utilities have higher levels of customer
satisfaction this year. Southern Company leads the electric utility
industry with a score of 82 up 2.5% from last year. A relatively quiet
hurricane season helped Florida Power & Light (FP&L) improve by 7.4%
to a score of 73.
For a complete list of measured companies and scores, please visit
www.theacsi.org.
About the ACSI
The American Customer Satisfaction Index is a national economic
indicator of customer evaluations of the quality of products 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 overall ACSI score for
a given quarter factors in scores from about 200 companies in 43
industries and from government agencies over the previous four
quarters.
The index is produced by the University of Michigan's Ross School
of Business in partnership with the American Society for Quality (ASQ)
and CFI Group, and is supported in part by ForeSee Results, corporate
sponsor for the e-commerce and e-business measurements.
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