Index: Customer Satisfaction is Up, Despite Low Consumer Confidence

MILWAUKEE - While consumer confidence has been low for the past several months despite a recent upturn, customer satisfaction and consumer spending continue to rise, according to the latest results of the American Customer Satisfaction Index (ACSI).

The ACSI, a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States, was recently updated with new data on non-durable products, causing it to rise slightly from a second-quarter score of 73 (out of a possible 100) to a mark of 73.1 in the third quarter. Compared with a year ago, the ACSI is up 1.5 percent (from a score of 72).

"While troublesome in its own right, declining confidence has not translated into materially less spending or lower satisfaction with the products and services bought," said Claes Fornell, professor of business and director of the University of Michigan Business School's National Quality Research Center, which compiles and analyzes the ACSI data. "Clearly, customer satisfaction is different from consumer confidence. A person can feel less confident about the state of the economy and yet be more satisfied with his or her automobile, sneakers or tax accountant."

Fornell notes that strong consumer spending accounted for much of Gross Domestic Product (GDP) growth in the third quarter. He adds that because customer satisfaction has a strong effect on spending, the ACSI and GDP usually move in the same direction.

In the current ACSI, the individual sector score for manufacturing non-durables reflects a similar percentage increase found in the overall ACSI score. But the current score of 81.4 for this sector -- comprised of eight industries (food processing, soft drinks, beer, tobacco, apparel, athletic shoes, personal care products and pet foods) -- is 11 percent higher than the overall ACSI score for all industries measured year-round.

Fornell says that most of the ACSI gain for the sector is driven by price reductions or the absence of price increases. "Usually, higher customer satisfaction provides more room for suppliers to raise price, but not if the improvement in customer satisfaction is, in itself, a result of lower prices," Fornell said. "The lack of pricing power continues to be an issue for the economy."

Among food processing companies, which scored a collective 81 in the ACSI, Sara Lee Corp. showed the biggest improvement as its ACSI score increased from 81 last year to 84 this year. Once again, H.J. Heinz Co. took the top spot in the industry with a score of 88.

Hershey Foods Corp. edged up a point to 87, which tied it with the Quaker Oats Co. for second place in the industry. Mars Inc., Nestle, General Mills Inc. and ConAgra Foods Inc. all posted scores of 83.

ACSI marks are up for every company in the soft drinks and beer categories, which scored 85 and 81, respectively. While Cadbury-Schweppes and PepsiCo Inc. scored highest at 86, the Coca-Cola Co. showed the greatest improvement with a score of 85, up from last year's company-low 81. Anheuser-Busch Companies Inc. led beer manufacturers with a mark of 82, ahead of the 79s posted by Adolph Coors Co. and Miller Brewing Co.

The tobacco industry posted the lowest ACSI score among the non-durables industries, holding steady at 76.

The index is produced by a partnership of the U-M Business School, American Society for Quality and CFI Group, and supported in part by Market Strategies Inc., a major corporate sponsor.
This ad will auto-close in 10 seconds