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 American Customer Satisfaction Index, a private company based 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. Potential respondents are screened prior to interviewing to guarantee inclusion of customers of a wide range of business-to-consumer products and services, including durable goods, services, non-durable goods, local government services, federal government services, and so forth. Results from data collection and analyses are released to the public throughout each calendar year. ACSI data has been used by academic researchers,^[1] corporations,^[2][3] government agencies,^[4] market analysts and investors,^[5] industry trade associations, and consumers.

History

The ACSI was started in 1994 by researchers at the National Quality Research Center, a research unit within the University of Michigan, in cooperation with partners 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 for the Swedish economy called the Swedish Customer Satisfaction Barometer (SCSB). Both the Swedish version and the ACSI were developed by Claes Fornell, now Donald C. Cook Professor of Business Administration at the University of Michigan, and chairman of CFI Group. In 2009, the ACSI left the University of Michigan to form a private company, although Fornell remains a professor at the university and the principal researcher behind the ACSI.^[6]

Methodology

The ACSI uses two interrelated methods to measure 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. The random-digit dial method of sampling is used to identify potential respondents, guaranteeing an accurate representation of the U.S. consumer population. In addition to these methods, the ACSI also collects a portion of its data using opt-in online interviewing and sampling from a representative Internet panel.

ACSI researchers analyze this data once collected with a structural equation model, which provides scores for the 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 receives 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 a company can (hypothetically) receive any score ranging from 0 to 100. In practice, over the history of the ACSI 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 allow maximum comparability between companies and government agencies.

Using these methods, each year ACSI produces customer satisfaction scores for more than 225 companies, 45 industries, 10 economic sectors and the U.S. national economy overall. Measurement is done on a rolling basis. During each fiscal quarter, data is collected for particular sectors and industries and used to replace data collected 12 months earlier. This data is then weighted by company market share up to industry scores, by industry revenue to create sector scores, and by sector share of GDP to create the National ACSI score. The National ACSI score represents, albeit at a 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 macroeconomic performance. Once completed, all of these results are released to the public on a monthly basis through the ACSI website and a variety of media outlets.

ACSI score calculation

A company's ACSI score is derived from three manifest variables (i.e. survey questions) included within the ACSI questionnaire, each rated on a 1-10 scale by the respondents interviewed for that company, government agency, or other organization:^[7]

The 0-100 ACSI score is calculated with the following formula, using the arithmetic mean for each question from the N total responses for that company (X1, X2, X3), along with the standardized and normalized partial least squares factor loading (or weight) for each question as calculated within the ACSI structural equation model (W1, W2, W3):

  ((X1-1)*W1 + (X2-1)*W2 + (X3-1)*W3)/9*100

The actual weights used to calculate an ACSI score tend to vary considerably across companies and industries, and the weights are proprietary to ACSI and its clients.

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 a longer-running focus on quality control procedures (such as TQM and Six Sigma), and perhaps more importantly are also 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 performed much better.

Macroeconomic and microeconomic findings

One interesting set of findings discovered by academic researchers involve predictions of macroeconomic growth as functions of changes in aggregate customer satisfaction. These researchers have argued that there is a robust relationship between aggregate ACSI data (i.e. the National ACSI score discussed above) and some important macroeconomic indicators. For instance, Fornell has argued^[8] that 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.

Furthermore, 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,^[9] a finding that has since been supported by other researchers.^[10]

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, Indonesia, Barbados, Turkey,^[11] Singapore,^[6] Mexico and Colombia.^[12] 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 permits comprehensive cross-national satisfaction benchmarking,^[13] 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: ForeSee (formerly called ForeSee Results) and CFI Group, Inc.

See also

• Foresee Results

References

External links

• The American Customer Satisfaction Index
• National Quality Research Center (self-description, includes the ACSI)
• National Business Research Institute