American Customer Satisfaction Index - Explained

What is the American Customer Satisfaction Index?

Updated at March 28th, 2023

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What is the American Customer Satisfaction Index (ACSI)?

The American Customer Satisfaction Index is an economic barometer that measures the United States consumer satisfaction as far as products and services are concerned. The ACSI produces 4 levels of scores or indexes. The levels include 44 industry score, 10 economic sector score, national customer satisfaction score, and scores for over 300 companies and federal government agencies. Generally, ACSI is an essential indicator that individual firms and the macro economy uses to measure economic performance.

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What does the American Customer Satisfaction Index (ACSI) Measure?

The ACSI was founded in 1994 by Dr. Claes Fornell, a researcher at the University of Michigan in the United States. The foundation of ACSI was along with the Wisconsin, the American Society for Quality in Milwaukee, and CFI Ground in Ann Arbor Michigan. The ACSIs headquarters are based in San Francisco, California. The ACSI was purposely created to help calculate and analyze the quality of the products and services by putting customers into consideration. Note that before the creation of ACSI, there was no metric tool that could measure and analyze customer satisfaction. Generally, ACSI is a model derived from a Swedish Customer Satisfaction Barometer developed and implemented in 1984. Dr. Claes Fornell, who is the founder of ACSI, decided to create it so that it can serve both the American and Swedish customers. Initially, the ACSI updates were done on a quarterly basis but as from 2010, the updates became more frequent for the public. The change enabled ACSIs key contributors to channel their efforts towards a number of sectors throughout the year. The ACSI is a parameter that gauges satisfaction levels of both domestic and foreign goods that has substantial market share in the United States. It surveys about 180,000 consumers every year so that it can understand their satisfaction levels on the products and services they frequently consumer. The customer survey entails a multi-equation econometric model that is developed at the University of Michigan. The survey process involves screening of respondent. The screening ensures the inclusion of actual consumers of a wide range of business to customer products and services. This includes services, durable goods, non-durable goods, local government services, federal government services, among others. Note that the release of customer satisfaction score is done on a monthly basis throughout the calendar year. The first publication of the ACSI index was in 1994. The update of the index is done quarterly on a rolling basis. The newly collected data from various economic sectors is usually used to replace data from the previous year. Data from ACSI used by different entities including and not limited to the following:

Researcher who analyzes consumer behaviour trends
Policy creators who utilizes the data to understand the health and the economys direction
Government agencies
Market analysts/Statisticians
Investors
Industry trade associations
Corporations
Consumers

The indicators that ACSI provides provides customers vigor satisfaction. It measures the competition among different customer-oriented organizations. It also forecasts the future avenues to ensure that it improves customer satisfaction.

The American Customer Satisfaction Index Findings

ACSI has been conducting research and collecting consumer satisfaction information for the past two decades. The experience from research enabled it to make a list of findings:

When there is a change in customer satisfaction, it affects the households willingness to purchase products and services. According to the findings, price adjustment is a leading indicator when it comes to consumer spending growth.
There is a correlation between high customer satisfaction and better company financial performance.
Changes in customer satisfaction correlate to the growth of (Gross Domestic Product GDP) when customer expenditure accounts for 70 percent of GDP
According to ACSI, there is a big difference between manufactured goods and services. The manufactured goods such as food items, has a higher ACSI scores compared to those for services such as banks, cable television, airlines, etc.
ACSIs measurement reveals that the quality of product and services is more important than price when it comes to customer satisfaction. According to ACSI, price promotions do work but only for a short period of time. In other words, price cuts are not sustainable when it comes to long term. So, firms that focus on quality improvement happen to do well in the long run.
There is a negative effect on customer satisfaction especially with services in case of merger or acquisition.

American Customer Satisfaction Index vs. Investing

Reports from ACSI survey to some extent possess the power to move markets. For instance, companies whose stocks have a high ACSI scores happen to perform better than companies with low scores. ACSI national score is generally seen to predict trends in both the stock market and consumer spending growth. According to the 2006 paper in the Journal of Marketing, it was revealed that a portfolio of stocks that were selected on the basis of customer satisfaction levels did outperform the market. ACSIs customer services satisfaction data is also used by exchange-traded fund developers.

Related Topics

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