American Customer Satisfaction Index - Explained

What is the American Customer Satisfaction Index?

Updated at June 27th, 2021

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What is the American Customer Satisfaction Index (ACSI)?What does the American Customer Satisfaction Index (ACSI) Measure?The American Customer Satisfaction Index Findings American Customer Satisfaction Index vs. Investing Academics research on American Customer Satisfaction Index (ACSI)

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.

Academics research on American Customer Satisfaction Index (ACSI)

The American customer satisfaction index: nature, purpose, and findings, Fornell, C., Johnson, M. D., Anderson, E. W., Cha, J., & Bryant, B. E. (1996). The American customer satisfaction index: nature, purpose, and findings.Journal of marketing,60(4), 7-18. The American Customer Satisfaction Index (ACSI) is a new type of market-based performance measure for firms, industries, economic sectors, and national economies. The authors discuss the nature and purpose of ACSI and explain the theory underlying the ACSI model, the nation-wide survey methodology used to collect the data, and the econometric approach employed to estimate the indices. They also illustrate the use of ACSI in conducting benchmarking studies, both cross-sectionally and over time. The authors find customer satisfaction to be greater for goods than for services and, in turn, greater for services than for government agencies, as well as find cause for concern in the observation that customer satisfaction in the United States is declining, primarily because of decreasing satisfaction with services. The authors estimate the model for the seven major economic sectors for which data are collected. Highlights of the findings include that (1) customization is more important than reliability in determining customer satisfaction, (2) customer expectations play a greater role in sectors in which variance in production and consumption is relatively low, and (3) customer satisfaction is more quality-driven than value- or price-driven. The authors conclude with a discussion of the implications of ACSI for public policymakers, managers, consumers, and marketing in general.
Foundations of the American customer satisfaction index, Anderson, E. W., & Fornell, C. (2000). Foundations of the American customer satisfaction index.Total quality management,11(7), 869-882. How do we know if an economy is performing well? How do we know if a company is performing well? The fact is that we have serious difficulty answering these questions today. The economy-for nations and for corporations-has changed much more than our theories and measurements. The development of national customer satisfaction indices (NCSIs) represents an important step towards addressing the gap between what we know and what we need to know. This paper describes the methodology underlying one such measure, the American Customer Satisfaction Index (ACSI). ACSI represents a uniform system for evaluating, comparing, and - ultimately - enhancing customer satisfaction across firms, industries and nations. Other nations are now adopting the same approach. It is argued that a global network of NCSIs based on a common methodology is not simply desirable, but imperative.
Organizational service climate drivers of theAmerican Customer Satisfaction Index(ACSI) and financial and market performance, Schneider, B., Macey, W. H., Lee, W. C., & Young, S. A. (2009). Organizational service climate drivers of the American Customer Satisfaction Index (ACSI) and financial and market performance.Journal of Service Research,12(1), 3-14. The climate for service is conceptualized and studied as a correlate of customer satisfaction and corporate financial and market performance, with customer satisfaction as a mediator of the climate-performance relationship. Brief reviews of relevant literatures yield three hypotheses: (1) customer satisfaction will be a significant correlate of organizational financial and market performance, (2) organizational service climate will be a significant correlate of organizational customer satisfaction, and (3) customer satisfaction will mediate the relationship between service climate and financial and market performance. The hypothesized relationships are supported in a 3-year longitudinal study ofFortune200 service companies (not unitswithincompanies) from diverse service sectors with path analyses supporting full mediation for customer satisfaction in the link between service climate and corporate financial and market performance. Management implications for corporate competitive advantage through a focus on service climate are discussed.
Does customer satisfaction increase firm performance? An application ofAmerican Customer Satisfaction Index(ACSI), Sun, K. A., & Kim, D. Y. (2013). Does customer satisfaction increase firm performance? An application of American Customer Satisfaction Index (ACSI).International Journal of Hospitality Management,35, 68-77. As a prominent factor in firms profitability and value, customer satisfaction has been given much attention in the measurement of a firm's financial performance. In the hospitality and tourism industry, however, the effect of customer satisfaction on financial performance has been relatively neglected because of the unique characteristics of the industry and presumably increasing cost for uncertain outcomes. Based upon this realization, this study empirically examines the relationship between the customer satisfaction index (CSI) and the companies financial performance in the hospitality and tourism industry (i.e., hotels, restaurants, and airlines). Findings reveal that the impact of customer satisfaction is reflected in the profit margin (PM), return on assets (ROA), return on equity (ROE), proxies of a firm's profitability, and in the market value added (MVA), a proxy of firm value. The results indicate that customer satisfaction positively affect a firm's profitability and value in the hospitality and tourism industry. Implications and suggestions for future research are discussed.
Developing an index for online customer satisfaction: Adaptation of American Customer Satisfaction Index, Hsu, S. H. (2008). Developing an index for online customer satisfaction: Adaptation of American Customer Satisfaction Index.Expert systems with Applications,34(4), 3033-3042. This study proposes an index for online customer satisfaction, which is adapted from an American Customer Satisfaction Index (ACSI). Since online shopping is an experience different in many ways from traditional shopping, a new index for measuring electronic-customer satisfaction index (e-CSI) is required. Thus, this study is the first step towards integrating satisfaction literature to propose an index for online contexts. The e-CSI model was tested in the context of a one month study of Taiwans largest online retailer (PChome Online) where it was found to significantly predict customer loyalty and overall customer satisfaction. In this study, we found that the satisfaction score of PChome Online is similar to the average for the online retail industry in ACSI. This model also allows the online retailer to understand the specific factors that significantly influence overall customer satisfaction by reading the causal relationship in the e-CSI model and the strategic management map. The partial least squares (PLS) method was used to test the theoretical model and to derive the e-CSI score.

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