Link My iMpact  
Link Strategic Positioning Tool Kit  
To Executive Education
To Kresge Library
Claes Fornell
  Claes Fornell

ACSI Slip Suggests Tepid Consumer Spending Growth

8/20/2008 --

E-business reaches new high, American automakers fall further behind foreign competition

ANN ARBOR, Mich.—Customer satisfaction continues on a bumpy path without momentum or trend in the second quarter, according to the latest report from the Ross School's American Customer Satisfaction Index.

After a small uptick last quarter, ACSI slipped 0.1 percent to 75.1 on a 100-point scale. The ACSI second-quarter report predicts that consumer spending will remain weak with growth of no more than 2.3 percent in the third quarter.

"The American consumer has long been the single biggest force propping up the U.S. and the global economy," said Claes Fornell, head of the ACSI at the University of Michigan's National Quality Research Center and a professor of marketing at the Ross School of Business. "But declining customer satisfaction, combined with weaker demand for U.S. exports, may make it difficult for American households to shoulder the burden of being the locomotive for world economic growth."

Every second quarter, ACSI measures customer satisfaction with the manufacturing durable-goods sector and e-business category of Web sites, including automobiles, personal computers, major appliances, Internet portals and search engines, and news and information Web sites.

Automobiles: Detroit Loses Ground

Hit with record losses, American auto manufacturers are also suffering from slumping customer satisfaction. No domestic automaker is represented among the top four nameplates, but the bottom three in the industry are all American brands. Yet customer satisfaction for the industry as a whole remains at an all-time high (unchanged at 82), and one American carmaker, GM's Saturn, shows considerable improvement, climbing 5 percent to tie its all-time high from 1998.

"The problem for domestic companies is that they now lag further behind their foreign counterparts," Fornell said. "This is not going to be helpful as the Big Three will lose more pricing power and be forced to continue dependence on rebates and discounting in a market where consumer preferences keep shifting away from domestic cars."

Lexus and BMW lead all auto manufacturers at 87. Toyota and Honda each improve 2 percent to 86. Mercedes Benz, once No. 1 in customer satisfaction, continues to fall behind the leading carmakers. In the past eight years, Mercedes has seen a slow but steady erosion in customer satisfaction---it is now no better than the industry average. Chevrolet, GM's best-selling brand, takes the biggest fall, down 4 percent to 79. Chrysler's Dodge (-3 percent to 78) and Jeep (+1 percent to 76) anchor the bottom of the industry.

Personal Computers: The Apple of Consumers' Eyes

The personal computer industry suffers a second consecutive drop in satisfaction, falling 1 percent to 74 and losing all gains made since 2005. Apple defies the industry by moving in the opposite direction and posting its largest gain ever to 85, a new all-time high for the industry. The 8 percent leap puts 10 points between Apple and its nearest rival, one of the largest gaps between first and second in any industry measured by ACSI.

As Apple's satisfaction improves, so too have its sales, market share, net income and stock price, Fornell says.

"It's hard not to be impressed with Apple," he said. "This is product extension at its best, where the new products, iPod and iPhone, are helping bring new customers to existing computer products. The fact that Apple is not dependent on the Windows Vista operating system hasn't hurt either."

The industry aggregate decline is largely for Windows-based machines—Hewlett-Packard (73), Gateway (72) and Compaq (70) each are down 4 percent. The exception is Dell---up 1 percent to 75.

Major Appliances: Whirlwind at Whirlpool

Customer satisfaction with major appliances slides 3 percent to 80 this quarter. All three major companies decline, with Whirlpool dropping the most (-5 percent to 80). General Electric and Electrolux each drop 1 percent to 80. Whirlpool, the world's biggest appliance manufacturer, faces increased competition at a time when domestic demand is shrinking and the cost of shipping and raw materials is rising. The company's customer satisfaction rose after its acquisition of rival Maytag in early 2006, but the gains in satisfaction were short-lived.

E-Business: Giddy for Google

Customer satisfaction with the e-business category of Web sites surges 6 percent to an all-time high of 79.3, largely on the remarkable improvement of Google. After slipping behind Yahoo for the first time last year, Google surged an unparalleled 10 percent to leave all rivals in its wake. Google's score of 86 sets a new standard for e-businesses and creates a formidable nine-point gap between its nearest competitor, Yahoo, which fell 3 percent to 77.

For a complete list of measured companies and scores, visit

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 44 industries and from government agencies over the previous four quarters.

The index is produced by U-M's Ross School of Business in partnership with the American Society for Quality and CFI Group.

For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847,