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Claes Fornell
  Claes Fornell
 

Customer Satisfaction Rises Again

5/20/2009 --

Strong showings for Southwest, DirecTV and Domino's; gains for Comcast and McDonald's.

ANN ARBOR, Mich. — The American Customer Satisfaction Index, a national economic indicator of customer evaluations of the quality of products and services, registered its second straight quarterly improvement after a period of decline preceding the recession.

For the first quarter of 2009 the ACSI jumped 0.4 percent to 76 on ACSI's 100-point scale, according to the report released this week by the Ross School of Business.

When ACSI improved in the fourth quarter of 2008, it stood nearly alone among economic indicators showing positive news in the midst of the recession. Now it is joined by several other indicators.

"Stock prices have been rising, real estate is showing signs of life, consumer confidence is up, corporate earnings are mixed but generally better than expectations and inventories are becoming more in line with demand and, above all, consumer spending rebounded in the first quarter," said ACSI Director Claes Fornell, professor of marketing at Ross. "It is too early to predict whether the recession has bottomed out, but since ACSI is usually a precursor to increasing consumer demand, it could very well be signaling a revival for a very depressed U.S. economy."

The ACSI report, updated each quarter with new measures for different sectors of the economy, factors in scores from about 200 companies in 44 industries and from government agencies over the previous four quarters. During the first quarter of each year, the ACSI measures customer satisfaction with the airline industry, hotels, restaurants, energy utilities, and telephone, cable, and satellite companies, among others.

What? Airline Passenger Satisfaction Improves?

Passenger satisfaction with airlines improved for the first time since 2003, up 3 percent to an ACSI score of 64, ending a downward slide that, with few interruptions, began in 1994. High fuel price volatility, indifferent service, labor problems, congested airports, and financial challenges have plagued the industry for a long time and even with the current improvement, airlines remain one of the lowest scoring businesses in the ACSI, Fornell says.

American Airlines is the only major carrier to drop, falling three percent to 60. Southwest continues to lead the industry for a 16th straight year, up 3 percent to an all-time high of 81. By contrast, United Airlines anchors the bottom, unchanged at 56.

"Southwest appears well prepared for today's economic conditions with its no-frills approach, low fares and reliable service," Fornell said. "The airline has a record of being able to deliver the basics well -- getting both passengers and their luggage to the same destination on time."

Airlines that have had the most significant customer service problems in the past improved the most. Continental is up 10 percent to 68, making up a similar decline from a year ago, and US Airways is up 9 percent to 59, also erasing a similar drop in passenger satisfaction. Delta improved 7 percent to 64 in the wake of its merger with Northwest, while Northwest itself remained unchanged near the bottom of the industry at 57, just ahead of United.

Hotel Rooms for Rent -- Cheap! The hotel industry is facing a difficult time as consumers and businesses tighten spending on travel, Fornell says. In the wake of a sharp downturn in business, budget hotels have fared the best by offering low rates and even adding a few perks to boot. For the more upscale hotels, the picture is more mixed.

Hilton leads the category, up one percent to 79, followed closely by Marriott, down 1 percent to 77. Two economy hotels, Best Western and Choice Hotels, surged to the middle of the industry, up 7 percent to 76 and 75, respectively, by keeping rates low and maintaining service. Hyatt, historically among the industry leaders, dropped 5 percent to 74 by lowering both price and service.

Telecom and Cable: Still Some Potholes on the Information Highway

Traditional local and long distance service is down 1 percent to 72, a year after reaching its highest score since 1999. AT&T declined 5 percent to 71, losing most of the ground it gained in 2008. Cox Communications holds its own at 74 to lead the category, while Qwest slipped 3 percent to 71. Comcast's digital voice service fell 3 percent to 67 to remain at the bottom.

Customer satisfaction with wireless telephone service reached a new all-time high for the third consecutive year at 69. Verizon Wireless jumped 3 percent to 74 to continue its lead over the industry. Sprint Nextel made the biggest gain of any company this quarter, up 13 percent to 63, though some of the increase is likely due to many departing and not-very-satisfied customers. Sprint Nextel remains at the bottom of the industry in customer satisfaction.

AT&T Mobility fell 6 percent to 67. Paradoxically, its success with the iPhone may have contributed to the declining customer satisfaction. As the wireless carrier has attracted iPhone customers with more intensive data needs, the strain on the network has created complaints about slow and spotty performance, Fornell says.

Customer satisfaction with cable and satellite television declined 2 percent to 63, although some of the large companies improved. Satellite TV still led the way, with DirecTV well above all measured companies, up 4 percent to 71. The other satellite provider, DISH Network, continues its slide, falling two percent to 64. Two years ago the satellite companies were tied at 67; now a seven-point gap separates them.

Cox Communications leads all cable TV providers for a sixth straight year, reaching an all-time high at 66, but Comcast made an even bigger leap, up 9 percent to 59. Comcast has apparently benefited by monitoring customer feedback on blogs and via the social networking site Twitter in order to identify disgruntled customers and address customer dissatisfaction on a one-to-one basis, Fornell says. Charter Communications is down 6 percent to 51, a new record-low for any company in the 15-year history of ACSI. Its stock has been delisted and the company is facing serious financial challenges.

Restaurants: Fast Food and Full-Service Battle for Consumer Dollars

Fast food is unchanged at 78, matching its highest score ever, while full-service restaurants jumped 5 percent to 84. As the recession has driven business away from the pricier sit-down restaurants to the cheaper fast-food alternatives, full-service restaurants have had to try harder to compete, Fornell says. Similar to airlines and some of the hotels, service to customers has improved, at least in part, because there are fewer customers to serve, but it is also true that there have been menu changes to the liking of diners and a lowering of price in some instances.

Domino's is on top at 77. Wendy's and Taco Bell made the biggest gains, each up 4 percent to 76 and 73, respectively. McDonald's continues to do well, passing both Burger King and KFC, up one percent to an all-time high of 70. Over the past four years, the world's largest fast-food chain has improved customer satisfaction more than any other fast-food business and at a rate more than four times the industry average.

Utilities: Restoring the Power

Customer satisfaction with energy utilities held steady at 74, tying its highest level since 2000. Sempra Energy leads at 80, unchanged from a year ago. MidAmerican Energy and PPL Corp., both up 1 percent, follow closely at 79. At the other end of the spectrum, three utilities fell below 70. Pepco Holdings dropped one percent to 68, tying Ameren, whose score improved 6 percent. Consolidated Edison is at the bottom of the industry with a score of 66. While not the only factor, a key to high levels of customer satisfaction seems to lie in the utility's power restoration abilities, Fornell says.

The ACSI is produced by the University of Michigan's Ross School of Business in partnership with the American Society for Quality and CFI Group. For a complete list of measured companies and ACSI scores, visit the acsi.org.



For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu