ACSI in Journal of Marketing: Linking Customer Satisfaction and Financial Results
Companies know they need to compete hard for customers. Customers choose to do business with companies based on their experiences and perceptions. Satisfied customers reward companies with repeat business, more business, and a willingness to recommend the company to others. Costs of marketing and customer support are reduced. The customer wins, the company wins and shareholders profit.

It just makes sense. But, management may still want proof before they commit to major investments in customer satisfaction.

This is where peer-reviewed, academic research can help. “Customer Satisfaction and Stock Prices: High Returns, Low Risk,” was published in the January 2006 issue of the Journal of Marketing.  Using COMPUSTAT company book values and American Customer Satisfaction Index (ACSI) scores from 1994-2002, the research concludes that “a 1% change in ACSI is associated with a 4.6% change in market value.”

The research analyzed an actual portfolio of ACSI companies where: 1) long positions were taken in firms with high and increasing ACSI scores (anticipating stock rises), and 2) short positions were taken in firms with low and deteriorating ACSI scores (anticipating stock declines). For the period from April 2000 to the end of 2004, the ACSI portfolio gained 75%, compared with losses in the S&P 500 and Dow Jones Industrial Average of 19% and 4 %, respectively. And, it did so with a beta¹ risk of .77, when compared to the S&P.  Simply put, well placed investments in improving customer satisfaction produce substantial returns.

At the individual company level, ensuring a return on customer satisfaction relies on having better information on customer behavior for improved decision making. Armed with better information, organizations are more effective at aligning resources, improving processes and optimizing investments toward enhancing their customer asset value. More often than not, this leads to superior financial results and shareholder value.