Article 3 of 8
Economy
Customer Satisfaction:
Shoppers Become More
Satisfied With Their Purchases
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Latest Survey Figures
Show
Focus on New Products,
Services Reaps Benefits
By Patrick Barta and Greg White
08/21/2000
The Wall Street Journal
Page A2
(Copyright (c)
2000, Dow Jones & Company, Inc.)
Amid the most lavish shopping spree ever, consumers are
finally gaining some satisfaction with their purchases.
According to the latest installment of the American
Customer Satisfaction Index , a
national measure of consumer attitudes, shoppers have grown
more satisfied with the quality of the goods and services they
are buying, including big-ticket durable items such as cars,
computers and household appliances.
The index, scheduled to be released today, is computed
quarterly by the National Quality Research Center at the
University of Michigan Business School in partnership with the
American Society for Quality and the CFI Group. The index
shows that satisfaction with durable-goods products rose 2.7%
in the second quarter to 79.4, out of a possible score of 100,
compared with 77.3 a year earlier.
The index focuses on a specific sector of the economy each
quarter. In previous quarters, the Research Center has
measured nondurable goods, services and retail stores. The
recent quarter's results pushed the overall index -- a running
tally of the different sectors -- up to 72.8. That matches the
fourth quarter of 1999, which was the highest level in more
than three years, and well above the nadir of 70.7 in the
first quarter of 1997.
It has been a persistent anomaly of the consumer-spending
boom that customer satisfaction has remained low while retail
spending has soared about 40% since the survey began tracking
consumer attitudes in 1994.
But the latest results were so strong that only two brands
-- Jeep/Eagle and BMW -- measured small but statistically
significant declines, defined as two index points or more.
Officials at Bayerische Motoren Werke AG's BMW of North
America and DaimlerChrysler AG, maker of Jeep/Eagle, disputed
the declines found in the ACSI, noting that other surveys and
their internal data rate their brands highly.
For the first time since the survey began, no company's
score fell by more than three index points, considered to be
the threshold at which sales of a product could be affected.
"Virtually all the news here is good," says Claes Fornell,
the director of the research center. He explained that
companies that spent much of the boom downsizing and cutting
costs have gained about as much as they can from those
strategies. They now are focusing on increasing revenue with
new products and better service.
To be sure, companies still have a long way to go. The
overall satisfaction index only ranks as a low C-average. It
is 1.9% below the initial level of 74.2 recorded when the
survey began, and the manufacturing-durables component is 0.5%
lower than its all-time high of 79.8 in 1995.
Yet there are signs many companies are thinking more about
customers than cost cutting. With competition stiff as ever,
"companies cannot afford not to put a good product out on the
shelf," says Bill Fiala, an analyst at Edward Jones, a St.
Louis brokerage firm. The cost of a faulty product, such as
the recently recalled Firestone tires, "is greater than ever
because the competition is so ready to pounce," he says.
Companies also are increasingly using technology, like
fix-it-yourself Web sites, to address consumer problems.
What all that means for the economy is hard to divine.
Skeptics have long said changes in customer satisfaction
aren't very meaningful, noting that the economy went
gangbusters the past several years even as customer
satisfaction declined. But Mr. Fornell points out declines in
customer satisfaction have hurt individual companies' sales.
Compaq Computer Corp.'s ACSI rating dropped seven ACSI points
to 67 in 1997, and its financial performance has lagged behind
its peers ever since. The company's score has since climbed
back to 71. If satisfaction drops substantially across the
entire economy, Mr. Fornell argues, "there is a risk of a
slowdown, with less consumer spending."
The current numbers, though, are almost uniformly positive.
The auto industry, a consistently high scorer, climbed two
index points in the latest survey to 80. While steady
increases in quality have helped, survey respondents indicated
"perceived value," which measures a product's features in
relation to its price, was a big driver for several of the
brands with the largest gains.
That isn't surprising given that the fiercely competitive
U.S. auto market has seen price deflation for the past few
years and auto makers have all but given up on raising prices.
South Korea's Hyundai Motor Co., the auto maker showing the
biggest improvement, with an eight-point ACSI gain to 76,
benefited from a big jump in perceived value. Seeking to
overcome a reputation for shoddy cars, Hyundai now offers one
of the longest warranties in the industry, and the company
recently tweaked its offerings to give buyers, even of basic
models, more popular features like air conditioning without
big price increases.
General Motors Corp.'s Chevrolet division also owes much of
its four-index-point gain to an increase in perceived value,
according to the study. General Manager Kurt Ritter says Chevy
has focused on giving customers more car for their money and,
on some models, has managed to avoid costly rebates that can
undermine the brand. "We don't want to be all that people can
afford, we want to be what people want to afford," he says.
While Chevy, whose ACSI score was average for the industry,
still has a way to go, Mr. Fornell of the University of
Michigan says it is that kind of appeal to consumer tastes
that pushes auto makers to the top of the rankings. Over the
past few years, European car companies like BMW and
DaimlerChrysler's Mercedes-Benz have surged to the top of the
list, displacing Japanese rivals thanks to hot new models with
striking designs, says Mr. Fornell.
At the same time, GM's Cadillac and Buick brands also are
top scorers despite somewhat stodgier products, Mr. Fornell
notes, because they satisfy the needs of their particular
customers. But GM could run into trouble as it tries to shift
these brands to appeal to younger buyers in the next few
years.
New technology also played a role in some of the
improvements in the ratings this year. Hyundai, for example,
saw a big jump in scores for the quality of its service. Over
the past year, Hyundai has rolled out a Web site for dealer
mechanics to access all kinds of service and diagnostic
information, replacing thick paper binders in service bays.
Hyundai also began using the Internet to link repair
specialists in the U.S. with engineers in Korea to handle
particularly thorny problems.
The home-appliance category did even better than autos,
jumping three ACSI points to 85 amid a flurry of new product
offerings.
Maytag Corp., which improved three index points to first
place in the category with a score of 87, has hit gold with
its widely popular Neptune washing machine launched several
years ago that uses 40% less water and costs 60% less to
operate than older models. Other new products include a
refrigerator with temperature-controlled drawers.
"These are products that are based on consumer insight, so
one would hope that that helps to drive consumer
satisfaction," says Jim Powell, a company spokesman.
General Electric Co., which saw its score climb to 83 from
80, launched about 20 new products last year, including a
halogen-light oven that heats foods as much as eight times
faster than a traditional oven, as well as a dishwasher that
is quieter than past models. The company has introduced a
"Solve-It-Yourself-Wizard" on its Web site that helps
customers trouble-shoot problems without contacting service
personnel. It also has cut the time customers have to wait for
repair staff.
On the computer front, Dell Computer Corp. saw its
satisfaction score rise four index points to 80, the highest
of the six computer brands surveyed. The company, cited by
respondents for perceived value and good service, recently
introduced an online trouble-shooting system similar to GE's
that also can run diagnostic tests on a users' computers at
home.
---
To create the American Customer
Satisfaction Index , the National Quality
Research Center conducts telephone surveys with 12,500 current
customers of the companies being surveyed that quarter. Each
year, that amounts to about 60,000 customers of products from
about 175 companies and 30 government agencies. Sales of the
measured companies constitute 30% to 40% of the U.S. gross
domestic product. Companies are scored on a scale of 0 to 100.
Industry indexes are constructed with company indexes,
weighted by the sales of each company. The national index is
made up of the industry indexes, weighted by their
contribution to GDP. Different sectors are updated each
quarter, so the entire index is fully updated each year.
Customers are quizzed about their expectations and their
perceptions of value and quality in the services they have
purchased; for manufactured goods, quality is broken down into
measures of the product and the service accompanying the
product. These are translated through computer models into
overall customer-satisfaction scores, which are used to
predict customer loyalty.
--- American Customer Satisfaction Index :
Durable Goods Industries
Tracking Satisfaction
The National Quality Research Center annually surveys customers of
about 175 companies and 30 government agencies, but each quarter it
updates selected industries. Here are the index scores, out of a
possible 100, for companies that make durable goods.
2nd Qtr. % Change
Group/Manufacturer 2000 Score from 1999
Personal computers 74 2.8
Dell 80 5.3
Gateway 78 2.6
Apple 75 4.2
IBM 75 2.7
Hewlett-Packard 74 0
Compaq 71 0
All Others 68 -1.4
Household appliances 85 3.7
Maytag 87 3.6
Whirlpool 86 2.4
Kenmore 85 0
General Electric 83 3.8
All Others 78 -2.5
Consumer electronics 83 0
2nd Qtr. % Change
Group/Manufacturer 2000 Score from 1999
Automobiles 80 2.6
Mercedes-Benz 87 1.2
Buick 86 0
Cadillac 86 1.2
Lincoln-Mercury 85 3.7
BMW 84 -2.3
Volkswagen 83 1.2
Saturn 82 2.5
Honda 82 -1.2
Toyota 82 -1.2
Volvo 82 2.5
Dodge 81 8.0
GMC 81 0
Chrysler/Plymouth 80 1.3
Chevrolet 80 5.3
Oldsmobile 80 -1.2
Pontiac 78 0
Mazda 78 2.6
Nissan 78 -1.3
Ford 77 0
Hyundai 76 11.8
Jeep/Eagle 75 -2.6
All Others 75 -1.3
Sources: The American Customer Satisfaction Index is produced through
a partnership of the University of Michigan Business School, the
American Society for Quality and the CFI Group | 
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