American Customer Satisfaction Index
The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the American Customer Satisfaction Index, a private company based in Ann Arbor, Michigan.
The ACSI interviews about 80,000 Americans annually and asks about their satisfaction with the goods and services they have consumed. Potential respondents are screened to guarantee inclusion of customers of a wide range of business-to-consumer products and services, including durable goods, services, non-durable goods, local government services, federal government services, and so forth. Results from data collection and analyses are released to the public throughout each calendar year. ACSI data has been used by academic researchers, corporations, government agencies, market analysts and investors, industry trade associations, and consumers.
The ACSI was started in 1994 by researchers at the National Quality Research Center, a research unit within the University of Michigan, in cooperation with partners at the American Society for Quality in Milwaukee, Wisconsin, and CFI Group in Ann Arbor. The ACSI was based on a model originally implemented in 1989 for the Swedish economy called the Swedish Customer Satisfaction Barometer (SCSB). Both the Swedish version and the ACSI were developed by Claes Fornell, now Donald C. Cook Professor of Business Administration at the University of Michigan, and chairman of CFI Group. In 2009, the ACSI left the University of Michigan to form a private company, although Fornell remains a professor at the university and the principal researcher behind the ACSI.
ACSI score calculation
A company's ACSI score is derived from three manifest variables (i.e. survey questions) included within the ACSI questionnaire, each rated on a 1-10 scale by the respondents interviewed for that company, government agency, or other organization:
|Overall satisfaction (X1)||Very dissatisfied||Very satisfied|
|Expectancy disconfirmation (X2)||Falls short of your expectations||Exceeds your expectations|
|Comparison to an ideal (X3)||Not very close to the ideal||Very close to the ideal|
The 0-100 ACSI score is calculated with the following formula, using the arithmetic mean for each question from the N total responses for that company (X1, X2, X3), along with the standardized and normalized partial least squares factor loading (or weight) for each question as calculated within the ACSI structural equation model (W1, W2, W3):
((X1-1)*W1 + (X2-1)*W2 + (X3-1)*W3)/9*100
The actual weights used to calculate an ACSI score tend to vary considerably across companies and industries, and the weights are proprietary to ACSI and its clients.
Sector, industry and company-level findings
Thirteen years of ACSI data have shown that certain sectors, industries and companies perform well consistently, while others are almost always below average (with the National ACSI score reflecting the average). At the sector level, manufacturing industries — including both durable and non-durable goods manufacturers — have tended to perform well. The comparatively higher satisfaction performance by these sectors is understandable; industries within these sectors tend to be well established, "old economy" industries that have a longer-running focus on quality control procedures (such as TQM and Six Sigma), and perhaps more importantly are also industries that rely less on human intervention in the production and consumption processes. On the other hand, the "new economy" service sector industries, which rely more on customer service and human intervention in the consumption process, have tended to perform below average.
Some industries that have performed well over the years in ACSI include: e-commerce, personal care products, soft drinks, beer, consumer electronics, automobiles and household appliances. Some industries that have tended to perform poorly include: cable television providers, airlines and telecommunications industries. Among government agencies, the Internal Revenue Service has tended to perform below average, while other agencies - such as the Social Security Administration - have performed much better.
There have been a series of papers investigating the association of ACSI and financial performance using stock market metrics. One important paper showed that ACSI predicted long-term firm value (Tobin's Q) but the association was strong only for those firms that were also able to simultaneously achieve operational efficiency. Termed dual emphasis, this research showed that both customer satisfaction and efficiency simultaneously affect long term performance. More recently, research shows that the dual-emphasis effect is stronger for firms that undergo a merger, compared to firms that do not. The general body of research showing the association between ACSI and stock-market-based metrics such as ROI, ROA, Tobin's Q, and so forth is summarized in a review paper published by the Marketing Science Institute, and another paper highlights the potential non-linear nature of the relationships involved.
Macroeconomic and microeconomic findings
One interesting set of findings discovered by academic researchers involve predictions of macroeconomic growth as functions of changes in aggregate customer satisfaction. These researchers have argued that there is a robust relationship between aggregate ACSI data (i.e. the National ACSI score discussed above) and some important macroeconomic indicators. For instance, Fornell has argued that the National ACSI score has proven to be a strong predictor of Gross Domestic Product (GDP) growth, and an even stronger predictor of Personal Consumption Expenditure (PCE) growth. This latter result is especially surprising, given that many economists continue to identify PCE growth as a "random walk" with no significant or consistent predictors.
Furthermore, Fornell and his collaborators have shown that ACSI data predicts stock market performance, both for market indices and for individually traded companies. In a 2006 paper published in the Journal of Marketing, Fornell and his coauthors argued that a hypothetical, back-tested portfolio of stocks chosen based on their performance in ACSI outperformed the New York Stock Exchange (the Dow), the NASDAQ and the S&P 500, a finding that has since been supported by other researchers.
International adoption of the ACSI model
Research groups, quality associations and universities in several countries have adopted the ACSI model to create customer satisfaction indices for their own national economies. Recent additions to the list of countries that have adopted the ACSI model include Great Britain, Indonesia, Barbados, Puerto Rico, Turkey, Singapore, Mexico and Colombia. Groups in several additional countries are in various stages of project implementation as well. The development of an international system of customer satisfaction measurement founded on a common methodology permits comprehensive cross-national satisfaction benchmarking, something that will grow more significant as economic globalization advances.
Private and public sector adaptation of ACSI
Only one company is licensed in the U.S. to apply the methodology of the ACSI for both the private and public sector: CFI Group, Inc.
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