Feb. 19, 2004

ANN ARBOR—Customer satisfaction is at its highest level since the second quarter of 1995, according to the University of Michigan Business School’s American Customer Satisfaction Index (ACSI).

The ACSI ticked up .3 percent to 74, continuing a strong two-year upward trend in how people evaluate the quality of goods and services on which they spend their money. The final-quarter report for 2003 shows satisfaction up 1.5 percent over the previous year.

Satisfaction with the buying experience has historically led to repeat business and increased spending, and the new data suggest that consumer spending will continue to rise, says Claes Fornell, director of the Michigan Business School’s National Quality Research Center, which compiles and analyzes the data.

“A person who has a good purchase experience is more inclined to spend again,” Fornell said. “Sustainable economic growth ultimately links to the availability of goods, services and experiences for which people are willing to repeatedly open their wallets.”

The fourth-quarter ACSI report includes the retail and finance/insurance sectors, as well as e-commerce. E-commerce, which was already at a high level, showed the greatest increase this year over last—up 4.1 percent to 80.8 from 77.6 in 2002. Finance/insurance climbed by 1.2 percent, from 73.8 to 74.7, while retail is up slightly to 75 from 74.6 last year.

Within e-commerce, Amazon.com once again posted the highest score (88) of any company measured last quarter, while eBay registered a 2.4 percent hike, from 82 to 84.

In the retail sector, Kohl’s remains the leader in the department/discount stores category, despite a 6 percent drop to 79. JC Penney is headed in the opposite direction, however, jumping 4.1 percent to match Target’s score of 77. Troubled K-Mart brings up the rear with a 70.

“JC Penney has been forced into focused retrenchment, squeezed as it is between Target and Wal-Mart,” Fornell said. “But as far as customers are concerned, things have improved. Complaints are down and service quality is up.”

Costco, included in the specialty retail stores category, is well ahead of its competitors with a score of 80. Lowe’s and Sam’s Clubs are relatively strong, though, both scoring 77. Home Depot (73), Circuit City (73) and Best Buy (72) are at the bottom of the category.

Fast food’s improvement from 71 to 74 makes it the biggest gainer in the ACSI. Yum! Brands’ Pizza Hut made the category’s biggest jump, up 7.1 percent to 75. This comes on the heels of a 10 percent improvement last year by Yum!’s KFC restaurants, which was up another 2.3 percent this time.

The category leaders continue to be Papa John’s, holding steady at 76, along with Domino’s, Little Caesar and Pizza Hut, all scoring 75. Despite nearly a 5 percent improvement, McDonald’s once again posted the lowest mark among fast-food restaurants—64.

Also included in the retail category are supermarkets. Publix, the perennial category leader, remains on top with a score of 82 (up 1.2 percent from 81). Its nearest competitor is SUPERVALU at 77. Kroger and Safeway are tied for last with scores of 71.

In the finance/insurance sector, the highest scores went to the property/casualty insurance and life insurance categories, 78 and 77, respectively. Farmers Group’s 4.2 percent increase to 75 still leaves it well behind GEICO, at 79, among property/casualty insurers. Health care insurance does not do well with customers, with a category score of 70.

Bank of America showed a healthy increase in the banking category, a 5.7 percent jump from 70 to 74. Wachovia, the category leader at 76, was up up 4.1 percent over its 2002 score.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available 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 39 industries and from government agencies over the previous four quarters.

The ACSI is produced by a partnership of the Michigan Business School, American Society for Quality and CFI Group, and supported in part by Market Strategies Inc., a major corporate contributor, and ForeSee Results, e-commerce co-sponsor.

Company scores and other information about the ACSI can be found on the ACSI Web site: www.theacsi.org.

www.theacsi.org.