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What Do Manufacturers Know about Manufacturing Customer Satisfaction?
Quite a bit, apparently: In a new report, food manufacturing improves its standing among consumers, while soft drinks and apparel fare less well.
Posted Nov 24, 2008
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Despite a general decline in customer spending, the food manufacturing sector has seen a 2.5 percent rise in customer satisfaction, according to an evaluation recently released by the American Customer Satisfaction Index (ACSI). Overall, the manufacturing and nondurable goods sector has experienced a 0.1 percent drop.

Although the overall sector has relatively little service that directly involves consumer-facing operations, periods of economic trouble increase the importance of customer relationships, warns Claes Fornell, founder of the ACSI and author of the report. That, in addition to a shrinking consumer pool, means the last thing companies should be doing is cutting customer service, especially as it may well provide a competitive advantage once the economy improves.

Until that improvement arrives, the report may help dispel any immediate concerns. "[There's] good news in that it's the absence of good news," Fornell says. Scores of each category evaluated in this report include:

  • Food Manufacturing............................83 (up 2.5 percent from 2007)
  • Soft Drinks ........................................83 (down 1.2 percent)
  • Breweries .........................................83
  • Cigarettes.........................................78 (up 1.3 percent)
  • Apparel.............................................80 (down 2.4 percent)
  • Athletic Shoes....................................79
  • Personal Care and Cleaning Products.....85
  • Pet Food............................................84

While the industry may let out a momentary sigh of relief, it's difficult to predict how long these satisfaction levels will hold up. "In the past, we've found a pretty strong correlation between satisfaction and future consumer demand," Fornell says. "Now the question is whether that still holds true. If you don't have the money, it doesn't matter how satisfied you are."

Recent reports have described companies cutting staff and freezing salaries, banks tightening their lending requirements, and consumers themselves having a hard time saving, let alone finding the money to spend. Consequently, Fornell anticipates a decline in prices. While gas and energy costs have recently retreated from their record highs, food has yet to follow suit. "It's somewhat surprising [food prices haven't come down] considering they went up so much in the early part of the year," Fornell says, adding that it's just a matter of time. "The actual raw material will have to come down along with everything else in a recession." Citing a silver lining, he suggests that consumers can hope to see some excellent bargains this this holiday season.

Fornell admits he was mildly surprised that so many companies in the report (46 percent) actually managed to improve their customer satisfaction scores. By comparison, an equal share of companies — 27 percent — saw their scores drop or remain unchanged. "Looking at that," he says, "things are not quite as bleak as we've been hearing." Companies deserve some credit, he says, when it comes to earning customer satisfaction in a difficult economic climate. Many are employing what the report calls recession-proof tactics: Strategies that focus more on customer retention and customer service, and less on slashing costs.

It's not yet clear, though, how widespread these trends might become. Fornell suggests that it will be interesting to see how the retail and financial service sectors measure up in reports to be released next year. "If they follow the same model," Fornell says, "[the economy] will be in pretty good shape."

On the other hand, he notes, the current level of uncertainty in the financial markets makes it difficult for these latest results to provide accurate predictions for 2009. "We have something we haven't seen for decades," he says. "If we only use our data, we predict a very weak spending period, but still an increase in spending, and we know that's probably not going to be the case." An understanding of the market trends ultimately points to conditions that are extremely serious, Fornell says, and forecasts appear dismal.

While some companies that thrive on a low-cost, low-price business model (e.g., Wal-mart) can hope to gain market share at this time, other companies should primarily aim to hang onto the customers they already have, Fornell says. Some price-cutting may be unavoidable, given the economic pressures, but the negative repercussions of a price war tend to outweigh any positive gains. "Hopefully, we won't see a repeat [of] the past, where the first thing to go is customer service," Fornell says. Current ACSI data has indicated little or no significant cuts in that respect, he says, suggesting that there's reason for some guarded optimism.

"[Customer service] is what many companies used to cut first," he says. "Maybe this time they'll learn."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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