Customer Satisfaction's Durability in Question
Customer satisfaction in the manufacturing (nondurable goods) industry has slipped for the first time in two years, according to the recent third-quarter report by The American Customer Satisfaction Index (ACSI), which recently released its third quarter report on that sector. On ACSI's 100-point scale, the industry dropped from 75.3 in the previous quarter to 75.2. Even though the latest rating remains a full percentage point better than the industry's third-quarter showing in 2005, the minimal quarter-over-quarter decline is notable, and can be primarily attributed to price increases -- especially in the food- and cigarette-manufacturing sectors, ACSI says.
Perhaps one of the most surprising results of the study was the increase in customer satisfaction in the pet food category, despite incidents of food contamination. (According to Claes Fornell, head of ACSI at the University of Michigan, products were recalled after several pet deaths attributed to rat-poison-laced food.) All the pet-food manufacturers included in the study, however, continued to see a rather high aggregate score (82). "What we're finding is that all these companies responded very quickly and very well to this type of problem, so it didn't affect their score," Fornell says. "In fact, it went up."
In the athletic-shoe industry, name-brand players continue to be laggards in customer satisfaction; manufacturers in the "Other" category continue to take the lead, improving from 81 in 2006 to 83. Overall, the industry improved 4 percentage points to 79. In terms of improved performance this quarter, however, Nike gained the most ground out of any company included in the survey, leaping ahead with a 4-percentage-point increase to 75. Although last year Nike was criticized for pricing-related problems, the athletic-gear maker seems to be improving its corporate strategy by fusing fitness with fashion in a partnership with Apple's iPod. This move, according to Fornell, indicates Nike's initiative to give customers what they want, when they want it -- by being more in tune with their "changing tastes." Reebok, which for the last two years had been riding the perks of its acquisition by Adidas, fell 1 percentage point to 77.
Other industries covered and their top scorers include:
- Food Manufacturing: Declined since last year from 83 to 81. Its top scorer -- H.J. Heinz Company. The company, best known for its ketchup, increased 3 percentage points to 90, reportedly the highest score of any company in any industry. Fornell attributes this feat to Heinz "going back to the basics" and focusing on what it does best: ketchup, sauces, and snacks. Using the same strategy, Campbell's has also shed its extra baggage such as chocolates, and gone back to focusing primarily on soups. And while Fornell warns that not every company will benefit by taking this step, he says that "clearly it should be less complicated to do well."
- Apparel: Reached its personal best with a score of 82, up from 80 last year. VF Corporation scored the highest at 84.
- Breweries: Improved 1 percentage point to 83. Molson Coors Company and "Other" brands tied at the top with 83. According to ACSI, the merger between Molson and Miller Brewing Company will have little effect on the combined firm's customer satisfaction, given the fact that the breweries differed very little in their scores.
- Personal Care & Cleaning Products: Also reached its record high, with a score of 85. The Clorox Company maintains its reign in the category, improving 1 percentage point to 87.
- Cigarettes: Scored the lowest overall, with 77. Although Reynolds American still scored the highest, it fell from 80 last year to 79. Fornell attributes the drop to the increase in product cost.
According to Fornell, it would be surprising if the nondurable goods category didn't perform well. "There's a lot of consumer choice, and the switching cost of going from one brand to another is very low," he says. Because of these factors, Fornell adds, customers are able to "organize themselves and buy what they like; and if they don't like what they buy, they will buy something else."
But despite its consistently high scores, customer satisfaction is already facing a challenging horizon, especially in light of the weakening dollar. In the food industry, for instance, many raw materials are purchased from abroad and Fornell observes the increasing problem of inflation in this industry. As a result, he says, pricing will be even more competitive. "People aren't going to stop eating because prices go up, but they will shift from the higher-priced food products to lower-priced food products," he says. "So you will have some winners and losers depending on that."
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