Customer satisfaction with the goods and services that Americans buy remained strong in the fourth quarter of 2009, according to the American Customer Satisfaction Index (ACSI).
The index was virtually unchanged, dipping a mere 0.1 percent from the previous quarter -- to 75.9 on the ACSI's 100-point scale. It remained much higher than it was prior to the recession and also slightly higher than this time a year ago.
Because economic recovery is highly dependent on consumer spending and high levels of customer satisfaction tend to strengthen consumer demand, the latest ACSI reading does not add to more economic woes. Despite anecdotal evidence to the contrary, most companies are providing good customer service and many have very satisfied customers.
"As long as unemployment remains high and credit tight, it is difficult to see how we can get to a sustainable pace of consumer spending growth," said Professor Claes Fornell, head of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference.
"But it is not all bad: the 'will to spend' is evidenced by high customer satisfaction. The issue is whether or not consumers have the 'means to spend,'" He added. "The recent news about the decline in unemployment and the rise in manufacturing hiring may not only lead to more people working, but may also dampen the fear of job loss. If so, the means to spend will face less of a hurdle."
As the stock market rebounded in 2009, the rewards have been greater for those companies with improving ACSI scores. On average, companies that did well in ACSI saw their stocks increase by 75 percent, while stock prices for those with declining ACSI scores rose just 22 percent over the same period.
Customer satisfaction with the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal care stores, gained 1.3 percent to an ACSI score of 76.2.
Nordstrom maintained its lead among department and discount stores, rising four percent to an all-time high of 83. Several other retailers posted large gains, including Target (+4 percent to 80), Dollar General (+5 percent to 79) and Dillard's (+4 percent to 78).
Macy's, notable for bucking the positive trend, saw its score fall four percent to an industry low of 71.
"I have never had a friendly experience at the Macy's in Reno," Victoria of Reno, NV, told ConsumerAffairs.com. "I would boycott the store altogether but sadly in Reno it is our only 'nice' store. I was looking at jewelry with a friend of mine, and by jewelry I mean the real stuff, diamonds, sapphires, etc. Anyway as we were looking at the cases the sales girl starts taking everything out and closing up for the night. The store didn't close for another 45 minutes!"
Among specialty retailers, Barnes & Noble stood out, leading for a third straight year with a score of 84. Office supply retailers rebounded from a year ago, with OfficeMax making the biggest move, up four percent to 77 to tie Staples (+1 percent). Office Depot followed behind (+1 percent to 76).
Home Depot improved for a second straight year, gaining three percent to 72. However, the improvement was not enough to move Home Depot up from the bottom of the specialty retail category or to close the gap with rival Lowe's, which gained four percent to an all-time high ACSI score of 79.
Supermarkets were unchanged for a third straight year with an ACSI score of 76, even though food prices dropped after two years of large increases. Publix has been in the lead since 1994 and this year was no exception: the supermarket chain improved five percent to 86 -- its highest score ever.
Safeway moved in the opposite direction one year after undertaking a large-scale store makeover. Its customer satisfaction retreated four percent to 72.
Maureen of Novato, CA, tells ConsumerAffairs.com that her local Safeway is always out of stuff. "Nine times out of ten, I have to go to another store to get items this store stocks, but the shelves are empty each time I shop there. The manager doesn't seem to care when you bring things to his attention."
The finance and insurance sector improved slightly, rising 1.4 percent to 77.1. Health insurers made the largest gain, up 2.7 percent to an ACSI score of 75, led by improvements for UnitedHealth Group (+14 percent to 72) and Aetna (+8 percent to 70). Even though healthcare costs continue to rise, the pace of price increases has slowed.
Banks held steady with a score of 75, although two of the largest banks -- Bank of America and JPMorgan Chase -- face a challenging customer environment with significant dropped in satisfaction. Smaller banks did better, as their aggregate score was unchanged for a third year at 80.
One year after acquiring Wachovia, Wells Fargo improved one percent to 73, best among the large banks. JPMorgan Chase and Bank of America also made large acquisitions, but in the aftermath of the Chase purchase of Washington Mutual, customer satisfaction fell seven percent to 68.
Likewise, Bank of America dropped eight percent to an industry low of 67 following its acquisition of Merrill Lynch and the subsequent cost-cutting undertaken to offset higher-than-expected debt.
The property and casualty insurance industry declined 1.2 percent to an ACSI score of 80, while life insurance improves 1.3 percent to 79. Among life insurers, Northwestern Mutual and New York Life led the category, rising four percent each to 81 and 80, respectively.
In the property and casualty industry, State Farm was on top at 82, a three percent improvement, followed closely by GEICO (+1 percent to 81) and Progressive (+1 percent to 80). The drop in ACSI for property and casualty insurance as a whole was driven by a three percent decline for smaller insurers, which have faced a more negative reaction to premium increases.
The ACSI score for e-commerce was up 1.8 percent to 81.4, nearly matching its all-time high. Internet retail improved 1.2 percent to 83. Netflix led, rising two percent to 87. The online video rental company has seen sizable increases in its subscriber base, revenues and stock price over the past year.
Amazon (unchanged) and Newegg (down two percent) were also strong performers with very high scores of 86. Customer satisfaction with eBay was up one percent to 79, but the auction site hasn't improved much over the years and eBay remained at the bottom of the list.
"Overall, online shopping continues to grow and provide higher levels of customer satisfaction," said Fornell. "Free shipping promotions, competitive pricing, and the ability to browse and research an ever wider selection of merchandise from the comfort of one's home have made online retailing a very attractive and powerful alternative to traditional stores."
As the stock market slump contributed to lower customer satisfaction with Internet brokerage services, the rebound in stock prices has had the opposite effect. Investor satisfaction with online brokerage was up 5.4 percent to an ACSI score of 78, the largest improvement for any category this quarter.
Customer satisfaction with the larger full-service brokerages Fidelity and Charles Schwab has been less affected by the ups and downs of the market. They didn't fall as far last year and show less of a rebound this year, with Schwab up one percent and Fidelity down one percent to share the lead at 79.
Even though their ACSI scores were lower, TD Ameritrade and E*Trade made big gains a year after customer satisfaction with their services plummeted, improving seven percent to ACSI scores of 76 and 74, respectively.
Customer satisfaction with online travel websites jumped 2.7 percent to a score of 77. Priceline showed the greatest improvement, up six percent to an all-time high of 76, while Expedia led among major travel websites for a fourth straight year, up three percent to 79.