Nationwide customer satisfaction remains low, but there has been a tiny 0.1% uptick to 73.2 (on a 0-100 scale) this quarter. Nevertheless, no matter how small, it is an increase, which has been a rarity for a long time now. In fact, this is only the second time during the past 16 quarters ACSI has increased. Consumer spending remains weak as well, but it did grow by 1.4% in the third quarter.
While GDP is a measure of the quantity of economic output, the American Customer Satisfaction Index gauges the quality of economic output as experienced by consumers. Obviously, these two measures are related. The satisfaction that people get from buying and consuming impact their future propensity to spend. The dissatisfied consumer will likely be hesitant; the satisfied consumer is more likely to repeat what was, after all, a gratifying experience. However, there are many other factors that affect aggregate demand.
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“While falling customer satisfaction tends to shift the demand curve downwards, strong consumer savings accounts move it in the opposite direction,” said Claes Fornell, founder of the ACSI and the Distinguished Donald C. Cook Professor (emeritus) of Business Administration at the University of Michigan. “The same is true for supply shortages; they, too, tend to move demand curves upwards. Subsequently, consumer spending has been positive during the first two quarters of 2022, while GDP has declined. It is also a likely reason why increasing interest rates have not yet affected inflation — consumers had money to spend, and demand was greater than supply. Accordingly, these are circumstances when customer satisfaction goes down but doesn’t lead to weakening demand. However, things are likely to change. Interest rates will increase further. Unless companies can continue to pass along cost escalations to the consumer, inflation will come down. It is not known, however, how long this will take. So far, there are no signs that inflation is coming down.”
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Meanwhile, businesses would do well to realize that consumer markets have long memories. Allocating scarce resources diligently to make sure one’s customers are satisfied will be critical. Getting customer data on what they like and don’t like is not going to be enough. Data analytics technology must be improved. Data are not the same as information. Data noise must be reduced and filtered out, and financially relevant indices and causal models must be used. Otherwise, it will take a long time for customer satisfaction to return to levels necessary for economic growth and strong business profitability.
The national ACSI score (or ACSI composite) is updated each quarter based on annualized customer satisfaction scores for all sectors and industries