Saturday, April 4, 2009

More Proof of the Value of Customer Satisfaction

A report issued in February by Claes Fornell, a Professor at the University of Michigan, ran a correlation analysis using the American Customer Satisfaction Index (ACSI) against about 200 companies in 44 industries. He found that on average, retailers with improving ACSI scores lost about 30 percent of their market value in 2008, while those with declining ACSI scores lost nearly twice as much (57 Percent). By comparison the S&P 500 dropped about 38 percent.

This result tracks a paper I published in the Summer of 2007 with a colleague where we took the best and worst companies in eleven industries and showed that the financial performance was significantly better for those companies ranked at the top of the ACSI ratings than those ranked at the bottom.

The bottom line is that every time the hypothesis is tested to determine if customer satisfaction is related to financial performance, the test result verifies the hypothesis that there is a statistically significant relationship between the two measures of corporate performance (financial performance and customer satisfaction).

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