Customer Satisfaction Drops Again, e-Commerce Reaches All-Time High

Published: Monday, February 25, 2008 - 23:00

(ACSI: Ann Arbor, Michigan) -- Satisfaction with the goods and services that people in the United States buy declined in the fourth quarter of 2007, according to a report recently released by the University of Michigan’s American customer satisfaction index (ACSI). The index fell to 74.9 on the ACSI’s 100-point scale, down 0.4 percent, to its lowest score of 2007. ACSI measures retail, finance and insurance, and e-commerce every fourth quarter.

Retail
Customer satisfaction with the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal-care stores, slipped 0.3 percent to 74.2 on ACSI’s 100-point scale. In the holiday shopping season, satisfaction with the department and discount scores reached its lowest level since 2001, sinking 1.4 percent to a score of 73.

Nordstrom led the department and discount store industry with a score of 80 as a result of high quality merchandise and superior customer service. Wal-Mart plummeted 6 percent to its all-time low of 68, well below the industry average. Wal-Mart also scored lowest in the industry for customer service.

Deep discount store Dollar General made its ACSI debut with a strong score of 78, providing customers with a wide variety of merchandise in a reasonably small store space at super discount prices.

The specialty-retail category aggregate remained unchanged from last year with a score of 75. The category expands this year to include category leader Barnes & Noble (83), Borders (81), Office Depot (78), Staples (77), Office Max (76), Gap (75), and the TJX Companies (74).

Home Depot (67) lost the gains it made last year after sliding 4 percent to the bottom of the retail sector. Lowe’s improved 1 percent to 75, widening the gap between the rivals.

“Operational efficiencies don’t always translate into customer service improvements,” says Claes Fornell, head of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference (Palgrave Macmillan, 2007). “Cutting jobs and eliminating services might improve earnings in the short term, but it won’t do much good if customers take their business elsewhere.”

The gap between Best Buy and Circuit City has narrowed. Best Buy slid 3 percent to a score of 74 while Circuit City improved 3 percent to 71.

Supermarkets were up 1.3 percent to 76, the highest level in 14 years, despite the recent rise in food prices. Publix continued to lead the category with a score of 83. According to its customers, Publix, like Nordstrom, offers high quality products and superior customer service, which has been the foundation for the lead in customer satisfaction over the past 15 years. Winn-Dixie plunged 7 percent to tie Wal-Mart’s supermarket business at the bottom of the industry at 71. Whole Foods Market made its ACSI debut with a score of 73, leading in quality and at the bottom for value.

Finance
Amid fears of a recession, the looming mortgage crisis, and high insurance premiums, the finance and insurance sector dropped 0.7 percent to 75.5. Banks climbed 1.3 percent to 78, lead by improvements in the “all others” category, up 3 percent to lead the industry with a score of 80. Wachovia, down 1 percent to 79, is still the top-scoring bank, despite its first drop since 2000. JPMorgan Chase climbed 3 percent to 74, and Bank of America was unchanged at 72. Wells Fargo and Citigroup each dropped 4 percent to 69, the lowest scores in the industry.

As health care costs continue to rise with more households now footing the bill, the satisfaction with health insurers slipped 1.4 percent, to 71. UnitedHealth declined the most, down 4 percent to 65.

e-Commerce
The e-commerce sector rose 2.0 percent to a new high of 81.6. In the highly competitive e-retail category, Amazon.com led with a score of 88, one of the highest regardless of industry. Amazon.com kept pace with increasing customer expectations and improved the customer experience accordingly. Newegg, Netflix, and Overstock made their first appearance in the e-retail category this year. Newegg (87) and Netflix (84) debut just behind Amazon, while Overstock’s first appearance is at the bottom of the industry with a score of 80.

ACSI can be found on the web at www.theacsi.org.

For more information, visit www.theacsi.org/images/stories/images/news/0208q4.pdf.

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