Customer satisfaction bodes well for some; means trouble for others

Apple Computer and Gateway saw solid gains in the annual report on the American Customer Satisfaction Index (ACSI), conducted by the University of Michigan and released in August. Apple led in the PC category with an 81-percent rating—a 2.8-percent gain over the previous year—but Gateway, in third behind Dell, saw a 7.2-percent jump with a score of 74 percent. Going in the opposite direction is Hewlett-Packard (HP). At one time a leader in customer satisfaction, HP dropped below the industry average for the first time a year ago, and though it showed a 1-percent gain this year to 71 percent, it remains 3.4-percent below the national average.

"A company that improves in customer satisfaction tends to perform better financially by generating more repeat business, which links to greater profits and higher stock prices," says Professor Claes Fornell, who heads the ASCI project. "Sales of Apple computers are up, and the company's stock value has improved more than 50 percent over the last year."

Though below the national average, e-business—comprised of Web portals, search engines, and news and information services—also posted improvements over last year. The composite score was 72.5—up from 71.4 last year. Google was the top search engine, with 82 points. No single company clearly differentiated itself in the news and information category, though Yahoo! was tops in portals with 78 points.

In e-retailing, reported earlier in the year, Amazon.com and Barnes & Noble.com are far outdistancing brick-and-mortar retailing.

"The scores indicate a stronger, lasting version of e-commerce than we saw a few years ago," says Larry Freed, a customer-satisfaction expert and CEO of Ann Arbor, Mich.-based ForeSee Results. "With scores like these [Amazon.com, 88 percent; Barnes & Noble, 87 percent], growth potential is significant. But the scores also show that the industry is extremely competitive, and staying ahead of customer expectations is going to be increasingly difficult. It's also what got the industry this far, and it's the key to faster growth."