ACSI Pres 03 Pom 246.ppt

American Customer Satisfaction Index (ACSI)

You won’t have loyal customers until you have “completely satisfied customers!”

~William R. Loomis(baldridgeplus.com)

ACSI Presentation ’03

Starring--in alphabetical order : Sonja Arnet Allen Bischofberger Nathan Calabrese Jon Carpenter Tony Filiberti

ACSI Topics

What is ACSI?ACSI MetricsFAQs about ACSIACSI ModelCompany Examples

What is ACSI?

What it is…

ACSI:Created in the nineties to be an economic

indicatorA uniform, independent measure of

consumption tracks customer satisfaction trends and

provides helpful benchmarking insights

What it is…

An economic tool:For creating Industry standardsFor companies to use as a benchmarkFor consumers to use to make better

informed purchasing decisions

What it is…

The ACSI is based upon information compiled from customer evaluations of goods and services.

Later we will learn from the ACSI Model how customer satisfaction can lead to either customer loyalty or complaints.

ACSI Metrics

ACSI Measures:

Customer satisfaction with the quality of goods and services purchased in the United States over time

8 economic sectors, 35 industries, 190 companies, and Federal or local agencies* Includes domestic and foreign companies that have

major market shares in several industries (i.e. Toyota, Honda, etc.)

ACSI Process

1. Data is collected Collection is done at the individual customer level Random telephone interviews of adults (age of 18-84) are conducted

to obtain data Data collected is regarding the customer’s satisfaction with specific

products 700,000+ consumers are interviewed each year ACSI results created for each company are based on 250 customer

interviews

2. Data entered into a multi-equation, econometric

model

ACSI Process (cont.)

3. Scores are produced Reported on a 0-100 scale (0=Lowest;100=Highest) Four levels of scores:

Company-aggregated customer scores Industry-average of company scores weighted by the revenues of each

company Sector-industry scores weighted by industry revenues National-sector scores weighted by each sector’s contribution to GDP

Company Example

The Result

ACSI produces company-level satisfaction scores

Produces scores for the causes and consequences of customer satisfaction, and their relationships

Answers the questions: Are customer satisfaction and evaluations of quality

improving or declining for the nation’s output of goods and services?

Are they improving or declining for particular sectors of industry, for specific industries, or for specific companies?

FAQs about ACSI

Query #1

Who is behind the ACSI & how is it funded? Developed by the National Quality Research

Center at the University of Michigan Co-sponsored by ASQ, CFI Group and the

University of Michigan Business School Corporate subscribers Sales of ACSI reports

Query #2

Who benefits from ACSI? American consumers Companies Comparing quality Software available

Query #3

When were ACSI results first released? October, 1994 3rd Monday of February, May, August,

November, & December

Query #4

What kind of information is available to what companies? Any ACSI subscriber Corporate subscribers Also in Fortune, BusinessWeek

Query #5

Can a company not included not included in ACSI get its own customer satisfaction index? Pay a fee to receive:

index custom research

Query #6

How many companies are reviewed through ACSI? Approx. 200 companies 70 segments of federal agencies two local government services:

Policesolid waste

Specific companies are included and excluded

ACSI Model

ACSI Model

Elements of the ACSI ModelCustomer expectationsPerceived Quality Perceived valueSatisfactionCustomer complaintsCustomer Loyalty

ACSI Model

Customer expectation customers experiences with product or service and

information about it media advertising salesperson word of mouth from other customers

customers expectation influence the evaluation of quality and forecast how well the product or service will perform

ACSI Model

Perceived quality Three questions measure the perceived quality

overall quality reliability the extent to which a product or service meets

the customers needs

Perceived quality proves to have the greatest impact on customer satisfaction.

ACSI Model

Perceived Value Two questions measure the perceived value

overall price given quality overall quality given price

Perceived price is usually only important in the first purchase decision.

ACSI Model

Customer complaints

Customer complaint activity is measured as the percentage of respondents who reported a problem with a company’s product or service within a specified time frame. Satisfaction has an inverse relationship to customer complaints.

ACSI Model

Customer loyalty

Customer loyalty is measured through questions on the likelihood to purchase a company’s products or services at various price points. Customer satisfaction has a positive effect on loyalty, but the magnitude of that effect varies greatly across companies and industries

Company Examples

National, Economy, Sectors and Industries

ACSI divides Economy by type of good produced

8 major divisions Each division has quarterly report Reports available from US Government, University of

Michigan, and ACSI Newest Division, E-Commerce highly monitored

Fast paced, highly dynamic many new companies can be used somewhat successfully to determine stock

profitability


Sections covered by ACSI (with %GDP) Transportation/Communications/Utilities (8.4%)

Airlines Cable/Satellite TV providers/Newspapers Express Mail

Manufacturing Durables (9.1%) Automobiles Household Appliances Computers/TV/VCR

Manufacturing Non-Durables (6.7%) Beverages/beer Food Processing Personal Care/Cleaning Products


Sections covered by ACSI (cont.) E-Commerce (calculated GDP found in other sections)

Auctions Portals Retail

Finance and Insurance (8.4%) Banks Insurance

Retail (9.1%) Restaurants Service Stations Specialty and high volume Retail


Sections covered by ACSI (with %GDP) Public Administration/Government (9.4%)

Police (metro) Federal Agencies Solid waste (metro)

Services (21.9%) Hospitals Hotels Motion Pictures

Corporate Subscribers

Corporate Subscribers Belong to ACSI or other organizations such as the CSMA (Consumer Satisfaction Measurement Association)

CSMA is a group of companies that conducts benchmarking studies in order to improve customer satisfaction.

CSMA has many more international members than ACSI


Notable ACSI Members AAFES Bank of America Bell South Direct TV Domino’s Home Depot US Department of Labor K-mart US Postal Service Verizon


Notable CSMA Members MCI Worldcom Department of the Army Honeywell Rockwell Electronic Payless Shoe Source Pitney Bowes Steel Authority of India Boeing Unisys Fiat

ACSI Case Study-Dow Corning

Dow CorningFounded in 1943$2.7 Billion 25,000 companies supplied with Dow

productsOver 7,000 products

Ceramics Lubricants Aerospace


Mid 1990’s saw the emergence of a strong silicon based industryNeeded to gain competitive advantageProduce performance-enhancing materialFix global Supply Chain Improve Customer satisfaction index


ACSI style surveys used as an indicator for Customer satisfaction improvement

Based on Customer complaints Globalization stretched Supply chainSAP created Supply Chain Management

software


SAP Software improvementsReduced lead time

9-20% depending on productQuicker shipping to worldwide customers

Reduced significantlyOverall improvement in responsiveness

Orders processed more quickly


ResultsQuicker ship times lead to higher customer

satisfactionReduced inventory keeps administrative

and warehousing costs low Increase in customer satisfaction helps

retain investors (stockholders) Improved forecasting accuracy, especially

for custom orders

Conclusion

What ACSI is as an financial toolHow it measures Customer SatisfactionThe ACSI model (a great exam question!)The Dow Corning case study

References

http://www.theacsi.com/overview.htm http://www.baldrigeplus.com http://www.flash.net/~benchmar/csma.html http://www.sap.com Text: The Management & Control of Quality,

5th ed., by Evans & Lindsay, 2002.

The End

Any questions?

ACSI Pres 03 Pom 246.ppt

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