According to a nationwide survey and analysis from the American Customer Satisfaction Index (ACSI) Americans' satisfaction with their shopping, buying, and consumption experiences is at a 20-year high.
"A satisfied customer is often a loyal customer and a loyal customer is often a profitable customer"
The Index increased by 0.6 percent to 76.8 on the 100-point ACSI scale in the fourth quarter of 2013, according to a recently released report. Based on that increase, ACSI analysts forecast the first quarter of 2014 will close out with consumer spending growth of 2.4 to 3.0 percent.
"Satisfied consumers are good for the economy because they create more demand, which is critical for economic recovery," said Claes Fornell, chairman of the American Customer Satisfaction Index and distinguished professor emeritus at the University of Michigan, where the Index was created. "The strong ACSI numbers suggest that while consumer demand is now pretty strong, it is a latent demand that needs to be triggered by improvement in household discretionary income and consumer confidence in order for the spending to fully materialize."
Consumer Satisfaction, Confidence & Sentiment
Satisfaction is one of the main factors affecting consumers' willingness to spend, along with consumer sentiment and consumer confidence.
The ACSI is calculated based on survey data that cover what Fornell calls "the full arc of the customer experience." The data is fed into an econometric formula that weights specific elements of satisfaction according to which ones most influence spending behavior. Fornell has studied the impact of customer satisfaction on buying behaviors for more than 30 years.
Demand, Spending, and the Stock Market
More than 70,000 people are surveyed over the course of a year to compile the Index. That includes customers of more than 200 firms that have significant enough market share to influence overall national consumer satisfaction and demand for goods and services. The ACSI reports company-level scores publicly on a rolling basis.
"A satisfied customer is often a loyal customer and a loyal customer is often a profitable customer," says Fornell. "That's why strong ACSI scores are indicative of stock market performance. Both ACSI and the stock market are at record highs."
Enough to Fix the Economy?
"For quite some time now, the U.S. economy has suffered from weak consumer demand," says Fornell. "It is still a big problem. Without strong consumer demand, the economic recovery will continue to be tepid."
