Google and Apple Defy Declining Customer-Satisfaction Trends

American customer satisfaction declined in the second quarter of 2008 and continues on a bumpy path with no momentum, according to (pdf file) the American Customer Satisfaction Index [ACSI] from the University of Michigan’s National Quality Research Center.

After a small uptick last quarter, ACSI slipped 0.1% to 75.1 on a 100-point scale. These results suggest that consumer spending will remain weak with no more than 2.3% growth in the third quarter.

Among individual companies and industries, Google (GOOG) surged in the improving internet portals/search engines category, while Apple (AAPL) performed well among otherwise-slumping personal computer manufacturers.

In the highly rated automobile industry, American automakers significantly trailed foreign competitors. Whirlpool also dropped in rankings in the declining appliance industry.

Internet Portals & Search Engines

According to ASCI, customer satisfaction with the internet search engine/portal category of websites rose 6% to an all-time high of 79.3, largely on the strong improvement of Google.

After slipping behind Yahoo for the first time last year, Google surged 10%. Google’s score of 86 sets a new standard for e-businesses and creates a nine-point gap between its nearest competitor, Yahoo (YHOO), which fell 3% to 77.

Personal Computers

 

The personal computer industry suffered a second consecutive drop in satisfaction, falling 1% to 74, losing all gains made since 2005.

Apple defied the industry by moving in the opposite direction and posting its largest gain ever to 85, a new all-time industry high. The 8% leap puts Apple 10 points ahead of its nearest rival.

The industry aggregate decline was largely among makers of Windows-based machines. Hewlett-Packard (HPQ)(73), Gateway (GTW) (72), and Compaq (70) each declined 4%. Dell (DELL) was up 1% to 75.

Automobiles

Customer satisfaction for the automobile industry as a whole remained at an all-time high (unchanged at 82), and one American carmaker, GM’s (GM) Saturn, showed considerable improvement (up 5%). However, U.S. auto manufacturers - hit with record losses - are plagued by slumping customer satisfaction. No domestic car maker scored among the top four in the industry, but the bottom three are all American brands.

• Lexus and BMW lead all auto manufacturers with scores of 87.
• Toyota (TM) and Honda (HMC) each improved 2% to 86.
• Mercedes Benz, once No. 1 in customer satisfaction, has continued to fall behind the leading carmakers. It has seen slow, steady erosion to its current position, which is around the industry average.
• Chevrolet, GM’s best-selling brand, took the biggest fall to 79, losing 4%. Chrysler’s (DCX) Dodge (-3% to 78) and Jeep (+1% to 76) anchored the bottom of the industry list.

Professor Claes Fornell, head of the ACSI at the University of Michigan said:

The problem for domestic companies is that they now lag further behind their foreign counterparts. This is not going to be helpful as the Big Three will lose more pricing power and be forced to continue dependence on rebates and discounting in a market where consumer preferences keep shifting away from domestic cars.

Major Appliances

Customer satisfaction with major appliances slid 3% to 80 this quarter. All three major companies declined, with Whirlpool (WHR) dropping the most (-5% to 80), while General Electric (GE) and Electrolux (ELUXF.PK) both dropped 1% to 80. Whirlpool, the world’s biggest appliance manufacturer, faces increased competition at a time when domestic demand is shrinking and the cost of shipping and raw materials is rising, according to ACSI

Fornell said:

The American consumer has long been the single biggest force propping up the U.S. and the global economy. But declining customer satisfaction combined with weaker demand for U.S. exports may make it difficult for American households to shoulder the burden of being the locomotive for world economic growth.

About the research: The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy. The overall ACSI score for a given quarter factors in scores from about 200 companies in 44 industries and from government agencies. Data for ACSI are collected at the individual customer level, with scores for a company’s customers aggregated to produce company-level results. Scores for each industry consist of an average of its companies’ scores, weighted by the revenues of each company.

 

Comments

[carguyc6:]

As an analyst in GM's Quality department, I spend the better part of each working day immersed in quality and customer satisfaction data. Given the dramatic improvements I've seen in GM's product portfolio over the past few years I was puzzled by the results of the ACSI. Granted, GM still has some less than stellar products in it's portfolio that are nearing the end of their lifecycles but it would be hard to argue that the recent crop of new products such as the Chevrolet Malibu, Cadillac CTS, Buick Enclave, Saturn Aura and Outlook, etc. aren't indeed class leading products. Don't take my word for it, read the media reviews or better yet, drive one. Understandably, I had a difficult time rationalizing significant improvements in GM's portfolio with subsequent declines in customer satisfaction so I did some investigation. It turns out that the declines in the ASCI have nothing to do with the product itself. Quite the contrary actually, since customer satisfaction with GM products, according to the study, remains high, along with value for the money. What drove the scores down this year are consumer perceptions of the financial condition of GM and the other domestic automakers (big surprise!) and perceptions of poor fuel economy. Perceptions of poor fuel economy don't necessarily reflect reality either. GM currently has 17 models in its portfolio that get 30+ mpg according to the EPA, more than any other automaker.

2008 Aug 26 01:04 PM

[Urbane Gori...:]

Sorry... I have to disagree.... I rented a mid-compact GM ""something"" in Hawaii... It seats five and had room for luggage... It really was a plasticky poorly made vehicle and suffered pretty bad gas mileage for the week we drove it. Compare that to the Fiat diesel we rented in Italy. No comparison... The Fiat wins hands down... Nor did it spew clouds of black smoke or clank like you have a bad case of rod-knock like American diesels seem to do. In fact it was real peppy and smooth.

Then look at engine life expectancy. I was looking at buying a used Mustang, but settled on a used BMW. Why? For the same price I found that the life expectancy of the Mustang engine (based on anecdotal info...) was a little over 100K miles, whereas the BMW would run to 250K miles....And the mileage was better.

I suggest you read the article in Wired where Jay Leno explains what is wrong with American manufacturers.... In essence he notes that American manufacturers penalize buyers for buying a cheap car. As he notes, there is no reason why a cheap car can't also be a quality investment. And, I agree.

jegan ;-)

2008 Aug 26 01:26 PM