The American Customer Satisfaction Index (ACSI), a national economic indicator of customer evaluations of
the quality of products and services, continues to worsen—a trend that began in 2007—but the deterioration for the third quarter was small, according to the University of Michigan’s Ross School of
Business. The good news is, the personal care and cleaning products sector held its own.
The ACSI, produced by the University of Michigan in partnership with the American Society for
Quality (ASQ) and CFI Group, is updated each quarter with new measures for different sectors of the
economy replacing data from the prior year. The overall ACSI score for a given quarter factors in
scores from approximately 200 companies in 44 industries and from government agencies over the
previous four quarters. The ACSI lost 0.1%, which drops the Index score to 75 on a 100-point scale.
The decline in buyer satisfaction has precipitated a softening of consumer demand, with household
spending actually falling in the third quarter for the first time in 17 years. Despite the overall drop
in ACSI, many companies are actually improving customer relationships.
In years past, rising customer satisfaction has helped sustain economic growth via consumer
spending even though wages did not improve much. But as the financial crisis has led to a credit
crunch and a contracting economy with high unemployment, the ability of households to spend money
is now seriously curtailed.
“The good news is that there has been not been a collapse in customer satisfaction, but rather that
the slide in ACSI might be flattening; the bad news is that customer satisfaction will not contribute
to aggregate consumer spending as much as it used to. Households are strapped for cash, have little
savings and credit is tight,” said Claes Fornell, founder of the ACSI. “But for individual companies,
customer satisfaction actually matters even more in a recession. Now is the time to make sure customers don’t leave and that margins don’t evaporate. Firms without strongly satisfied customers will
face a very difficult challenge.”
ACSI reported there was no change in the industry score for personal care and cleaning products,
which remains at a record high of 85.
Clorox remains atop the industry ( 87), but is joined this year by Unilever (which was up 1% to 87)
and Colgate-Palmolive, which improved dramatically (with a 7% rise to 87) in great part because of
its oral care product lines, such as toothpaste, teeth whiteners and electric toothbrushes.
According to Prof. Fornell, Colgate-Palmolive’s 87 is an all-time high for the company.
“Colgate-Palmolive has had a bumpy ride over the past few years, possibly because of a restructuring that began in 2005. The company has cut costs by closing almost one-third of its plants. It has
reduced the size of its workforce by 12% while shedding certain product lines, such as its laundry
detergent brands, in order to allocate more resources to oral care and pet food. Customer satisfaction
appears strong in the oral care product lines, but weaker for pet food,” he said.
Companies bucking the trend and improving customer satisfaction this quarter are strengthening
one of their most important assets—the health of their customer relationships, according to Prof.
Fornell. “This is as difficult to do in hard economic times as it is necessary. Companies that make sure
their customer relationships stay intact or grow stronger are in a better position to reap benefits once
the economy gets better.”
More info: www.theacsi.org
TO TELL THE
Today's beauty product marketers are less likely to mask the truth than those of yesteryear. According to
Mintel Beauty Innovation—a new service from the Chicago market research firm that monitors
beauty and personal care launches globally—manufacturers are shining a light on ingredients and
Mintel reports that more than one in seven global beauty product launches this year has either
been organic, ethical or all natural. In 2007, just one in nine fit that criteria. In the U.S., manufacturers are moving even faster. Nearly 30% of U.S. beauty products launched this year were organic,
ethical or all natural, up from 23% in 2007.
“Beauty companies increasingly take a more honest approach to personal care,” noted Nica Lewis,
head consultant, Beauty Innovation. “As people tire of insincere celebrity culture, we see more manufacturers using pure, natural elements in their products.”
In recent months, the honest trend goes even further. “Some of the latest beauty products incorporate ingredients from Indian Ayurveda or Traditional Chinese Medicine,” Ms. Lewis added. “These
ancient remedies have antioxidant or whitening properties that are being used to enhance contemporary, natural and organic formulas.”
More info: www.mintel.com