Customer Satisfaction Levels Fall
Online Companies Improved, But Overall ACSI Ratings Declined Again
Advertising agencies may have to focus on service, quality and reliability to address customer dissatisfaction with retail and financial services companies.
In 2008, advertisers may be called upon to produce campaigns addressing serious dissatisfaction levels in the American retail and financial service sectors.The problem was highlighted in February 2008 when the American Customer Satisfaction Index (ACSI) dropped for the second straight quarter.
The overall index for American companies fell to 74.9 on a 100-point scale. The 2007 fourth quarter score was the lowest level of that year.
In its report on the fourth quarter index, the University of Michigan said the falling score, when combined with other negative economic factors, does not speak well for sales in 2008.
"A second consecutive drop in customer satisfaction, combined with increasing unemployment, plummeting house prices, tighter credit, high levels of household debt, and inflating fuel and food prices, is likely to pose even more challenges this quarter for consumer spending growth," the report said.
Claes Fornell, head of the ACSI, added that both customer satisfaction and household debt-to-income ratios "are moving in the wrong direction."
Online Retailers Raised Customer Satisfaction Ratings
The bright spot in the latest ACSI was a two percent jump in online customer satisfaction, giving that sector an 81.6 percent satisfaction rating. Amazon.com led the Internet industry with an 88 rating. Newegg scored 87 and Netflix came in with an 84.
By contrast, department and discount stores dropped another 1.4 percent, sinking to 73, their lowest satisfaction rating since 2001. Wal-Mart contributed significantly to that decline as it fell six percent, to its all-time low of 68.
Trying to shed its image as strictly a retailer of low priced merchandise, Wal-Mart changed its advertising slogan late in 2007 to "Save Money. Live Better," assuming the "live better" phrase would strengthen the reason to save money. The change was made too late in the year to impact the fourth quarter ASCI and the new slogan does not appear to address the low satisfaction issue.
In an apparent reference to Wal-Mart, the University of Michigan report says "competing on price is no longer enough to offset lagging quality."
ACSI Does Not Designate Acceptable Customer Satisfaction Ratings
While the ACSI index tracks satisfaction ratings from quarter to quarter and from business sector to sector, it does not establish parameters for acceptable or safe ratings by sector or business.
Some firms may decide they can live with a 68 or 70 rating until it obviously affects their sales and profit levels. The checkout lines in some Wal-Marts, for instance, indicate that the stores may still be doing very well despite the lower satisfaction ratings.
Other retailers might experience an early connection between falling satisfaction ratings and their sales. Or they may fear the lower ratings will hurt their sales in the near future.
Advertising Agencies May Be Asked to Change Product and Service Perceptions
Product and service problems usually have to be corrected before the satisfaction ratings will improve. However, in today’s market, it may take considerable time to correct those problems if the company is dependent upon foreign products and outsourced labor that is located thousands of miles away.
Meantime, troubled companies are apt to look for advertising that can change service and product perceptions until those issues can actually be corrected.
That puts additional creative pressure on ad agencies to find new ways to promote service, quality and reliability to at least a fourth of the customers, many of whom are cynical and/or angry.
