Price declined as the most frequently reported reason for choosing a carrier in 2008, down to 39 percent of survey respondents.

The fact that consumers claim to value good customer service, but routinely choose to give their business to the carrier with the lowest fare, is usually blamed for the current trend towards higher fees and awful customer service. J.D. Power & Associates concluded that airlines should invest in their employees to improve customer service before its too late...

“Across the airline experience, from check-in, to the flight, to deplaning, passengers are being affected by the ramifications of carriers making staff cutbacks and have expressed that performance and attitudes of airline staff are suffering,” said Sam Thanawalla, director of the global hospitality and travel practice at J.D. Power and Associates. “In this unstable industry environment, it is critical that airlines invest in their employees as a means to enhance the customer experience, as there is a strong connection between employee satisfaction and customer satisfaction. Those airlines that focus on keeping their employees informed and motivated will be better able to change negative consumer sentiment and truly differentiate themselves.”

Can an airline's service get bad enough to make you pay more to avoid a certain airline?

In other news, JetBlue ranked highest overall in their survey for the third straight year.

Overall Satisfaction in the Airline Industry Declines to a Three-Year Low Primarily Due to People Factors, Rather than High Prices [JD Power]
(Photo: whatatravisty )

Customer Satisfaction Falls Again; Retail, Financial Services Down; Wal-mart, Home Depot at All-Time Lows [ACSI]

[via The Value Creation Process in Customer Relationship Management (PDF)]
* Reichheld, F. F. and Sasser, W. E. Jr. "Zero Defections: Quality Comes to Services", Harvard Business Review, September-October, 1990, pp. 105-111.

Industry scores dropped 12 points on 1,000 point scale. Verizon has the highest ratings at 726. Sprint scored the lowest with 679. The average is 709. According to the survey, the four most important factors driving customer satisfaction are sales staff (51%); store display (17%); store facility (16%); and price/promotion (16%).

The study's authors claim in the press release that the biggest thumb on customer satisfaction scores are employees in big box retail stores who using high-pressure sales tactics and not accurately conveying product and
service information. Gee, I wonder who that could be...

2007 Wireless Retail Sales Satisfaction StudySM-Volume 2 [J.D. Power and Associates]

...we can figure that HSBC, Bank of America, and Capitol One probably have the fewest membership benefits, the highest fees, and the highest APRs. These three companies are certainly not well-liked among our readership.

J.D. Power and Associates attributed the high marks for American Express to the array of membership benefits their cardholders have. While airline miles are some of the most widely dispensed and used membership benefits in the credit card industry, the study found that cashback rewards have a greater impact on customer satisfaction.

Interestingly, while membership benefits drive much of customer satisfaction, most customers are unaware of all the benefits that they have, a factoid provoking enough that we're going to check in with our credit card company to make sure we know the full power of our plastic.

American Express Ranks Highest in Credit Card Satisfaction [J.D. Power and Associates via FiLife]

One interesting finding is those same conditions don't build trust for consumers as quickly, "suggesting that they have now come to expect these attributes in day-to-day business."

However, their trust can be severely eroded when these baseline requirements are not met, with potentially dramatic consequences for business. For example, a massive 63% of European consumers would be concerned about buying a product or service if a company was unethical; 56% would lose trust with bad customer service, and 59% would react negatively to outdated products and services.

The same holds true for issues of security—the study found that customers are willing to move to a competitor if they offer higher security, but they don't feel it should be treated as an "added value" that justifies higher fees.

As an aside, it's interesting to compare industry reputations across the pond: banks are among the most trusted in Europe, while telecommunications and airlines are the least trusted.

We wonder how much longer it will be before shareholders start to realize that a healthy company is dependent upon meeting these requirements as much as meeting quarterly sales goals—perhaps it's already begun with the recent shareholder suit against Mattel.

"Unisys study reveals what erodes consumer trust" [Computing SA]
(Photo: Getty)

Despite that mysterious anecdote, all three stores Business Week sampled scored high on cleanliness. The big failure in all three, however, was customer service, which continues to nose-dive due to poor morale:

As the experience with the cashier in Uniondale illustrates, many of Wal-Mart's workers feel outright hostility toward the company, and, by extension, they often treat customers with indifference or worse. That puts Wal-Mart in a box. Without reasonable service, the company is forced to compete almost solely on price. That in turn squeezes margins and makes it difficult to pay employees the better wages and benefits that could boost morale. It's a vicious cycle that now appears to be working against Wal-Mart.

After reading a scientific article in the Journal of Science claiming exactly that, we put together two mock stock portfolios. One contained companies that both scored in the top 20% of the American Customer Satisfaction Index (ACSI) relative to their competition and beat the national ACSI average. The other was the reverse, companies scoring in the bottom 20% and having scores lower than the national mean.

Since May, when the portfolios began, the ACSI fund is down 5.63%. The ANTI-ACSI fund is down 8.16%. Also, we messed up. Overview inside...

It's much too early to draw any sort of conclusion whatsoever but we thought you might be interested in seeing how they were doing so far.

We realized two things we did very wrong:
1) We're a month behind in reporting the changes, somehow we miscalculated 4 months (we figured for four months in advance, rather than four months inclusive... doh!)

2) The ACSI index covers over 200 companies, but it only releases new scores for a limited number of industries each quarter. That is, different industries take turns getting reported each quarter and you don't see the industries next set of scores until 12 months later. Therefore... we have a bunch of number crunching to do and have to evaluate and buy a crapload more companies, backdated to their May prices when the experiment began. Good thing we're only playing with imaginary money!

PREVIOUSLY:
The Consumerist ACSI Fund v2.0
How To Beat The Stock Market: Buy Companies With High Customer Satisfaction Scores

Laurette then leveraged being a skinflint into an art project, Produits rembours s/Money-back Products (1993-2001).

Now that's thrift for ya! — BEN POPKEN

products [Laurette.net]
Matthieu Laurette [Your Daily Awesome]

UPDATE: To alleviate commenter concern that this post indicates we're dry-humping Satan...

Companies put satisfaction/money-back guarantees on products, earning good-will feelings and trust from shoppers, yet the makers know an extremely small percentage of people will ever take them up on the offer. While Laurette's behavior may strike one as fraudulent, it's intellectually interesting to see someone take these guarantees to the logical extreme and live nearly entirely on rebated products, allegedly in a perpetual state of dissatisfaction, calling into question whether one can truly find "satisfaction" in today's consumer culture.

We also made the The Consumerist ANTI-ASCI fund, buying only companies performing in the bottom 20% on the ACSI relative to their competition and having ACSI scores below the national average.

Peek at our portfolios...

We know, ha ha, the ANTI-ACSI is outperforming the ACSI. Even if it was the other way around, you can't tell anything from a mere 2 hours and 20 minutes of the market being open...

In that spirit, Correlation does not equal causation. To truly see the experiment's hypothesis out, it will need to run for far longer than any of us will probably be writing this blog. Something like 10 years, ya know?

Even still, we'll have fun tracking the funds' progress, and seeing if it might be true that company's with higher scores on the American Customer Satisfaction Index outperform the market indexes. — BEN POPKEN

NOTES:
* Made these charts with Google Finance's portfolio function.
* It's easier to find companies below the national ACSI average than above it.
* Samsung was excluded as they're not public ally traded on the American stock market.

PREVIOUSLY: The Consumerist ACSI Fund

(Photo: Getty Images)

Though each Indian call center is different, our tipster explains how his measures success, inside...

(Photo: sarae)

An outside firm calls the customers after they've had contact with us, and asks them to score us on a scale of 1 to 5. And yes, we get a weekly report of the scores for each site. [We have] minimum targets (which is for 50 percent of callers to rate us a perfect 5, and 85 percent of callers to rate us a 4 or a 5.) And despite what people may think, they REALLY care about those scores. A single low scoring call has managers scrambling, arranging meetings, people tracking down the recording, action plans, training sessions being arranged, charts, graphs.... etc.

It may seem to the customer like no one cares, but that's because no one at our site is authorized to get into contact with the customer to apologize or acknowledge the complaint. (another issue to send up the totem pole.)

There are a series of around 15 questions they ask.

• What's your overall experience with the company,
  
• How likely are you to recommend the company to your friends,
  
• Overall how would you rate the agent you spoke with,
  
• How would you rate their attitude, the level of resolution they gave you, the level of personal attention.... etc.

  The questions about the company are used by the company themselves (and also to give the customer a place to vent so they don't have to take out complaints on the company on the agent), the "overall how would you rate this agent" is the sole factor used in the scores, and the rest (along with comments) are used by trainers to see what exactly lead to the low score so we know what to correct.

Starbucks and Cracker Barrel fared well, along with several upscale chains, including Bonefish Grill, Ruth's Chris, Legal Sea Foods, and Morton's. The survey attributes the faltering satisfaction levels to record expansion and a lack of innovation.

"They all drowned in the sea of sameness," he said, asserting that they had failed to innovate and largely had similar menus. "They overbuilt and underwhelmed."

Eateries found failing to deliver [Chicago Trib]
Restaurant-Beverage Demand Today 2007 [Kanbay Research Institute]

These companies are in the top 20% on the ACSI scale relative to their competition, and their score is higher than the national ACSI average (75.2).

We used the same methodology as an article in the Journal of Marketing whose backtested portfolio outperformed the major indexes by 93%

We'll monitor the portfolio and see if you can really beat the stock market by buying companies with high customer satisfaction. — BEN POPKEN

PREVIOUSLY: How To Beat The Stock Market: Buy Companies With High Customer Satisfaction Scores

The results are based on an online survey of 6,543 U.S. consumers conducted last fall. The top retail pharmacy was Medicine Shoppe, an international franchise business owned by the drug distributor Cardinal Health.

The rankings also surveyed "big box" chains for overall customer satisfaction. Target cleaned up with "866 points and receives the highest ratings in all factors driving customer satisfaction." Walmart and Costco fought it out for most crappy with Costco winning the battle of who could suck the most by one point. —MEGHANN MARCO

Pharmacy Survey Says: Medicine Shoppe No. 1 [WSJ Health Blog]
JD Power National Retail Pharmacy Satisfaction Study
Duane Reade Ranked #7 out of 7 ::cue surprise face:: [I Hate Duane Reade]
(Photo:Maulleigh)

(Corporate hotels have little to worry about because if they foul up, Marriott will just send in a glut of extra labor to fix the problem.) So how to keep labor costs way down and keep the scores way up? Easy.

Based on logs of guest problems kept by the "At Your Service Agent" (the hotel operator) and the on-property comment cards, the franchise managers know in advance which guests are likely to give the property a low score. Before or soon after the guest checks out, the list of problem guests gets copied to the hotel's reservationist, the person responsible for updating records in Marriott's massive guest database called OSCAR. The reservationist opens each problem guest's file and "updates" the guest's e-mail and postal addresses—actually changing them to invalid or just plain fake addresses. This way, if the guest gets selected for a GSS survey. . . the survey never arrives. This way, only happy, satisfied guests ever get the surveys, and the franchisors can run a hotel into the ground while laughing all the way to the bank.

Marriott, "the leader in brand loyalty," prides itself on having some of the best customer service in the industry—so much so that the corporate Quality Assurance group uses some really tough metrics. And the stakes are high: these QA metrics determine whether a given franchise hotel gets to keep the Marriott "flag," or the right to use the brand. Guest surveys are split into two types: on-property comment cards, which alert staff to problems while a guest is still around, and "Guest Satisfaction Surveys." As the name suggests, the former is just a bellwether, it never gets seen by anyone outside the property. The latter, however, is a corporate metric.

After any given stay, a guest may be randomly selected to receive a "Guest Satisfaction Survey" by e-mail or post. Guests are asked to rank nearly every aspect of the hotel, from breakfast to meeting room temperature, on a scale from 0 to 10. What the survey doesn't mention is that there are really only two valid scores: 0-7 counts 0, 8-10 counts 1. A hotel's GSS "Score" is calculated as the percentage of all responses that are 8 or above. Precisely because the stakes are so high, franchise hotels are willing to do anything to keep their scores high. (Corporate hotels have little to worry about because if they foul up, Marriott will just send in a glut of extra labor to fix the problem.) So how to keep labor costs way down and keep the scores way up? Easy.

Based on logs of guest problems kept by the "At Your Service Agent" (the hotel operator) and the on-property comment cards, the franchise managers know in advance which guests are likely to give the property a low score. Before or soon after the guest checks out, the list of problem guests gets copied to the hotel's reservationist, the person responsible for updating records in Marriott's massive guest database called OSCAR. The reservationist opens each problem guest's file and "updates" the guest's e-mail and postal addresses—actually changing them to invalid or just plain fake addresses. This way, if the guest gets selected for a GSS survey. . . the survey never arrives. This way, only happy, satisfied guests ever get the surveys, and the franchisors can run a hotel into the ground while laughing all the way to the bank.

I doubt Toyota and Marriott franchisors are the only ones who have found the holes in the system....I'm not surprised. It's the culture of modern business.

University of Michigan's American Customer Satisfaction Index (ACSI) increased to an overall 74.9 score out of 100 in the fourth quarter of 2006, its highest level since the survey first started in 1994. That's a gain of almost 2 percent from the previous year and a 0.7 increase from the previous quarter.

Home Depot raised their score, while Lowe's dropped 5.1%. Lowe's is still winning overall. "Elsewhere, consumers tabbed wholesale club operator Costco with the highest satisfaction numbers among retailers, while electronics seller Best Buy had the biggest jump in its score."

In banking, Wachovia was the clear winner for the sixth year in a row. —MEGHANN MARCO

Customer Satisfaction Hits All Time High [CNNMoney]

(Photo: tellumo)

"Don't ever underestimate the intelligence of the American consumer, because he or she is far smarter than we often give credit for. ... Garner a reputation for providing great customer satisfaction and you can charge a price premium..."

That s from, Satisfaction, a new book by two execs at J.D. Powers and Associates, that place that s always giving cars shiny trophies.

The book s premise presents us with a paradox. If sites like The Consumerist are successful in making companies behave better, prices may rise. Also, we d have nothing to talk about.

Thank god that ll never happen.

The Customer is Always Right [Star-Telegram]