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Satisfaction with Personal Care, Cleaning Products Remains High

November 30, -0001

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.”

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