Customer satisfaction hits all-time high
U. of Michigan survey reveals most improvement in the retail, financial services sectors.
NEW YORK (CNNMoney.com) -- Customer satisfaction among American consumers for a wide range of goods and services reached an all-time high at the end of 2006, according to a survey of consumers published Tuesday.
The 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.
The survey, which measured customer satisfaction in everything ranging from department stores to life insurance, saw the biggest improvements in the retail and financial services sectors, and only a slight uptick in e-commerce.
The index also anticipated that consumer spending, which accounts for nearly three-quarters of the U.S. economy, will continue to grow in the first quarter of 2007 at a 3.5 percent to 4.1 percent pace.
"In view of these results, it is not surprising that the consumer continues to lift the economy despite the housing slump," Professor Claes Fornell, director of the University of Michigan's National Quality Research Center, said in a statement.
In fact, the ACSI ranking for retailers showed scores that reversed course for the two merchants. Home Depot improved its customer satisfaction score by 4.5 in 2006 while Lowe's score dropped 5.1 percent to its lowest score ever.
"Home Depot's $350 million investment in store operations, new hires and more training may be paying off," Fornell wrote in the report. "The gap in customer satisfaction between Home Depot and Lowe's is closing, but Lowe's still holds a significant lead. Their challenge is to maintain strong customer service even as they accelerate growth and open more stores."
Elsewhere, consumers tabbed wholesale club operator Costco (Charts) with the highest satisfaction numbers among retailers, while electronics seller Best Buy (Charts) had the biggest jump in its score.
Department stores overall didn't improve their scores last year, although Kohl's and J.C. Penney successfully bucked the downtrend by avoiding a decline in their respective scores.
Big win for banks
The banking sector scored its highest level of customer satisfaction since 1994, according to ACSI. For a sixth year in a row, Wachovia (Charts) was the clear winner among customers, followed by sharp gains in approval among Wells Fargo (Charts) and JPMorgan Chase (Charts) customers.
It's been a steady improvement in customer satisfaction for the commercial banking industry since the year 2000. The growing popularity of online high-yield savings accounts, shrinking net interest margins, low interest rates on lending products and a slumping housing market have increased competitive pressures within the industry. That has made banks more eager to provide consumers with improved products and services, including the elimination of various fees, in order to draw deposits.
The University of Michigan report indicated that improvements in quality and value are driving customer satisfaction gains in the finance and insurance sector, with commercial banks finally scoring a new high of 77 on the index.
Customers were also positive about the health and life insurance sectors, with MetLife (Charts) leading the pack in terms of satisfaction. The gains in approval came even as healthcare costs continued to rise, due in part to a slowdown in premium growth and the cost of drugs.
E-commerce keeps climbing
E-commerce reported its second consecutive year of improvement, but fell just short of its 2003 all-time high, according to the ASCI survey.
One of the few dim spots in the survey was the online travel industry, which eased 1 percent, due to declining customer satisfaction with smaller travel Web sites. Leading sites such as Orbitz, Travelocity.com and Expedia only experienced slight changes.