(FORTUNE Magazine) – This year's customer-satisfaction index highlights the enduring strength of established brands and underscores the pitiful state of American services. The top quartile is a roll call of well-established names--Heinz, Maytag, Kraft, Whirlpool, Nordstrom, Kellogg, Miller Brewing--while the bottom quartile is a lineup of harshly judged service companies. Airlines, for example, are widely viewed as hostile monopolies that delight in torturing their passengers. Banks going through mergers are driving customers out their doors. Many utilities, accustomed to regulated markets, haven't learned how to woo customers. Most fast food and its accompanying service are increasingly considered less than palatable.

Researchers have found a general correlation between delighted customers and above-average stock market returns (see following article), but while reading this ranking, you can't help noticing the exceptions. Many of the brands with top ratings, for example, are manufactured by companies with mediocre to poor financial results (Whirlpool, Nordstrom). Some of those airlines, banks, and utilities that alienate customers are minting money (Northwest Airlines, Wells Fargo).

Obvious question: Just how much attention should managers pay to studies, like the ACSI, that closely track customer attitudes? The answer: plenty. The ACSI, like other such surveys, has limitations. It's a fledgling, four-year-old effort that covers only products and services used by households, not other businesses. The research covers close to 200 U.S. companies and a few foreign concerns with big market shares, a small slice of the corporate landscape.

But these limitations shouldn't obscure the index's potential, as more and more enterprises are concluding. So far, about 25 companies have anted up the $25,000 required annually to gain access to the data the University of Michigan collects for this index. Andersen Consulting recently signed up as a sponsor because the firm regards the index as a useful management tool. Says partner Joseph O'Leary: "I tell clients it could help them assess where they are today vs. competitors, and in what direction they are moving." The European Union is also on the verge of adopting the ACSI modeling methodology, which means companies on the Continent will be urged to employ it.

ACSI's growing stature stems from managers' frustration with the uneven results of quality-improvement efforts that began in the 1980s. Frederick Reichheld of Bain & Co. and other researchers have proved that loyal customers--those who repeat purchases regularly--can substantially increase profits because they cost less to attract than new customers. But businesses have needed a credible, independent system for measuring the value of that loyal-customer asset over time and across business lines.

Economist Claes Fornell at Michigan's business school created just such an econometric model for Swedish companies in 1989. What set the Swedes' Customer Satisfaction Barometer (CSB) apart from other efforts was its ability to estimate what percentage of customers would repurchase a product or service. That information is crucial for planning because it enables companies to calculate future revenue streams and thus make rational investment decisions. After five years the Swedes were able to demonstrate a tantalizing correlation: Companies capable of increasing their quality index by one point every year for five years improved their average returns on assets during that period by 11.33%.

The American Society for Quality began searching in 1990 for a methodology to create a national index that could measure different kinds of businesses comparably. They selected the Swedish model as the best, which led them to Fornell. Today customers of ACSI are given customized computer software that quantifies results from telephone interviews with about 50,000 customers every year, plus a report that compares their company's results with those of competitors. More important, if clients plug in their own financial data--such as the average cost of each transaction and the average profit margin on each sale--they can obtain a dollar figure that represents the net present value of their retained-customer base. Net present value is based on future earnings, so the software disciplines managers to think hard about the effects of strategic choice.

The people who compile the index do not formally advise their clients on how to fix an ailing business, but their information helps diagnose problems. Take, for example, the experience of a real company that for reasons of confidentiality we'll call Company A. This is a service outfit that conducts millions of transactions every day at an average cost of less than $5 each. A manager can learn from ACSI that his quality-index number is far below those of two competitors because his company receives so many complaints. The net present value of Company A's customer base is a low $801 million. If the company could reduce the number of malcontents through better service and product--no easy task--its net present value would rise and perhaps overtake the $1.1 billion registered by Company B, which is smaller. Fornell warns, however, that these gains take time; a rise in net present value lags behind any increase in customer satisfaction because the satisfaction increase isn't worth much until it's established.

To fulfill its potential, an index like the ACSI should provide numbers that correlate more closely to overall economic performance. That, proponents of the index argue, will come with time. Fornell would like to see a "retained-customer asset" figure added to corporate balance sheets, because "intangible assets are crucial in today's economy." He thinks boards should insist on knowing the value of their company's customer bases and instruct CEOs to boost those values. Everyone says customers are important; as their importance becomes quantified, they will get more attention yet.

--Linda Grant