Customer Service = Money

image A few studies have shown that companies with high ratings on the American Customer Satisfaction Index (ACSI) have seen better performance on the stock market over a period of time than their competitors.

In the study / paper entitled Customer Satisfaction and Stock Prices: High Returns, Low Risk (here is the PDF), a number of companies were tracked. Those with high customer satisfaction ratings did better on the stock exchange between 1997 and 2003 than those with lower ratings.

These companies outperformed their competitors by margins that were occasionally quite large. The student is pretty technical, but from my understanding, and the understanding of some other people I know that are familiar with it, it shows that companies with higher customer satisfaction rates enjoy business success as well.

Think about it – great customer service usually leads to high customer satisfaction, which in turn produces many of the following:

  • Customer referrals
  • Customer evangelists (aka free marketing)
  • Increased repeat business
  • Increased profitability
  • Happier employees (which leads to increased productivity)

By the way, the ACSI is a super interesting group. Their satisfaction scores by company (and also by industry and sector) are really interesting. Only larger companies are included, but the numbers are really interesting. The biggest problem is that they don’t have measurements for all the companies on the list for every year.

One Response to “Customer Service = Money”

  1. jen_chan, writer said:

    Oct 26, 07 at 6:54 am

    Never underestimate the power of good customer service. I see that the Zappos story has reached this part of the web. Honestly, I think customer service benefits not only the customers but the company as well. And it’s not always in terms of monetary benefits. Doing the same thing (more or less) over and over again can get pretty mundane after a while. When you go out of your way or even just give good service, you’re not only making your customers’ day. Employees will also find themselves feeling good about themselves.