Customer satisfaction with food companies weakens: ACSI
November 18, 2010
by Bryan Salvage
ANN ARBOR, Mich. — The overall American Customer Satisfaction Index (ACSI) fell 0.3% for the third quarter – after almost two years of stalling scores – which brings the Index to a score of 75.7 on a 100 point scale. As a result, it appears it will be difficult for the US economy to look to strengthened consumer demand for a boost.
“Periods of stalling ACSI growth have often been followed by weak, and sometimes negative, GDP growth,” said Professor Claes Fornell, founder of the ACSI and author of The Satisfied Customer. “Consumer spending is unlikely to exhibit much of an increase unless bond buying by the Federal Reserve leads to more employment, inflation, consumer confidence and higher stock prices. With the drop in ACSI, consumer spending for the final quarter of 2010 does not look like it will improve enough to spur much economic growth.”
Customer satisfaction with food companies dipped for the first time in three years, falling 2.4% to an ACSI score of 81. Rising food prices seem to be the culprit, but some slippage in quality is also to blame as satisfaction with nine of the 13 largest manufacturers declined. Heinz fell 1% to 88 but nevertheless leads the industry as it has for the past decade, with cereal maker Quaker Oats and confectioner Hershey (both -1% to 86) close behind and Mars (-2%) and Sara Lee (unchanged) next at 85. Tyson Foods declined the most (-6% to a rating of 77) below other food companies. Customers are complaining about quality and a recall of deli meats probably hasn’t helped either, ACSI stated. Kellogg also faced a big drop, down 5% to match the industry average at 81. ConAgra improved, surging 6% to nearly offset a steep drop in 2009. Discounts on many frozen food lines and the introduction of new products created better value for money and higher quality, but not without a cost. The lower prices are eating into earnings and ConAgra’s profit forecast has been reduced.
“We’re not familiar with this index or how it’s calculated, but would like to point out that our company would not be having a record year if we were not producing anything but high-quality, safe products that meet the needs of our customers,” spokesman Gary Mickelson told MEATPOULTRY.com. “Our own tracking studies show consumer trust in the Tyson brand and confidence in the quality of our products have remained stable. In addition, Tyson’s Consumer Relations Department tracks the number consumer contacts we receive and in fiscal 2010 experienced an 11% increase in the number of consumers praising our products and a 12% decrease in the number expressing concerns.
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the US. ACSI releases results for various sectors of the economy on a monthly basis to provide up-to-the-moment coverage over the entire calendar year. The national index is updated each quarter and factors in scores from more than 225 companies in 45 industries and from government agencies over the previous four quarters.
“[Tyson Foods] has also received numerous honors over the past year for our products and service, such as McDonald’s Supplier of the Year, Taco Bueno Product Vendor of the Year and winner of the 2010 CSP Retailer Choice Best New Product Contest,” Mickelson added.
After three years of stagnant scores, customer satisfaction with pet food fell slightly, down 1% to 83, although pet food remains one of the highest-scoring products with no company ever below 79. Mars Petcare leads the way, up 2% to 85 and tying the aggregate of smaller pet food brands. Del Monte is next, after a 4% surge to 83.
Colgate-Palmolive’s Hill’s Pet Nutrition and Nestlé Purina PetCare share the next industry slot with identical scores of 82, just below the industry average. Hill’s jumped 3%, while Nestlé Purina plunged 5%. Iams has an even larger drop, down 6% to 80, as quality fell from in best in class to about average, according to customers, which is unlikely to be satisfactory when buyers expect premium quality and are charged accordingly.
The Index was founded at the University of Michigan’s Ross School of Business and is produced by ACSI LLC. ACSI can be found on the Web at www.theacsi.org