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Happy customers, better bottom line...
Make like Google and Yahoo!

By Daniel Terdiman

Published: Wednesday 17 August 2005

The link between customer satisfaction and financial success is a lot more than anecdotal, according to a report released on Tuesday.

The University of Michigan's American Customer Satisfaction Index, or ACSI, reflects US citizens' sense of approval about some of the country's most famous companies and brand names during the first quarter of 2005. It concludes that companies which concentrate on meeting customers' needs are the ones most likely to make sales and lure new devotees.

A clear reflection of that is the correlation between the near doubling of revenues by both Google and Yahoo!, and their dominance of the search engine and portal categories, respectively.

Larry Freed, president and CEO of ForeSee Results, which co-sponsored the report, said: "It's not a surprise that Google and Yahoo! not only do a great job at satisfying their customers but are also both financial successes. So that's a great testament to customer satisfaction."

The flip side to the success of Google and Yahoo!, said Freed, is the smaller advances in revenues and satisfaction ratings received by the two Silicon Valley companies' major rivals, MSN and AOL. These companies "have had minimal growth - if any at all - in revenue, and trail Yahoo! and Google significantly in satisfying their customers", he said.

In the portal category, Yahoo! earned the highest rating on ACSI: an 80, up 8.1 per cent from a year ago. By comparison, MSN came in at 75 and AOL at 71. Google led the search category with an 82. Ask Jeeves scored 72 in search.

The study measured customer satisfaction in several other areas as well, including personal computers, automobiles, and news and information.

In the personal computer category, Apple scored 81, beating Dell by seven points.

Freed pointed out that the majority of online news and information companies scored within two points of each other. The general lack of differentiation between sites such as MSNBC.com and USAToday.com, and their inability to create distinguishing personalities, are key factors in the relative weakness of their brands, he said.

The ACSI is a national economic indicator of how satisfied customers are with the quality of products and services available to households in the US. The evaluations, gathered in a report by the University of Michigan Business School and other organisations, carry a top score of 100.

The ACSI covers a number of industries, including automobiles and appliances. It comes out quarterly, although particular industries are updated once each year. Information is acquired, for example, via telephone interviews and web questionnaires.

CNET News.com's Ed Frauenheim contributed to this report

Daniel Terdiman writes for ZDNet