According to conventional wisdom, customer satisfaction is correlated with profit margins. But not always. It appears that high inflation is dramatically hammering satisfaction scores, while profit margins are moving in the other direction, according to ACSI figures.
“The more recent downturn in customer satisfaction is worrisome,” say researchers at the American Customer Satisfaction Index. “It is often the case that a change in customer satisfaction precedes a change in profitability.”
“Since ACSI is down sharply, chances are that corporate profitability will follow suit,” ACSI says. And that is a sign of “malfunctioning markets.”
The negative correlation between profits and satisfaction “is likely to happen in malfunctioning markets with supply problems for products as well as labor, demand greater than supply and where inflation is, at least in part, caused by collusion and price gouging,” the ACSI says.
Internet service providers traditionally rank at the bottom of industry scores for customer satisfaction , along with linear video subscriptions. Mobile scores are higher and fixed network voice scores, traditionally low, have stabilized, probably because disaffected customers have abandoned the service, so the remaining customers arguably are those who still see value in the service, as illustrated by eMarketer data.
ISPs, as a group, rank about 20 points lower, on average, as shown by ACSI figures.
As a rule, physical products industries tend to rank higher than products sold as subscriptions.
Perhaps consumers are reminded every month when they have to pay anew for their subscription products of the value-price relationships. On the other hand, that “pay as you go” reality does not similarly seem to damage supermarket scores, which tend to be high.
Whatever the reason, I cannot remember a time in many decades when communications services did not rank at the bottom of industry satisfaction scores.
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