Commonly Used Terms

The ACSI, American Customer Satisfaction Index, is an index that measures the satisfaction of U.S. household consumers with the quality of products and services offered by both foreign and domestic firms that have a significant share in U.S. markets. It works as an economic indicator that measures the satisfaction of consumers across the United States economy.

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The ACSI is a cause and effect model that measures drivers of customer satisfaction on the left side and outcomes of customer satisfaction on the right. The questions assess customer evaluations of the determinants of each parameter. These parameters are multivariable components measured by several questions that are weighted within the model.

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This national customer satisfaction level indicator is reliant on 3 critical 10 point scale questions to obtain customer satisfaction. These American Customer Satisfaction Index (ACSI) questions are categorized into Satisfaction, Expectation Levels, and Performance.

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For example, the questions would ask:

1.  How satisfied are you with the following product/service?
2.  Whether the product/service met your expectations?
3.  How did the product/service perform in comparison to our competitors?

The ACSI then provides a formula to normalize the results achieved from these questions.

    (Satisfaction + Expectancy + Performance - 3) / 27 * 100

Ideally, all three parameters have different weights according to their industry as well as the state. This influences the American Customer Satisfaction Index (ACSI) customer satisfaction score calculation. This calculation is an average calculated by considering different weights for each of these parameters and also industrial standards.

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 The methodology used by ACSI, as aforementioned, is based on three key parameters: Satisfaction, Expectation Levels, and Performance, which are further elaborated into the following:

1. Customer expectations evaluate what the customer expected the product or service to be and what did they actually receive. These expectations can be formed either from word-of-mouth or prior market research or belief in an organization’s previously proven reputation.
2. Perceived quality is a parameter that evaluates a customer’s past experience. It depends on how competitive the market is and whether the customer has experienced the competitor products or services and also on what frequency of usage.
3. Perceived value is the utility of product or service in comparison to the cost paid by the customers. Value, generally, impacts the first purchase but, over a period of time, becomes less impactful when it comes to building and maintaining customer satisfaction.
4. Customer complaints are those customers who feel there’s a huge gap between what they expected or were promised and what they were delivered. This gap can lead to displeasure, which is important to understand customer satisfaction as higher displeasure indicates lower customer satisfaction levels.
5. Customer loyalty is measured on the basis of likeliness of a customer repurchasing from the same organization and irrespective of the cost linked to various products and services offered by this organization.

The ACSI benefits businesses, researchers, policymakers, and consumers alike by serving as a national indicator of the health of the U.S. economy, as well as a tool for gauging the competitiveness of individual firms, consumer satisfaction, expenditure patterns at different income levels, ever-changing market trends and profitable markets.