Academic

A while ago I commented on the notion that corporations may be less likely to focus on other constituents during an economic downturn.  The most recent scores for the American Customer Satisfaction Index both confirm and undercut that notion as it relates to customers.  Indeed, those scores, which reflect results for the first quarter of 2008, find that there has been a slight rise in customer satisfaction for the first time in a year, while commentators to the Index indicate that--unless corporate resources are "too depleted or misallocated"--a focus on customers is critical during times of economic turmoil.

Indeed, commentators to the Index note that companies actually feel pressure to focus on customer satisfaction because of the economic downturn.  This is because customers have few resources and hence are not inclined to spend more.  As a result, companies must work hard, not necessarily to get new customers, but to make sure that they keep the customers that they have.  In this regard, the economic downturn appears to make every customer that much more important, providing incentives for companies to make sure that they do not lose any customers to competitors.  Thus, the Index revealed a slight increase in customer satisfaction.  Moreover, when viewed by industry, the Index indicated that there was more gain than decline in customer satisfaction in each industry.

To be sure, it appears that not every company, or in some cases not every industry, can afford to spend resources on improving customer satisfaction.  Cue the airlines.  With American Airlines' recently announced plans to cut jobs and charge customers for their first checked bag, it is little wonder that many customers are dissatisfied with airlines.  Reflecting this, the Index revealed that the airline industry as a whole had some of the lowest customer satisfaction scores, with some companies showing double digit declines in customer satisfaction.  In fact, commentators note that too often airlines with low satisfaction numbers merge, creating even more dissatisfaction among their customer base.  Hence, low customer satisfaction numbers seem to be an industry wide problem with no real winners--including  shareholders.  But alas Southwest appears to be the one exception to this problem.  Indeed, the Index reveals that Southwest has particularly high customer satisfaction numbers, and points out that if not for those numbers, customer satisfaction for the airline industry would be at an all time low. Of course, while Southwest's focus on customer satisfaction may be some part of the reason why it is doing better than many other airlines, it also may be the case that the fact that Southwest is doing better than others gives it the flexibility to focus on customer satisfaction.  (And hence the increasing gas prices may change the Southwest story as well).  These observations only confirm commentators' initial observation--that is, the economic downturn makes focusing on customers critical, unless a company is so economically challenged that it cannot afford such a focus.