To understand more fully the modern economy, and the firms that compete in it, we must measure the quality of economic output, as well as its quantity. Claes Fornell, Chair of the Board and Founder, American Customer Satisfaction Index, 1995

As in all good journeys , let us begin this book with a bit of history and foundation-setting. Given the primary subject of the book—to understand changes in the perceptions of American consumers over the last quarter-century and how to manage customer satisfaction given these changes—it is important to start with a brief overview and history of the American Customer Satisfaction Index (ACSI). How and why was the ACSI project created? How does it measure consumer satisfaction with individual companies, industries, and economic sectors? How has it evolved over the course of a quarter of a century? The fact that a large portion of the material contained in this book draws on ACSI data and findings, such an introduction is wise and necessary before proceeding. But beyond this straightforward goal, a clearer notion of how and why the ACSI was created and how it measures satisfaction across the U.S. economy and around the world will provide the foundation for a deeper understanding of the most important and enduring purposes of consumer insights and customer satisfaction measurement. In turn, this information will enhance the insights and lessons derived from 25 years of ACSI data and research offered in the chapters that follow, with personal insights from the founder of ACSI himself. So how and why did this project emerge?

In the early 1990s, researchers at the American Society for Quality (ASQ)—a prominent professional association founded shortly after World War II with the goal of advancing quality improvement principles and practices within economies around the world—recognized the need for a comprehensive national measure of quality for the U.S. economy. Only with such a measure, so it was thought, could a clear understanding of how well the U.S. economy was performing be achieved. ASQ began by investigating whether a national, cross-company, cross-industry measure of quality already existed, and if not, whether its development was feasible. With the help of a team of experts on the topic, ASQ examined myriad approaches to quality measurement and determined that no standardized measure of quality existed that could be applied to the multitude of diverse products and services offered within a modern economy. While many different quality measures existed, none was designed to effectively compare and benchmark these measures across distinct industries and categories (e.g., goods vs. services, cars vs. consumer-packaged goods (CPG)), or to aggregate them into a national index of quality (i.e., an economy-wide, macroeconomic view of quality). However, one potentially useful model that was being implemented outside the U.S. at the time was brought to the attention of ASQ: the Swedish Customer Satisfaction Barometer (SCSB).

A few years before ASQ began its search, in 1989, a Swedish economist and professor at the University of Michigan in the U.S. named Claes Fornell had designed and launched a national index of customer satisfaction for the Swedish economy, a project called the Swedish Customer Satisfaction Barometer (SCSB). Fornell had spent the first decade of his academic career writing extensively on the topics of customer satisfaction, consumer complaint behavior , the economic impacts of customer relationship management, and advanced statistical analysis of consumer survey data. It was this expertise that had led him to conceive and create the SCSB.

With support from the Swedish government, which had seen its economy struggle with increased competition and slower growth throughout much of the 1970s and 1980s as the effects of the European Common Market became fully apparent, the SCSB was the first project to apply a single, standardized statistical model for measuring both quality and customer satisfaction across the diverse sectors of a large national economy. In its first year, the SCSB successfully measured satisfaction with nearly 100 Swedish companies across 28 distinct consumer industries, interviewing approximately 25,000 customers of these companies in the process. Ultimately, it was this model that would attract the attention of ASQ, be chosen as the best alternative for measuring quality and satisfaction in the U.S., and be transported across the Atlantic to be applied to the larger U.S. economy as the American Customer Satisfaction Index.

It was on the basis of the SCSB project that the ACSI was founded in Ann Arbor, Michigan, by a group of professors at the University of Michigan’s Business School (now the Stephen M. Ross School of Business), under the direction of Fornell. With funding from ASQ, the University of Michigan, and several other organizations, an extensive “first wave” pretest of the ACSI was conducted in 1993.¹ Analysis of these results confirmed what had previously been discovered in Sweden: that a cross-industry, cross-sector measure of the quality and satisfaction of a nation’s economic output was indeed possible, providing highly informative results about the conditions of the economy. One year later, in 1994, the baseline American Customer Satisfaction Index study was produced. This first wave of the ACSI study measured satisfaction with seven sectors of the U.S. economy, 30 industries, and approximately 180 large business-to-consumer (B2C) companies. The study has been replicated each year since, with fresh results collected and released throughout each calendar year. And as we will show below when reviewing the methods and models of the ACSI, the study has grown significantly in the intervening 25 years.

The central purpose motivating Fornell and his collaborators to create the ACSI was simple and relates to the mission that originally sent the American Society for Quality (ASQ) on its search for a national index of quality. This objective remains important in both understanding the material to follow in this t...