Since 1994, the American Customer Satisfaction Index (ACSI) has conducted millions of interviews with American consumers regarding their experiences with major consumer goods and services companies. As we commemorate ACSI’s 25th anniversary, the expert team at the ACSI (Claes Fornell, Forrest Morgeson, Tomas Hult, and David VanAmburg) published a book – The Reign of the Customer: Customer-Centric Approaches to Improving Satisfaction – that takes a look back and examines the major findings from the invaluable, incomparable ACSI source of consumer insights and information.

Rather than the book being a mere retrospective, the authors use 25 years of ACSI findings to inform best practices for improving the consumer experience, better satisfying customers, and achieving profitable customer loyalty – today and into the rapidly changing future. The Reign of the Customer helps managers understand where we were, where we are today, and where we are heading tomorrow in providing exceptional customer experiences.

As a part of the book, we included an interview with Professor Claes Fornell, one of the book’s coauthors and the Founder of the American Customer Satisfaction Index. The question and answer session with Dr. Fornell is included here.

Question: When you founded the ACSI more than 25 years ago, what was your primary goal? What did you hope the project would provide that didn’t already exist (to researchers, companies, policymakers, etc.)?

Claes Fornell: It was about that time 25 years ago when three big trends were beginning to become evident. The first was global competition, the second was the growth of services in most advanced economies, and the third was that consumers were beginning to be better armed with information (about purchase alternatives, prices, quality, etc.). These trends led to more buyer power and fewer monopolies in the overall economy. In other words, there was a major shift in power away from producers to consumers. It also meant that the conventional measures about the performance of firms and economies needed updating and change. At the company level, it was clear that the more we knew about how satisfied customers were, the better we could predict future revenue from repeat buyers. At the macro level, we could also infer what an increase (or decrease) in aggregate customer satisfaction meant for aggregate consumer spending. This was very important since consumers account for about 70% of gross domestic product in the U.S. It is not possible to have strong economic growth without robust growth in consumer spending.

Question: Have changes in the economy over the past 25 years impacted how customer satisfaction is measured?

Fornell: Yes. Just about every company now measures customer satisfaction in one way or another. That’s an important first step. The problem is that most companies still do not have enough quality in their measurements. Very little attention is paid to the integrity and properties of the measures. The concepts of reliability and validity seem foreign to many companies, which have led to measures that don’t reflect what they purport to measure and contain more random noise than authentic variation. Over the long run, this is, of course, untenable.

Question: Can you give us some idea of the economic and financial importance of customer satisfaction, both to companies and to national economies?

Fornell: Most companies depend heavily on repeat business. There are only a few things we consume only once. In a competitive market, where consumers have a great deal of choice, it is therefore necessary to make sure one has satisfied customers. Otherwise, they will go elsewhere. We can see the financial impact not only in revenue and profitability, but also in stock returns. For more than 15 years now, we have had a stock fund that invests in companies with superior customer satisfaction (as measured by the ACSI), with very good results. The stock portfolio of these companies had a return of 518% between March 2000 and March 2014. This is much better than the market. The S&P 500 went up only by 31% over the same period of time.

Question: Given that the ACSI has existed for 25 years, and that satisfaction measurement in general is more popular than ever, why do some companies (and even entire industries) continue to treat their customers so poorly (cable TV companies perhaps being an example here)?

Fornell: The major reason for this is some form of monopoly power. Despite what I said about the increase of competition in general, there are exceptions. There are markets where purchase alternatives are few and/or where the cost of leaving a company can be substantial. I would put cable companies in that category. In industries with few product and service options, customers have limited powers to punish offending companies.

Question: Finally, if you had one lesson or piece of advice from all of your research and all of your experience that you think would help companies most, what would that advice be?

Fornell: Let me answer by first saying what advice I would not give. For example, it is a folly to believe that the customer is always right. Economically speaking, the customer is only “right” if there is an economic gain for the company in keeping that customer. Some customers are very costly and not worth keeping. It is also not helpful to believe that customer loyalty is priceless and customer satisfaction worthless. Unless the company has a monopoly, loyalty can be very costly unless it is produced by customer satisfaction. If loyalty is gained by price discounts instead of having satisfied customers, for example, it is usually a path to failure rather than to healthy profits.

 

Book Author Biographies

Dr. Claes Fornell is D.C. Cook Distinguished Professor in the Ross School of Business at the University of Michigan (Emeritus). He founded the American Customer Satisfaction Index in 1994 and is hailed globally as “The Father of Customer Satisfaction.” Fornell’s work on systems for managing customer satisfaction has led to two U.S. patents. He has also founded several other customer-centric companies (CFI Group, ForeSee Results, Detroit Vineyards, and Exponential ETFs).

Dr. Forrest V. Morgeson III is a member of the faculty of Marketing in the Broad College of Business at Michigan State University and Director of Research at the American Customer Satisfaction Index. Morgeson’s first book, titled Citizen Satisfaction: Improving Government Performance, Efficiency, and Citizen Trust, was released in 2014 (Palgrave Macmillan). He has consulted with numerous corporations and governments in more than 30 countries.

Dr. G. Tomas M. Hult is Professor and Byington Endowed Chair in the Broad College of Business at Michigan State University and a researcher at the American Customer Satisfaction Index. Hult is a member of the Expert Networks of the World Economic Forum and United Nations / UNCTAD’s World Investment Forum. He is a Fellow of Academy of International Business and the 2016 Academy of Marketing Science Distinguished Marketing Educator.

David VanAmburg is Managing Director of the American Customer Satisfaction Index. As an expert in customer satisfaction, VanAmburg has lectured at the University of Michigan’s Ross School of Business and numerous venues internationally, addressing the relationships among satisfaction, quality, customer service, loyalty, and shareholder value. VanAmburg is regularly quoted and featured in numerous print and radio media, including Bloomberg, CNN, TIME, Wall Street Journal.

 

Internet service providers (ISPs) are at the bottom no more.

A year after tying for the lowest score in the American Customer Satisfaction (ACSI) rankings, customer satisfaction with ISPs soared 4.8% to a score of 65 (on a scale of 0 to 100), according to our most recent Telecommunications Report.

Eight of 11 providers improved. Verizon’s Fios led the industry with a 4% jump to 73, while Comcast’s Xfinity made the biggest leap, moving into third place with an 8% surge to 66 – and almost every facet of the customer experience improved compared to last year.

That’s the good news. The bad news?

ISPs, which have historically ranked low on the ACSI scale, only climbed into second-to-last place, and except for mobile app quality (79) and reliability (77), most benchmark scores remain low, ranging from the upper 60s to the lower 70s.

The data are a blueprint for how ISPs can address a pressing customer need right now. The question is, will they use it?

ISP-provided equipment is no match for hardware from third parties

For the first time, we measured the in-home Wi-Fi experience, comparing customers’ experience with ISP-provided equipment with those who use third-party equipment.

For the most part, it was no contest.

While ACSI scores for Wi-Fi security were comparable (75 for third parties versus 74 for ISPs), customers using third-party equipment were far more satisfied across the board.

They were happier with the range (75 versus 72 for ISPs), reliability of service (75 versus 71 for ISPs), how quickly equipment restarted (74 versus 69 for ISPs), and most notably, cost (72 versus 66 for ISPs).

This is hardly unexpected. After all, equipment is the bread and butter for these third-party companies.

However, if there was ever a time for ISPs to put resources into improving in-home equipment, it’s now.

Quality in-home Wi-Fi has never been more important

In-home high-speed internet service, once deemed a luxury, is now in nearly three-quarters of American households. But it’s often taken for granted.

That changed when COVID-19 relegated workers and students to their homes, switching quality high-speed in-home internet from a luxury to a necessity. ISPs have room to grow in this area as well.

This year, we also measured overall Wi-Fi quality for the first time. We based the scores on seven benchmarks: security, multiple device connections, range, avoiding service loss, service restart, upload/download speed, and price paid.

Verizon Fios had the highest score overall (77) but was the only ISP to outperform the top third-party leaders, Netgear and TP-Link, both at 75. LinkSys (73) outpaced the remaining ISPs as well, while Xfinity (72) was the only other ISP to beat a third-party company, narrowly besting ASUS (71).

Although the numbers don’t bode well for ISPs, there are bright spots. For example, ISP customers were happier with the variety of available internet plans this year, and they found internet service more reliable.

If ISPs can make progress in those areas, then there’s no reason why they can’t make similar gains in the hardware department by offering more reasonable equipment rental prices and improving the reliability of in-home Wi-Fi.

It starts at home

ISPs are no longer resigned to the cellar of the ACSI rankings. They’re not exactly a fan favorite, either.

But, with more people working from home, more students studying from home, and more people simply forced to be home, they’re going to require – and expect – a reliable in-home connection like never before.

ISPs shouldn’t expect to wipe away years of customer satisfaction woes overnight by solely improving the equipment they provide. But it’s an opening that could slowly bridge the gap. Will they take it?

Customer satisfaction with cell phones has grown steadily over the past 15 years. During that time, the industry’s made a 16% net gain.

That upward trend continued throughout 2019 and in the early parts of 2020. Although global cell phone sales dropped 1% in 2019 and the pandemic hasn’t helped in 2020, customers have never been more pleased with their cellphones.

Per our most recent Wireless Service and Cellular Telephone Report, customer satisfaction with the industry improved 1.3% to an all-time high of 80, and most of the manufacturers showed gains.

Apple surged to the top spot in the category with a 1% jump to 82. LG also improved, climbing 1% to 79. Even the group of smaller manufacturers rose 4% to a score of 75.

The key to this success? Making incremental improvements across the board.

Focusing on multiple areas pays off

The industry scored well across almost every element of the customer experience last year, but this year it did even better.

Cell phone users agreed that their devices were better in most ways. While the ease of texting (85) and calling (84), and phone design (84) remained steady and enjoyable for customers, websites climbed 2% to 84.

And it didn’t stop there. Customers were increasingly pleased with the operating systems and software (up 2% to 83) and found navigating menus and settings much easier (up 2% to 83). Phone features (up 1% to 83), video quality (up 1% to 83), and audio quality (up 2% to 82) were all better. And, while battery life still sits at the bottom of the customer experience benchmarks, it’s no longer a glaring weakness after climbing 3% to a score of 80.

Cell phone manufacturers showed the power of improving multiple areas. Apple, which consistently gets chastised for poor battery life, took that criticism to heart and made serious improvements with the iPhone 11 Pro and Pro Max. But Apple didn’t stop with the battery – it also enhanced the camera system, displays, and processors. And folks took notice.

Apple customers were happier with their device’s battery life, audio quality, and video quality, as well as ease of using the operating system and navigating menus and settings.

LG customers were also more satisfied this year. They found texting and navigation easier compared to last year, along with more phone feature varieties, and better audio and video quality, which has become a staple of LG phones.

The smaller group of cell phone manufacturers made customers happier in nearly every aspect, including improving battery life and making texting and calling easier.

As effective as this strategy proved to be, it wasn’t adopted by everyone in the industry.

Motorola misses the mark

While cell phone users have never been happier with their devices, Lenovo’s Motorola customers were the exception.

The manufacturer fell to fourth place as satisfaction plummeted 4% to score of 77.

Not a single customer experience benchmark improved year over year. In fact, they all decreased – with significant falls in terms of battery life satisfaction and ease of calling and texting. Putting so much emphasis on the design element (flip phones, anyone?) was clearly not an ideal strategy.

Motorola has work to do in the eyes of its customers. The good news is its competitors have shown the way.

There’s no silver bullet to customer satisfaction success

Cell phone manufacturers reached an all-time customer satisfaction high score because they didn’t just focus on one element – they looked at the entire user experience. Users care about battery life and phone design, but they also care about what these products were made for in the first place (i.e., calling and texting). All of these elements need attention.

For the most part, manufacturers saw what their customers wanted — all of it — and made concerted efforts to improve. And, according to the data, they succeeded.

There’s an insatiable appetite for streaming – especially now.

According to a recent Nielsen report, Americans streamed 85% more minutes of video in March 2020 than they did in March 2019. During the last week in March, Netflix owned the largest share of streaming minutes at 29%, followed by YouTube (20%), Hulu (10%), and Amazon (9%).

New streamers are also entering the space, even in the midst of the COVID-19 outbreak.

Quibi, the short form, mobile-only video platform, launched April 6 and had 1.7 million downloads in its first week. HBO Max remains on schedule for its May release. Peacock, NBC Universal’s new streaming service, soft launched on April 15 and is still committed to its July 15 national rollout.

These new entrants are jumping into a competitive streaming service industry, where customers are already relatively satisfied with existing options and features, according to our data.

So where are the opportunities for streaming companies – especially the new entrants – to stand out from an increasingly crowded pack? And more importantly, what do viewers want more of from their streaming services?

Here are two ways streaming services can get in with the binge watchers of the world.

More current offerings, please

Customers like what they’re getting from streaming providers. According to our data, they’re satisfied with the number of TV shows (scoring 76 on a 0-100 scale), the variety of TV shows and movies (both 75), the availability of the past season’s TV shows (74), and the number of movies (74).

So, what’s missing from the queue? Current programming.

When it comes to the availability of the current season’s TV programs and new movie titles, today’s streamers have room for improvement. The former has an Index score of 72, while the latter sits at the bottom of the industry at 70.

By offering customers the latest and greatest of film and television, new players can distinguish themselves.

Keep the original content flowing

Customers appreciate originality.

Over the last year, customer satisfaction with the quality of original content has climbed 3% to a score of 76. And no streamer offers original content like Netflix.

Not only did Netflix top all streaming services in satisfaction with its original content, but it has no intention of slowing down. Analysts predict the streaming giant will spend $17.3 billion on original content in 2020 alone.

Although other streamers like Amazon, Hulu, and YouTube are producing original work, there’s a legitimate gap between Netflix and the rest.

While Peacock’s original content may be a bit delayed due to the coronavirus, other incoming streaming services can fill the void – even Quibi, whose shorter content might be a nice change of pace if you’re looking to sneak in a quick episode before bedtime, while cooking dinner, or during a lunch break.

Are you still watching?

The current situation has accelerated a trend that’s been happening for the past two years, with more consumers cutting the cord than ever before.

This is not going to change anytime soon. In fact, analysts predict that the adverse economic and social implications brought about by the COVID-19 outbreak is only going to speed up the process.

The streaming industry is a crowded space. Established players already have a leg up on the competition, but the race isn’t over yet. There’s plenty of opportunity to make up some ground. New competitors would be wise not to let it pass them by.

Stay tuned for our newest Telecommunications Report, coming in June, for more details on how streaming industry players are faring.

Business as usual has changed.

Some industries – and brands for that matter – are feeling the effects more than others. Travel, restaurant, and retail companies that rely heavily on in-person traffic are bracing for revenue shortfalls. Meanwhile, the federal government weighs stimulus packages to offer distressed businesses some relief.

In this environment, it’s tough to offer any substantive advice to businesses in survival mode. But history and experience offer three fundamental reminders on how businesses can serve customers and meet expectations in this difficult and unprecedented time.

1. Pivot to digital

Seemingly every day the number of people allowed to congregate in public shrinks in order to shield the public from COVID-19 exposure. States are requiring non-essential businesses to close their doors and advising citizens to shelter in place. “Social distancing” is our new reality, and it’s forcing many retailers to shift (or bolster) their digital strategies.

Our data has shown online is more satisfying than in person interactions in retail, and for at least the next several weeks it’ll be more important than ever for companies to maintain these channels. In the early days of the pandemic, restaurants and even some retailers began enabling customers to order items ahead from their digital apps for parking lot pick up. Others are using push notifications and other online channels to keep customers informed on the availability of products and services.

You’ll have to be nimble, of course, but make sure your customers know that, while they can’t necessarily go about business as usual, you still have the capabilities to offer them the services they’re used to.

2. Communicate frequently

Now more than ever, your employees and customers need to hear from you. They need to know they can reach you with questions and concerns.

Have customer service representatives available (remotely!). While customer support services like live chat, help pages, and cell centers haven’t always lived up to expectations, it’s certainly better to make these resources available rather than leave customers in the dark. If anything, use this as an opportunity to strengthen communications.

Send reassurance emails with key information to put your customers’ minds at ease. For example, make individuals who prefer going to a branch for their banking needs aware of your mobile app’s capabilities. Remind them that they can still access their banking information online and tell them what services are available.

These are unusual times in that many companies, by law, aren’t able to operate as usual. In the end, customers will likely understand this, but that doesn’t mean they won’t have questions. Be proactive and responsive to their concerns to maintain your customer relationships in the long run.

3. Don’t increase prices without increasing value

The coronavirus is negatively impacting the global economy. Businesses are losing money and the situation may get worse before it gets better. Yet, even if you’re among the industries suffering the most, don’t take advantage of the crisis.

This is not the time to raise prices – without offering better quality – just to offset predicted losses. If you must suspend service, ensure you have a plan to make up for this inconvenience, whether you prorate refunds, extend return policies, offer future credit, or waive change fees.

During this difficult time, we need to come together and do what’s best for the collective good. It’s one of the reasons why Amazon has been removing third-party sellers who are charging insane prices for cleaning products during the outbreak.

Adapt, overcome, and survive

The coronavirus outbreak is disrupting our lives in ways we never imagined, and we’ll feel its effects for some time. But we will get through this.

Keep your customers in mind, communicate frequently, and be flexible. If you have the means to do so, don’t be afraid to innovate to meet and help customers where you can.

While business has fundamentally changed in a couple short weeks, these three elements hold true and will help you weather whatever comes next.

The energy utilities sector knew what it had to do to improve satisfaction. The people made that very clear.

Last year, when customer satisfaction fell 2.7%, we observed a strong desire for green initiatives. While fixing this area wouldn’t automatically repair the strained relationship between customers and utilities, it would go a long way toward showing that providers not only hear their customers’ concerns but are actively making concerted efforts to improve.

Unfortunately, it appears little has changed.

The grass still isn’t greener

Once again, energy utilities sustained a sector-wide drop in customer satisfaction, falling 1.5% to an American Customer Satisfaction Index score of 72.1 (on a scale of 0 to 100), according to our most recent Energy Utilities Report. And that “green” problem? It’s still there.

In the three categories of energy utilities – investor-owned (down 1.4% overall to 72), municipal (down 1.4% overall to 72), and cooperative (down 2.7% overall to 73) – efforts to support green programs is either the worst or tied for the worst customer experience benchmark.

Overall, investor-owned utilities earned a 70, municipal utilities took home a 69, and cooperative utilities, while finishing with the highest mark at 71, still saw customer satisfaction plummet 4%.

Providers like National Grid, American Electric Power, and PG&E score well below the investor-owned utilities average for green initiatives. The same goes for the group of smaller cooperatives and smaller municipal utilities, which score in the mid-to-high 60s.

Unfortunately, a lack of support for green programs isn’t the only thing hindering customer satisfaction.

Missing out on a sense of community (support)

Customers believe utilities providers could be doing more to support local communities – much more.

Within the investor-owned utilities category, efforts to support the local community is the lowest customer satisfaction benchmark – tied with efforts to support green programs – at 70. National Grid, American Electric Power, and PG&E struggle in this area too. But they’re not alone.

Eversource Energy and FirstEnergy also have plenty of room for improvement among investor-owned utilities.

Municipal utilities providers perform better than investor-owned utilities in this area – but not by much. The industry scores a 72, down 3% from the previous year.

While cooperatives remain the sector leaders for supporting their local communities, they’re doing worse than they did a year ago, dropping 3% to an Index score of 74. Smaller cooperatives have the most room for improvement here as well.

Change in business values

Although the energy utilities sector isn’t offering customers the sort of support they crave for green initiatives or local communities, many of America’s top business leaders are starting to see the light.

Fortune 500 CEOs – 181 of them to be exact – signed a letter showing these very things are important to business. Instead of prioritizing shareholders and maximizing profits, the “purpose of a corporation” needs to center on investing in employees, delivering value to customers, and supporting outside communities through sustainable endeavors.

“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” said Jamie Dixon, chairman and CEO of J.P. Morgan Chase and chairman of Business Roundtable, the group of CEOs from major U.S. corporations who released this statement.

While profits will always be part of the equation, top American business leaders recognize how important it is to do right by their customers.

It’s time to listen and act

For the second consecutive year, there’s widespread customer satisfaction decline across the entire energy utilities sector.

All three categories of energy utilities saw their overall scores drop and every aspect of customer experience either declines or remains unchanged. And at or near the bottom of it all is support for green programs and local community.

Once again, energy utility providers know what they must do. Not only are their customers telling them their needs, but other U.S. corporations are preaching a change in values and business practices.

If the Retail Trade sector were a kingdom, then online would sit firmly on the throne.

According to our most recent Retail and Consumer Shipping Report, while the sector evens out following two years of decline, only one industry sees its customer satisfaction soar: internet retail, up 1.3% to a score of 81.

Customers continue to chase the best, most convenient shopping experience available, and right now online is king. Customers can find what they need more easily and aren’t pestered by salespeople. When you look at online versus brick and mortar head-to-head, online wins every time.

Given this idea that “online wins every time,” we decided to compare three online retailers with their brick-and-mortar counterparts to see how well this held up. Here’s what we found.

Target.com vs. Target: Same score, different story

Despite dropping 3% year over year, Target.com maintains the same score as its counterpart in the department and discount category, both at 78.

Among internet retailers, ease of checkout and payment process (86) is the highest individual benchmark. On the contrary, this metric finishes dead last among department and discount stores with a score of 71. This trend holds true when comparing Target.com and Target.

Target.com is near the high end of internet retailers in store speed. The physical store, however, while among the better performers in the department and discount store space, still trails its online counterpart by a wide margin.

Although customers agree that online retailers possess a stronger variety of merchandise (84 to 77) and availability of inventory (82 to 75) than department and discount stores, Target.com and Target buck the trend, sharing the same score in both respects.

In the end, despite trailing internet retail leader Amazon (83), Target is making a concerted effort to boost its online presence. Target.com is expanding its same-day delivery service and creating its own “Deal Days” online event in the vein of Amazon Prime Day.

Nordstrom.com vs. Nordstrom: Traditional retail gets online bump

Only three companies boast scores above the internet retail industry average. The one traditional retailer? Nordstrom.

Nordstrom.com improves 1% to a score of 82, besting its brick-and-mortar counterpart, which remains unchanged at 79. Nordstrom.com outpaces Nordstrom in most individual benchmarks, including variety and inventory.

One of the biggest disparities between the physical store and its online counterpart is the ease and speed of the checkout process. Both thrive within their respective categories, but Nordstrom.com is significantly better than Nordstrom. In fact, Nordstrom.com is tied for the top score among all internet retailers.

Sears.com vs. Sears: Started at the bottom …

… and they’re both still there. Sears.com and Sears each have the lowest customer satisfaction scores in their respective categories.

Although Sears rose 1% among department and discount stores to a score of 71, it still sits below internet retail bottom dweller, Sears.com, which stayed put at 73. Sears.com also remains higher than Walmart’s department and discount store, which dropped 1% to 71 as well.

Sears.com offers slightly better variety than the brick-and-mortar store and stocks a greater inventory. Customers also give Sears.com the edge in speed and ease of checkout.

One area where Sears outshines its online brethren is with its support. Customers find Sears’ in-store staff more helpful and courteous than that of online customer support. This is interesting considering the opposite holds true for the two categories – internet retail and department and discount stores – as a whole.

The big picture is clear

The Retail sector experienced widespread declines last year. Just one year later, the message is crystal clear: Online shopping is the focus.

While traditional retailers aren’t falling by the wayside, more and more companies recognize their customers continue to shift toward the internet. The online shopping experience is easy, convenient, fast, and there’s no salesperson physically chasing you around the store trying to get you to buy something.

The retail battle may wage on as brick and mortar isn’t going away. But as it stands, this is a pretty one-sided affair.

There were 43 mergers and acquisitions (M&A) of over $10 billion in 2019 – an 8% increase from 2018. There were another 21 deals worth more than $20 billion a piece.

This is just the start.

The worldwide value of M&A transactions reached a total value of $3.9 trillion in 2019. While that’s 3% less than 2018, it’s the fourth-strongest year ever recorded.

This is good news for investors. The same cannot be said for customers.

The American Customer Satisfaction Index shows that large M&A deals commonly have a negative effect on customer satisfaction. On average, the acquiring company experiences a 3% drop in customer satisfaction over the initial two-year period post-merger.

Why is that? There are a few major reasons – but sometimes it depends on the industry.

1. It’s not about customers

M&A often has a negative effect on customer satisfaction because it isn’t done on behalf of customers; it’s done on behalf of shareholders.

Typically, in an acquisition, companies aren’t trying to grow their customer base by improving how they provide goods and quality services. They’re literally buying another customer base.

The goal for these companies is delivering value to shareholders. In the process, they can alienate consumers, ultimately working against their own goal.

2. Customers in service-related industries suffer the most

Customers of manufacturing-related industries usually don’t notice a difference following M&A. If a company buys a line of canned food, for example, and keeps putting it out with the same label and the same quality, the customers who purchase that product aren’t really affected. They still receive the same product, made the same way. The only difference is the organization behind the scenes that now owns the brand – and customers might not even know that’s changed.

For customers of service-related industries, however, the change in ownership is felt in a big way.

Banking, retail, airlines, utilities, and anything else involving services, is where you typically see a significant customer satisfaction drop in the wake of a merger up through the first two years of the union.

For example, back in 2005, US Airways fell 8% to an industry low after merging with America West. And just one year after purchasing Northwest, Delta Airlines’ customer satisfaction plummeted 10%.

When two companies merge, both sides begin shedding costs. These costs are usually customer-service focused. For example, a handful of branches might close following one bank’s purchase of another. In this event, customers may no longer receive the same level of service they’re used to.

There’s also the possibility of unexpected snafus. Maybe your frequent flyer miles get lost when two airlines merge and you’re arguing with customer service over how to get them back. Or maybe you get double-billed for cable services or wireless networks.

T-Mobile and Sprint are suggesting their merger will benefit customers. But a lot can go wrong when you combine large customer bases.

Perhaps Sprint customers will experience an uptick in customer service if the provider merges with T-Mobile, as they’ll move from an organization with the lowest American Customer Satisfaction Index score (65) among mobile network operators to the one with the highest mark (76) in the same sector. Then again, customers may have such high expectations for T-Mobile that the service they receive fails to live up to it.

3. The bargain basement

The best companies aren’t typically going out and acquiring other top companies. What usually happens is that subpar companies go out and purchase even worse companies. It’s a weird strategy.

Sure, they can acquire these low-end companies on the cheap, but is it really in their best interest to purchase another bottom-dweller? Probably not.

These companies already have dissatisfied customer bases. If the purchaser is not interested in improving satisfaction levels, then those customers might end up even less satisfied than they were before the merger – especially if they had high expectations for this union.

A lesson for the age of the large acquisition

The numbers don’t lie: Major M&A deals were on the rise in 2019. Global Payments bought TSYS for $21.5 billion. London Stock Exchange Group acquired Refinitiv for $27 billion. United Technologies agreed to purchase Raytheon for $86 billion. These are just a few of the transactions over $20 billion.

While the total number of global mergers was down in 2019, M&A value still exceeded $3 trillion every year since 2014. The merger market is expected to thrive in 2020 thanks to low interest rates and a better economic environment.

But before these organizations – particularly service-related companies – make decisions that are clearly geared toward influencing their balance sheet and adding to their portfolio, they might want to think about what this decision means for their customers.

You might be able to buy a customer base, but that doesn’t mean you’re buying its loyalty or you’re able to improve its satisfaction.

People tune into the Super Bowl for all sorts of reasons.

For some, it’s all about the big game itself. For others, it’s the extravagant halftime show.

But one thing that gets everyone hyped on Super Bowl Sunday is the commercials. This is the day brands break the bank and go all out.

According to AdAge, 30 seconds of airtime during this year’s game cost $5.6 million. While this seems like a ridiculous amount of money – and it is – this is a price companies were more than happy to pay.

One industry usually well-represented in Super Bowl commercials is the automobile industry. This year was no exception, as millions of screens across the world were plastered with funny, nostalgic, and inspirational auto commercials.

But you have to wonder, did automakers take full advantage of their airtime?

It’s one thing for the commercials to be entertaining – most usually are – but are they also informative? Are automakers listening to what their customers want and appealing to these needs?

Using our Automobile Report as a guide, we examined the commercials of three major automakers to find out.

Hyundai gets ‘smaht’

With the help of Chris Evans, Rachel Dratch, and John Krasinski, Hyundai used its Super Bowl airtime to plug its new Smart Park self-parking system. While these Bostonites laid the love on a little thick (and we’re not just talking about their accents), the move by Hyundai was wicked “smaht.”

Customers care about in-car technology, and the automobile industry is not meeting their high standards.

According to our report, satisfaction with technology is down 3% year over year and is toward the bottom of all industry benchmarks – tied with warranties for second-to-last place – with a score of 78.

Hyundai, for its part, also has room for improvement in this area. It scores above industry average, but compared to individual automakers, it’s merely middle of the road. By drawing attention to the new Sonata’s “Smaht Pahk” capability, Hyundai shows it understands customer needs and that it’s making a concerted effort to meet them. Like we said: smaht.

Toyota has room for all heroes

Cobie Smulders of “How I Met Your Mother” and “Avengers” fame is a super mom speeding around rescuing selfless superheroes who chose to stay behind after saving others from various catastrophes.

How does she save these heroic individuals? She picks them up in her roomy Toyota Highlander.

Interior design isn’t on the bottom rung of industry benchmarks, but it falls 1.2% over the past year to 82. Toyota scores just above average, so it too has plenty of room (pun intended) for growth.

Toyota uses alien attacks, chemical disasters, and a wild west showdown as backdrops to point out a simple fact that most car owners can agree on: Space matters. Bonus points for the final shot on the dashboard navigation screen. As we mentioned, customers crave enhanced technology.

Jeep shows there’s nothing mundane about ‘Groundhog Day’

Unlike in the cinematic classic, Bill Murray didn’t go down a rabbit hole of despair in Jeep’s commercial reenactment of “Groundhog Day.” This time, he had a Jeep Gladiator at his disposal.

Although driving performance (tied for first at 84) and exterior (82) rank highly among customer experience benchmarks, Fiat Chrysler’s Jeep struggles to keep up with the competition. The automaker falls below industry average in both areas.

With a commercial featuring Murray and Punxsutawney Phil tackling tough terrains in a sleek Gladiator, Jeep shows this vehicle is easy on the eyes and can handle any adventure life throws at you. Not only that, you look forward to it.

This ad played well with the press. Jeep can only hope it has the same effect on its customer base.

Commercials can offer more than just commercial appeal

As entertaining as these ads can be, remember that commercials and customer satisfaction are not the same thing.

Super Bowl commercials aren’t going to be successful if they’re not creative and memorable. But that doesn’t mean automakers should skip out on a golden opportunity to show they’re paying attention to things their customers want.

Customer satisfaction in the automobile industry fell 3.7% to a score of 79 over the last year. If automakers want to see those scores climb, they might want to take a page out of playbook of the companies tailoring their message to what’s really driving their customers.