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E-Business, PCs Really Satisfy: Report

U.S. consumers are feeling very pleased these days with the service they are getting from their PCs and e-business portals, according to a new report published Tuesday.

The latest American Customer Satisfaction Index (ACSI) -- a national economic indicator produced by the University of Michigan -- hit 74.4 for the second quarter of 2004. On a scale of 100, the overall index remained unchanged from last quarter and is holding steady at its highest level in ten years.

The overall ACSI score for a given quarter factors in scores from about 200 companies in 40 industries and from government agencies over the previous four quarters.

Higher satisfaction scores have implications for companies beyond simply making customers happier. "A company that improves in customer satisfaction tends to perform better financially by generating more repeat business, which leads to greater profits and higher stock price," Professor Claes Fornell, who heads the Index at the University of Michigan, said in a statement.

While the overall study also covers a wide range of topics including automobiles and appliances, the report found some top American PC brands are improving their service image. Apple Computer leads the pack with a score of 81, making a 5 percent improvement in each of the last two years. Gateway has also improved to a score of 74 especially after its acquisition of eMachines.

Going in the opposite direction is Hewlett-Packard . Once a customer satisfaction leader, the Compaq acquisition has dragged the Palo Alto, Calif.-based computer and printer maker down, according to the ACSI report.

"HP remains competitive on price," Jack West, past president of the American Society for Quality, and a co-sponsor of the ACSI said in a statement. "But this is a reminder that there's more to satisfaction and loyalty than meets the eye. HP's problem is that the quality of both their products and service support has fallen off sharply since the mid-1990s, when HP was leading the industry."

Search is King

Researchers also found Americans' approval with search engines, portals and online news and information sites also edging upward. Search remains the clear standard-setter among the three e-business sub-categories measuring a combined score of 80 on the 100-point ACSI scale, with portals (71) and news/information sites (75) lagging well behind.

Google with a score of 82 is by far the over achiever on the block despite the potential strain of brand extensions and other changes. Ask Jeeves is a very distant second in the pure play search category but has managed to jump up to a score of 71 since being below the average three years ago.

Google's real competition may be coming from the portal category: Yahoo , which earned a 78, and MSN with a 75 have significantly higher satisfaction scores than the closest search engine competitors, and both are focusing on improving search within their Web sites.

Larry Freed, president and CEO of analyst firm ForeSee Results said the lines between search engines and portals are blurring with each sub-category competing by increasingly taking on characteristics of the other.

"Google is a star performer in the search field, but other search engines are not its only competition," Freed said in a statement. "Google and other search engines likely face future competition for retail-driven search from companies like Amazon, an absolute customer satisfaction machine. It's not always easy to keep people with you while you extend your brand. That Google has been able to do so is a testament to the brand's value though they have bigger hurdles ahead."

Of the other portal and content sites, the ACSI report found AOL is experiencing a Renaissance. The Time/Warner subsidiary's latest score of 67 is still well behind rivals but a remarkable improvement over their score of 56 five years ago. Faced with a diminishing number of dial-up subscribers, Freed said AOL has been forced to seek revenue by marketing higher quality content and services to non-subscribers.

"AOL is back from the dead, and that is the striking thing among portals," said Freed. "It seems AOL's content-heavy approach and partnerships have real appeal."

And while high levels of satisfaction with shopping and consumption usually mean that people become more willing to spend, which also gives a boost to the economy, University of Michigan's Fornell found considerable forces pulling in the other direction.

"Price adjusted satisfaction is actually dropping," he said. "Add weak employment, debatable wage growth and higher interest rates to the picture, and enthusiasm for buying more weakens. Nevertheless, third quarter spending is almost certain to be higher than the dismal second quarter spending."



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