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Friday, November 27, 2009

Recession Over? Check the Customer Satisfaction Index.

Most economists & business pundits agree that we’re slowly emerging from the current economic downturn, but that the turnaround won’t really accelerate until the consumer spending that comprises about 70% of GDP returns.

They suggest the reason for the reluctance of the consumer is the perceived frailty of the turnaround – jobs are still being lost, the housing market is still in a funk and equity markets are still not performing to pre-recession levels – but that once feel perceive security in their job, their home and their 401k, they’ll start spending again.

I’ll suggest an additional reason consumers have been slow to resume spending: a decrease in satisfaction with how companies treat their customer relationships.

There’s a perceived lack of equity & fairness in the customer-business relationship. Many don’t trust government (the dollar-for-dollar most expensive service we use) or financial institutions on Wall Street responsible for enabling economic growth through responsible lending. We’re suing our banks over credit card practices and ancillary service fees, and we don’t believe our news sources are representing anything other than a profit objective.

Particularly critical in service businesses, where customers give information and effort of themselves in the relationship, the public won’t resume full consumption until faith has been restored that they are not being taken advantage of by companies they trust with their time, effort and money.

The American Customer Service Index reporting satisfaction with financial services providers won’t come out until February. While it was trending downward in 2008, we could expect to see a greater decline in 2009 as twelve months of bank bailouts, suits over overdraft fees and the CARD Act are factored in.

Equity & fairness are basic requirements of the service companies we use. If we don’t feel we can trust our banks, healthcare providers, news networks, and government, we’ll choose not to consume beyond the basic requirement.

The consumer is the key to the turnaround, but to a greater extent than currently thought. While we’re investing as taxpayers in everything from financial institution to auto makers, business should also be investing in activities that result in customer satisfaction, starting with transparency, equity & fairness.

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