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Study finds link between stock market performance, customer satisfaction

New research by the University of Michigan shows that customer satisfaction is directly linked to stock market performance.

By Paula Aven Gladych | Updated on July 05, 2012

Customer satisfaction is directly linked to stock market performance, according to research from the University of Michigan. Companies with high scores on the American Customer Satisfaction Index (ACSI) and the National Customer Satisfaction Index UK (NCSI-UK) produce higher stock returns than competitors and greatly outperform market indices.

The study examined the relationship between customer satisfaction and financial success by creating portfolios in which stocks are bought long or sold short based on performance in the ACSI and NCSI, which use the same measurement technology. The cumulative return of a $100 investment in the ACSI fund from April 2000 to April 2012 was $490, a gain of 390 percent. By comparison, the S&P 500 returned only $93, a 7 percent loss. In the United Kingdom, the NCSI portfolio earned a return of 59 percent from April 2007 to June 2011, and the FTSE 100 had a negative return of 6 percent.

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