Buy Companies with High Customer Satisfaction Scores?
May 18th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
As you know, I don’t hold any stocks or paper based investments of any kind (outside of cash, which is a gamble). I realize, however, that many of you feel as though you must continue to play these paper games for various reasons.
While I am in no way suggesting that you should follow the advice presented in this article, it seems interesting, even to me. (It may or may not be better than anything I ever came up with on my own.) If you read what follows, along with the advice given to roomfuls of Google millionaires, and allocate some percentage of your treasure to both methods (this is where your Magic 8-Ball comes in really handy) it’s tough to know how you could improve on risk of ruin paper games in the global ponzi scheme casino.
Don’t you love my attitude toward stock market investing?
Via: Consumerist:
Using a back-tested paper portfolio and an actual case, the authors of a study published in the Journal of Marketing found that companies at the top 20% of the the American Customer Satisfaction Index (ACSI) greatly outperformed the the stock market, generating a 40% return.
From 1996-2003, the portfolio outperformed the Dow Jones Industrial Average by 93%, the S&P 500 by 201%, and NASDAQ by 335%.
Past performance doesn’t indicate future results. ACSI only goes back to 1994. However, these startling findings help vindicate one of our central claims: investing in customer service and satisfaction is good for your bottom line.
“Cost-cutting” and “profit-enhancing” measures like outsourcing all your tech support to India, creating a byzantine apparatus for warranty repairs, and using rebate systems designed to trip up your customers will only hurt you in the long run.
Research Credit: BoingBoing
