October 16th, 2012 by Leonard Klie

We’ve all heard the mantra that the customer is always right, right? While that notion is being challenged in some business circles, it’s playing out in entirely new ways on Wall Street.

According to research by CFI Group, customer satisfaction has proven to be a strong indicator of stock performance. In fact, stocks for companies with high customer satisfaction have outperformed the rest of the stock market by 24 percent on average.

In compiling its findings, the CFI Group used data from the American Customer Satisfaction Index (ACSI) in the United States and the National Customer Satisfaction Index UK.

The company singled out Apple, long a favorite for customer service. With preorders of the newly released iPhone 5 exceeding 2 million in 24 hours, stock earnings are at an all-time high, with one share selling for nearly $670, the company said.

Claes Fornell, founder of the ACSI and a professor at the University of Michigan, says it’s no coincidence that customer satisfaction and stock prices are linked. “Companies with highly satisfied customers generate superior returns because customer satisfaction is critical for repeat business, and that type of business is usually very profitable,” Fornell said in a statement. “That is, loyal customers tend to be highly profitable as long as their loyalty comes from their satisfaction and not because prices are low.”

So CFOs take notice. Your investors are looking at your customer satisfaction scores. You might want to do the same.

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