Satisfaction drives Apple’s growth – or not ?

Apple has again topped the American Customer Satisfaction Index for personal computers (the product and service). Famous satisfaction researcher, Professor Fornell, gushes:

“In the eight years that Apple has led the PC industry in customer satisfaction, its stock price has increased by 2,300%,” remarks Claes Fornell, founder of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “Apple’s winning combination of innovation and product diversification—including spinning off technologies into entirely new directions—has kept the company consistently at the leading edge.”

But wait a minute… is he implying that satisfaction with Apple computers is driving this financial performance? I’m sure that many would read it like that. But this is only satisfaction with Apple computers, while Apple’s stellar gains in revenue, profits and market capitalization in recent years have almost entirely come from the iPod, iTunes, iPhone and now iPad. Their computer sales have done well, but they are a shrinking part of their revenue and profits.

What is the story on Apple’s PC satisfaction scores ? Well they have always been good, which isn’t surprising given that they steer clear of offering really low quality, low featured, low price models. Even back in the mid to late 90s when Apple sales were dropping and profits evaporated Apple held its position as number 2 on satisfaction behind Dell. Just as Dell has continued to hold onto a satisfaction score of 77 for the past decade in spite of ups and downs in its fortunes.

Apple’s resurgence begain in 1997 with the return of Steve Jobs. Within a year they posted an astonishing profit turnaround (from losses to profits) and launched the iMac. Satisfaction nudged up in 1999 but was still below their norm for the mid-90s. And it kept on nudging up, which probably reflects that their computers and computer service have been getting better. It may also reflect a halo effect from the iPod, iPhone, iPad, iTunes – that’s a problem with satisfaction scores, they are influenced by other things (like the weather).

But let’s be clear, this rise in satisfaction for Apple computers did not cause Apple’s 2300% rise in share price. Maybe it helped a tiny bit but the heavy lifting was done by sales of other products.

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