The Helpful Index

I spotted this in the current (January 9, 2006) edition of BusinessWeek magazine.

The next time you're stuck on infinite hold waiting for a customer service rep, think about whether you'd want to invest in that company. A new study shows that companies with high customer satisfaction ratings beat the market handily.

A portfolio of some 20 companies with the best marks delivered a return of 40% (excluding dividends and transaction costs), compared with 13% for the Standard & Poor's 500-stock index for the five-year period ended May, 2003, according to research from the University of Michigan's Ross School of Business. The portfolio also had less volatility than the index. "Customers know something about stock prices before investors do," says Claes Fornell, the study's lead researcher and director of the University's National Quality Research Center.

Topping the list of 200 companies (rated from 1 to 100) are Apple, Yahoo!, VF Corp., and Toyota. You can find the complete list at www.theacsi.org. "If you're scouting for investments, make sure you compare companies with their peers," says Fornell. "And take a pass on any company with a rating below 50."

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