This undervalued component of company stock analysis may leave potential returns on the table.
Investors can tap into the research on customer satisfaction through the American Customer Satisfaction Core Alpha ETF (BATS: ACSI).
ACSI tries to reflect the performance of the American Customer Satisfactions Investable Index, which utilizes a rules-based methodology to measure the performance of large-cap U.S. stocks by gathering data from customers and utilizing a proprietary econometric model to determine a customer satisfaction score. The underlying index is sector-weighted to reflect the overall U.S. large-cap market and security-weighted based on ACSI customer satisfaction data.
ACSI survey data is based on questions that measure customer expectations, perceived quality and perceived value, according to the prospectus sheet.
“The thought being, customers know in advance of the market themselves as well as traditional financial metrics where they are going to consume, and that should be a leading indicator of financial performance,” Quigg said.
Customer expectations is a measure of consumer’s anticipation of the quality of a company’s products or services, representing both prior consumption experience, which includes some nonexperiential information like advertising and word-of-mouth, and a forecast of the company’s ability to deliver quality in the future. Perceived quality is a measure of the customer’s evaluation through recent consumption experience of the quality of a company’s products or services. Lastly, perceived value is a measure of quality relative to price paid.