Over the past 12 years, the strongest satisfaction companies had positive revenue surprises 5.5% more often than the S&P 500, along with positive EPS surprises 7.8% more often than the index.

Related: 3 Strategic Reasons Advisors Should Adopt Factor-Based ETFs

Strong customer satisfaction has helped generate outperformance on the upside through greater earnings surprises, and the factor has also helped cushion price declines during broad selloffs.

“Satisfied customers tend to be loyal customers that are also less sensitive to price increases,” Blechman added. “These customers are the last to leave in economic downturns and the first to return when things improve.”

Over the past 12 years, the ACSI underlying index underperformed the S&P 500 by more than 5% only five separate periods with an average peak-to-trough duration of about six months and the largest relative to market underperformance during any drawdown was 5.8%. The recovery and return to a relative all-time high in these instances occurred within five month on average as well.

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