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Apple Watch Crushes Competition in Customer Satisfaction Survey

By Daniel Sparks – Jul 12, 2016 at 3:41PM

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Customers love the Apple Watch. But sales are still too small for this news to matter much.

In J.D. Power's 2016 Smartwatch Device Satisfaction survey, Apple's (AAPL 1.56%) new smartwatch was the only device in the category earning five out of five of the J.D. Power's "Power Circle" ratings. Second-place Samsung earned just two of five Power Circle ratings. The report highlights an important takeaway for Apple investors: While Apple Watch sales may be off to a slow start, it's at least a start that is satisfying customers.

Apple Watch. Image source: Apple.

Customers love the Apple Watch

In the smartwatch satisfaction survey, 11 factors were examined, according to J.D. Power. The factors included "ease of use, comfort, battery life, phone features, price, strength/durability, display size, styling/appearance, reliability, apps available, and customer service."

Apple's overall score on a 1,000-point scale was 852. Samsung's overall score was 842. But J.D. Power Circle ratings highlight a larger gap between the two companies; Apple's five-star rating stands for "Among the best," and Samsung's two-star rating is pegged with a not-so-impressive description: "The rest."

"Apple ... ranks highest in customer satisfaction with smartwatches and performs particularly well in comfort, styling/appearance and ease of use," J.D. Power said in a press release on Tuesday.

Going forward, Apple Watch customer satisfaction could get a boost. The new WatchOS update coming this fall enables apps to launch instantly, by allowing apps to be installed natively on the watch and by having up-to-date information ready ahead of time. This change addresses what is arguably WatchOS's most frustrating problem today: Sometimes it's faster for users to pull their iPhone out and open an app than it is to open the corresponding Apple Watch app to view the same information.

WatchOS 3. Image source: Apple.

Of course, the fact that customers are enjoying the Apple Watch isn't necessarily new information. Management has been citing favorable customer satisfaction data for Apple Watch since shortly after its 2015 debut. And the boasting continued into the company's most recent earnings call.

"Our customers are very happy with Apple Watch," said Apple CFO Luca Maestri during the tech giant's most recent earnings call. Maestri followed by citing a recent 451 Research study, measuring Apple Watch's customer satisfaction rate at 94%.

It's worth noting that Samsung is capitalizing in one subsegment of the wearables market where Apple isn't. Samsung ranks highest in customer satisfaction in the connected fitness band category, where Apple doesn't have a product. Samsung's overall satisfaction score in this segment is 859 -- and J.D. Power boasts a five-Power Circle rating.

Promising news

A high customer satisfaction score for the Apple Watch could signal more market opportunity for the new device. Apple has always strived to put the customer experience above all else when designing products, and it has proved to be an effective strategy for the company. The iPod, iPhone, and iPad were all products ranking high in customer satisfaction studies. Historically, Apple's emphasis on the user experience has helped the company develop a dominating share of profits in new product categories and sustain these advantages for years.

Specifically, Apple's outsize customer satisfaction in the nascent category so early can help Apple increase customer loyalty and repurchases.

But since the Apple Watch still represents a very small portion of the company's sales -- probably around two to three percent -- this news doesn't necessarily affect an investment thesis in the stock. But it does at least reaffirm that Apple Watch is here to stay and that it will likely be a key contender if the category takes off.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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