The happier the customer, the better the performance, and the lower the risk: That's the conclusion of the University of Michigan's Ross School of Business, which also happens to compile the American Customer Satisfaction Index. The new study, which appears in the January issue of the Journal of Marketing, compared an ACSI-based hedge fund's performance (and a "hypothetical back-tested portfolio") with the S&P500. It found that the HF, from its inception in 2000 returned 91.2%, compared with the S&P500, which posted -12% during the same five-year period.

"This research has huge implications for the economy and for individual investors," said Professor Claes Fornell, who headed the research team on the survey. "It should change the way people make decisions where to invest."

The report concludes, "Investments that work for the benefit of improving customer satisfaction are good for everyone: consumers get better products and services, investors see great returns, but most importantly, the economy will function better as the power of consumer and equity markets get more synchronized."

And it won't hurt for managers to remember that the better they treat their clients, the better it is for business.