CORPORATE executives have plenty to worry about these days: a sideways stock market, the backlash against offshoring and additional scrutiny from regulators. But they may want to pay attention to one more worrisome issue - a rocky relationship with customers.

Companies are offering the best bargains in history. It has never been cheaper to fly from Dallas to Los Angeles, to make a phone call from Boston to Brussels or to buy a computer or a DVD player. Yet the harder companies work to make products cheaper and better, the less they seem to impress their customers.

The American Customer Satisfaction Index, the definitive benchmark of how buyers feel about what business is selling them, will reach its 10-year anniversary this fall. For business - the index measures satisfaction for 200 companies in 40 industries - it is hardly a cause for celebration. Some scores have risen in the last few years, but many industries and companies rate lower today than they did in 1994, and the index is down over all.

A decade ago, on a scale of 0 to 100, the overall index was 74.8. The most recent score was 74.4. Back then, the airline industry was at 72; the most recent score was 66. Telecommunications was at 81; the most recent score was 71. Personal computers were at 78; the most recent score was 72.

The bottom line is that despite a decade of spectacular advances in hardware price and performance, as well as an explosion of innovation in consumer electronics, mobile phones, Internet access and low-cost travel, customers remain unmoved, even downright unappreciative.

Claes Fornell, a professor at the University of Michigan Business School and the creator of the satisfaction index, describes business's track record during the index's first decade as mixed. Some industries and companies, he notes, have been consistently strong performers. What's striking, though, is that most of the best-performing companies are in the most traditional parts of the economy.

The company with the highest index rating, a 90, is H. J. Heinz - no one's idea of a cutting-edge enterprise, but a venerable producer of familiar foodstuffs like ketchup and pork and beans. A decade ago, its rating was 89. Meanwhile, the most recent score for Hewlett-Packard, Silicon Valley's fabled innovator, was 70, down from 78 in 1994.

The problem? Too many companies confuse selling clever gadgets at good prices with delighting customers. When so many products get cheaper every year, offering customers a great bargain will not necessarily win their loyalty. Someone else is bound to offer a better bargain, and besides, most customers have come to expect good deals. "Price has an effect on whether you buy or not," Dr. Fornell says. "It has less of an impact on whether you're satisfied or not."

Seth Godin, an entrepreneur, marketing expert and author of the new book "Free Prize Inside: The Next Big Marketing Idea" (Portfolio, $19.95), calls this lack of gratitude the FedEx paradox. "When FedEx started, it was a miracle," he says. "You put something in an envelope and it showed up anywhere in the United States the next day. It was breathtaking - for about a week. And then, if the letter was five minutes late, you said, 'I want my money back.' Companies keep raising the bar on expectations."

That doesn't mean every chief executive has to aspire to create the next Nike or Restoration Hardware or Starbucks - companies that got out of the price-performance trap by turning everyday products into lifestyle statements. (Sometimes a cappuccino is just a cappuccino.) It does mean that to stand out in the eyes of hard-to-please customers, companies have to figure out how to stand for something a little out of the ordinary.

Vermont Teddy Bear is a small company whose impressive turnaround shows the power of creating a connection with customers rather than competing on price. Its chief executive, Elisabeth B. Robert, chuckles about how improbable it is "to use Howard Stern to sell $85 teddy bears to grown men."

But that's what the company does. It aims marketing for its Bear-Grams - teddy bears sent by mail, nearly a third of which are sold in the two weeks before Valentine's Day - to a customer whom it dubs Late Jack. He is nervous about picking the right gift, waits until the last minute and is looking for something both personal and goof-proof.

Ms. Robert reaches these customers by using live spots on radio and television programs aimed at men - Mr. Stern's program, sports talk shows, even auto-racing programs. Company employees occasionally appear on the programs to banter with the hosts. Telephone operators ("bear counselors," in company parlance, who most assuredly do not work in India) offer advice about ways to personalize a gift and reassure callers that their selections will arrive on time.

WE'RE not selling our products," Ms. Robert explains. "We're selling our people. We have a live relationship with our customers, on the radio and on the phone." That's why, she adds, customers can order a Bear-Gram only by calling Vermont Teddy Bear directly or by using the company's Web site. "The idea of anyone else touching our customer's credit card makes me feel queasy," she says.

Before Ms. Robert took over, Vermont Teddy Bear defined its business in conventional terms - selling toys, complete with expensive retail space in Manhattan - with disastrous results. In 1997, the company's low point, annual sales dipped to $17 million from $24 million a few years earlier. Under Ms. Robert, annual sales exceed $50 million.

You don't have to be a cute company based in a quaint state to forge a genuine bond with customers. For two consecutive years, Amazon.com, the Internet giant, has registered the satisfaction index's highest-ever score for a retailer - in fact, a record score for any company in the service sector.

Why does Amazon produce such satisfied customers? Low prices and wide selection play a part. But plenty of retailers, on the Internet and at the mall, offer good deals and scads of merchandise. The real secret, says Bill Price, a former vice president of global customer service at Amazon, is the site's evolving menu of features and services that make it more friendly, more reliable and easier to use - little touches that personalize the site for each buyer.

"Most of these features were inspired by customers," says Mr. Price, who left Amazon in 2001 and now advises other companies on how to improve service. "Our job was to listen to customers and invent for customers."

The result of years' worth of small innovations is a shopping experience so distinctive and so intuitive that it amounts to a huge competitive advantage - and an eye-popping satisfaction-index score of 88. By comparison, Wal-Mart, which trumpets its low prices, registers a score of 75.

Now, if Amazon can only catch Heinz.

William C. Taylor is a co-founder and the founding editor of Fast Company magazine. He's writing a book called "Mavericks at Work."