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Mr. Satisfaction

J.D. Power Turned the Auto Industry Upside Down By Asking a Simple Question: Are You Happy With Your Car? Now He's Into Airlines, Hotels, Credit Cards and Who-Knows-What's-Next. Here's Why J.D. Power Is the Good Housekeeping Seal of the '90s.

October 13, 1996|David Sheff | David Sheff is the author of "Game Over: How Nintendo Conquered the World" (Vintage). His last article for the magazine was on champion surfer Kelly Slater

What matters most to car owners? In a world of compression ratios, locking differentials and computer-controlled transmissions, satisfaction often comes down to unlikely features. Like cup holders. * Cup holders? * "All you have to do is have a hot cup of coffee spill onto your lap while you're driving to understand why people care about them," says J.D. Power, who has changed the shape and destiny of American and international products by studying these things. "Put in cup holders and your customers will be happier." * At 65, James David Power III, founder of the Agoura Hills-based J.D. Power and Associates, has parlayed a consulting sideline run from his kitchen into 360 employees, branch offices in four countries and revenues of more than $35 million last year alone--nearly all of it derived from finding out whether or not we're satisfied with what we buy. Power mails millions of surveys and compiles the truckloads of responses into reports that tell companies how happy customers are with their cars or tires or phone service. Subscribers to Power's reports--virtually all the key players in the industries he covers, among them automobiles, airlines, credit cards, hotels and long-distance companies--get detailed information not only about their own customers but also those of their competitors. * Keeping the customer satisfied wasn't entirely commonplace when Power conducted his first survey, in 1968. No more. With advances in technology and improvements in the quality of most consumer goods, customer satisfaction is now, thanks in part to the Power surveys themselves, the benchmark of success. Profits may be transitory, the new thinking goes, but customer satisfaction implies a future because happy customers come back. Increasingly, the Power name is used by consumers when making decisions about major purchases. Companies ranked at the top of his surveys see the results in increased, sometimes skyrocketing, sales. Which is why the fiercely coveted ranking--"#1 in Customer Satisfaction: J.D. Power & Associates"--seems to be everywhere: on TV and print advertisements, even on the windows of cars in showrooms. The Power endorsement now carries as much, and arguably more, weight than those of Good Housekeeping and Consumer Reports.

The impact of Power's surveys has been felt most dramatically in the car business. He has been tracking it since the late 1980s, when American cars were still the stuff of jokes on late-night TV. Then the Buick LeSabre, which had unimpressive sales at the time, ranked as the top domestic nameplate in a Power survey. Not many American cars could boast satisfied customers, so Buick advertised the surprising result in a massive campaign. Sales grew by nearly 100% in the months afterward. "Americans wanted to buy American if there was some assurance that the quality was up," Power says. "Here was a basis for doing so."

The Power imprimatur, says Mike Flynn, associate director of the University of Michigan's Office for the Study of Automotive Transportation, "has more credibility than any other independent evaluation of cars, including Consumer Reports. It has a profound influence on the industry and a direct influence on buyers. In many cases, it tips the balance in the decision about what car to buy." An internal study by Lexus showed that the Power endorsement has more influence on its potential car buyers than anything other than advice from dealers and word of mouth--more than advertising, more than reviews in magazines and newspapers.

"There is a sea of claims out there," says Jim Press, general manager and senior vice president of Lexus. "Customers want an independent source of information. J.D. Power provides one--direct from the consumers' mouth." Adds Yale Gieszl, executive vice president of Toyota Motor Sales USA: "Power has generated intense competition among the auto makers to top one another in product quality and customer satisfaction. By creating the competition, he has helped the auto industry improve."

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EVER SINCE THE BUICK SUCCESS STORY, CAR MAKERS THAT PERFORM well in Power surveys have clamored to advertise the results, paying a licensing fee of as much as $100,000 for the privilege. The publicity value for Power sometimes cuts both ways. In 1990, Chevrolet advertised that its Lumina placed No. 1 among mid-sized specialty cars in a Power study. While this was true, the car had in fact scored worse than average among all the vehicles in the study. Realizing that the value of his name would evaporate if he didn't step in, Power decreed that henceforth, the J.D. Power name could be used only in the advertising of companies that placed first in their category and ranked above the industry average.

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