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The Honolulu Advertiser

Posted on: Tuesday, September 2, 2003

J.D. Power survey still shapes industry

By David Kiley
USA Today

J.D. POWER

DETROIT — Power is his name, and he still wields plenty of it.

This month, J.D. "Dave" Power III celebrates his 35th anniversary in the business of alternately angering and delighting companies — from automakers to Internet service providers — with his influential rankings of how good a product they deliver and how well they take care of customers.

A good score in a J.D. Power and Associates survey can win a company tens of thousands of customers a year. A bad score can do just the opposite.

The firm surveys customers about a product or service. It releases results to the public, but companies buy detailed analyses of how they and their competitors perform. And Power lets the No. 1-ranked companies advertise their scores, for a fee.

"There are two brands worth anything at all in this area, Consumer Reports and Power, and Power is the only one you can advertise," says marketing consultant Dennis Keene.

Power this year has declared EarthLink the best high-speed Internet provider, Ritz-Carlton the best luxury hotel chain and Microtel the best economy hotel chain. They all pay to advertise their rankings.

Power's meat and potatoes is still the car business, where he first made his mark in the late '60s and where his influence continues to be felt.

This year Power, 72, returned to an earlier practice of publishing the rankings of every car company, every brand, every model in his surveys of quality, dependability and customer satisfaction, rather than just the scores of those above the industry average.

So the whole world saw, for example, that South Korea's Kia was last in long-term dependability while the vaunted Mercedes-Benz brand had dropped below the industry average.

General Motors product chief Bob Lutz says Power's rankings have driven automakers to emphasize product quality, but grumbles that the surveys sometimes focus on the wrong things. "Our Hummer H2 lost a lot of points on quality this year because buyers complained about poor fuel economy. With a vehicle that big, what do they expect?" says Lutz.

Power says he's heard it all before. "We are the voice of the consumer, not the engineers, and that's what we get paid for," he says.

Toyota, Power's first auto client, has long dominated the quality rankings, partly because its quality control system mimics the Power survey.

When an internal survey by Toyota's Lexus luxury brand found the turn signal on its big sedan, LS 430, too quiet for customers who left on the blinker after a lane change, it was made louder. That happened before Power's survey could pick up the complaint.

"I think our rankings were critical to the whole Japanese industry reversing its tin-and-bamboo image," says Power.

After graduating from the Wharton School in the early '60s, Power went to work as a financial analyst at Ford Motor. Bored, he went into customer research for GM's Buick and GMC brands. But, he says, the job was telling GM what it wanted to hear. "The research was tortured until it confessed," he recalls.

Power went to Los Angeles and opened his own firm on his kitchen table with his wife, Julie, sorting through consumer questionnaires and charting results on spreadsheets. His big break came in 1968 when he got a contract to advise Toyota, which was re-entering the U.S. market after an unsuccessful start in the 1950s.

Detroit automakers wouldn't give Power any business. But Toyota dispatched him to Japan to audit its operations for how to improve products, especially for the USA, in specific ways customers would notice. Improved brake power and better rust inhibitors followed quickly from his findings.

Soon, Toyota began advertising its Power rankings, and consumers and Detroit noticed.

Power became nationally known in 1973 when a newspaper got hold of a report he wrote saying 20 percent of Mazda's rotary engines were going bad after 35,000 miles. The episode "taught me that going public was a quicker way to reach the CEO than going up through middle management," he says.

In the mid-1970s, Ford killed an idea for a small van that rated "poor" in an internal survey of the company's pickup and station wagon owners. Power thought Ford was wrong and told the company it should ask import car buyers about the van. Eventually, ousted Ford president Lee Iacocca took the idea to Chrysler and launched the minivan to huge success, especially with import car buyers.

Today, Power studies companies in 10 other industries besides automotive. Some companies beg him to survey their category because they think their company will rank No. 1.

In recent years, though, Power has turned down surveying for tooth-whitening products and business schools. "I just couldn't figure out how to do those categories well, so we thought it best not to do it," he says.