For decades, J.D. Power’s research has been a key tool for savvy consumers trying to separate companies with high-quality products and world-class customer service from the other guys. Think about it: At some point, you’ve almost certainly come across an ad for a bank or carmaker in which the company touts its high performance on a J.D. Power survey.
But how did J.D. Power develop its renown, exactly, and how does it compile its much-publicized satisfaction and quality surveys? And just how reliable are those reports, anyway? Here’s what you need to know.
Key Takeaways
• J.D. Power is perhaps best known for its customer satisfaction surveys, which top-performing companies often reference in ad campaigns.
• The firm conducts customer surveys for eight industries, including the automotive sector, financial services, and healthcare.
• Much of the company’s revenue comes from providing data services and analytics to businesses trying to better understand how consumers feel about their brand.
• J.D. Power contends that its research is not biased toward companies that pay for its services.
How J.D. Power Got Established
While the privately owned company is now one of the most recognized market intelligence brands in the world, J.D. “Dave” Power III built the company from the ground up beginning in 1968. Back then, the main focus for the former advertising employee was offering targeted research for automotive companies.
Several years later, the company conducted its first customer satisfaction survey, which rated carmakers by the average experience of their buyers. When second-place Subaru made its ranking the centerpiece of an ad during Super Bowl XVIII, the research firm was on its way to becoming a household name. “That really put J.D. Power on the map with the mainstream consumer market,” son Jamey Power told Family Business magazine in 2014.
Over time, the company’s benchmark reports, including the Initial Quality Study and Vehicle Dependability Study, became popular resources for discerning car buyers. They also became important publicity tools for companies that perform well on its consumer surveys and have the option to pay J.D. Power a fee for the right to reference the results in advertising and marketing materials.
Expanding beyond auto research
In the 1990s, the company began expanding outside the automotive market, with targeted intelligence products for industries such as financial services, insurance, and utilities. Today, it offers several studies for each of the eight industries it serves, including the U.S. Credit Card Satisfaction Study and National Bank Satisfaction Study for the banking sector. For the healthcare market, it conducts annual studies that compare life insurance carriers, commercial health plans, and Medicare Advantage insurers, among others.
While J.D. Power is perhaps best known for its consumer surveys, it generates much of its revenue by charging companies for data analytics services designed to help gain market share. In its marketing initiatives, the company touts its ability to bring “the voice of the customer” to its clients.
The company was owned by Dave Power and a group of senior executives for many years before McGraw-Hill acquired the company in 2005. It was eventually sold to Chinese investment firm XIO Group before being acquired by the Chicago-based private equity firm Thoma Bravo, LLC, in 2019 for nearly $1.9 billion.
Subsequent to the Thoma Bravo acquisition, the company moved its headquarters from its long-time home in Costa Mesa, Calif. to Troy, Mich. It currently has offices in 17 cities on four continents: North America, South America, Europe, and Asia.
Benchmark Studies
Most consumers know the name J.D. Power based on its influential benchmark studies, in which consumers rank companies based on factors such as quality (as in the auto industry), customer service, and overall satisfaction. In each case, the study results are converted to a “Power Circle” rating from one to five (the highest possible score).
To compile those studies, J.D. Power reaches out to a random set of consumers and business customers through mail, telephone, and email. It asks those subjects to rate multiple aspects of their experience with the company in question, such as billing and customer service.
The research team then weighs each of those factors based on their perceived importance to the customer experience, resulting in an overall satisfaction score. Brands that generate the highest scores receive a J.D. Power award for that particular study.
The market intelligence firm argues that its methodology distinguishes it from online company reviews, with its website claiming that “J.D. Power is one of the only sources of consumer ratings based on independent and unbiased feedback from a representative sample of verified product owners.” In other words, it collects feedback from a broad sample of actual customers, rather than skewing its results toward those with strong positive or negative experiences.
Sources of Revenue
While J.D. Power’s benchmark survey results are free, the company charges licensing, or “co-branding” fees to top-ranked companies that choose to use their awards for marketing purposes.
The company also sells market intelligence to clients—from automakers to credit card issuers—who hope to better understand the consumer’s relationship with their brand and with competitors. Those reports likewise use data from J.D. Power’s annual consumer surveys, but include more detailed information than is provided in its free offerings. In addition, clients can hire the company to perform customized research that yields even deeper insights into the customer experience, according to Keith Webster, the president of global business intelligence at J.D. Power.
Per the company’s website, “J.D. Power translates consumer survey responses into studies and reports that are used by companies worldwide to improve product quality, customer satisfaction, and other business metrics.”
Companies purchase the firm's market intelligence in order to identify areas of strength relative to the competition as well as aspects that may require improvement, such as customer service or—in the case of car producers, for example—build quality. “The companies that deliver a great experience for their consumers also deliver great financial performance,” says Webster.
The Michigan-based firm also provides data services that help clients better understand the markets in which they operate. Its solutions include The Power Information Network, or PIN, which provides real-time data on retail vehicle sales and J.D. Power Valuation Services (previously known as the NADA Used Car Guide), which collects pricing information on new and used car transactions.
Fast Fact
One of Dave Power’s first business clients was Toyota, which paid him $600 for a report on the U.S. forklift market.
Are the Results Objective?
While the bulk of its revenue comes from the businesses it rates, J.D. Power has long contended that its survey results remain objective. In other words, though clients pay the research firm for detailed market data or licensing rights, those funds don’t affect the consumer survey results. “It’s unvarnished truth,” says Webster. “That’s been the formula since the beginning.”
Webster suggests that in some cases, companies perform poorly in its surveys even though they hire J.D. Power to obtain market data or advisory services. “We’re going to do our work with integrity,” he says. “And we’re going to do it whether or not companies like it.”
The Bottom Line
While you may not walk away with insight into a specific product line or service, J.D. Power’s surveys are regarded as a key tool for assessing a provider’s overall performance in terms of customer satisfaction or quality. The fact that J.D. Power solicits feedback from verified users of a particular brand is a key point of differentiation compared with most online reviews.
