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What Is JD Power?

J.D. Power Explained

J.D. Power is a marketing research organization that analyzes customer data to provide rankings, evaluations, and reports for a number of sectors. The organization has been in operation for more than 50 years and is well-known for its vehicle and truck ratings.

In this post, you’ll discover what J.D. Power is, what it does, and why the firm matters.

What Is J.D. Power?

J.D. Power is a worldwide marketing research organization that evaluates client input about goods and services across many various sectors, including automobiles, credit cards, and insurance. The company’s staff of specialists then converts that information into papers it sells to corporate customers, and free polls and research it distributes for consumers.

The car business is the most significant industry in which J.D. Power operates. The firm’s Initial Quality Study (IQS) and Vehicle Dependability Study (VDS) are prominent ones you may have heard of.
In 1984, Subaru became the first carmaker to reference J.D. Power rankings in a commercial.
Though the business is most recognized for its work in the automobile sector, J.D. Power investigates numerous other industries, including:
  • Financial services (banking, credit cards, etc.)
  • Insurance
  • Health care
  • Home Retail
  • Media, technology, and telecom
  • Travel and hospitality 
  • Utilities

The Balance incorporates J.D. Power poll data in its ratings of credit cards and insurance, among other things. For instance, we look at the J.D. Power Credit Card Satisfaction Study for our credit card evaluations, and the company’s auto insurance and claims satisfaction surveys for some of our insurance ratings.

What Does J.D. Power Do?

J.D. Power is recognized for its benchmark studies, which it develops based on research of consumer surveys. J.D. Power then rates the rivals and gives rewards for the highest-performing firms.

The firm’s ratings take into consideration a range of customer-based characteristics, depending on the product or service. For instance, J.D. Power’s annual credit card satisfaction survey scores credit card issuers in the following areas:
  • Interactions
  • Credit card terms 
  • Communication 
  • Benefits and services 
  • Rewards
  • Key moments (applying for a card, resolving difficulties, dealing probable fraud, etc.)

The customers J.D. Power considers for its study are confirmed owners or users of the goods and services. As part of its research, J.D. Power communicates with millions of customers every year.

J.D. Power’s surveys and studies take many various formats, too. The vehicle Insurance LoyaltyIQ study, for example, is meant for industry stakeholders and examines shopping and company-switching habits among consumers of the top 50 vehicle insurers in the U.S.

Why People Care About J.D. Power Rankings

J.D. Power’s appeal among customers is largely attributable to its marketing and technique. Automakers like to incorporate J.D. Power honors in ads, which makes the company’s rankings and awards more well-known than its rivals. For example, a 2019 ad from Chevrolet devoted its whole 30 seconds on J.D. Power’s research, stating that more than 440,000 individuals participated to a study regarding vehicle quality that resulted in Chevy earning more awards than any other automobile manufacturer in the preceding four years.

J.D. Power conducts its customer satisfaction rankings independently, basing them on actual customers’ experiences. This process may make the firm’s rankings more trustworthy among consumers purchasing items or services J.D. Power has rated.

How J.D. Power Makes Money

J.D. Power generates money by selling its research results and license fees. If a corporation wants to include J.D. Power in an advertising (like those automobile advertisements you may see), the firm needs to pay a license fee for it.

Auto-insurance firms may employ J.D. Power to obtain access to LoyaltyIQ reports, white papers pertaining to the auto-insurance sector, analysis of your company’s product performance in key areas, and 10 hours of consultation with a J.D. Power insurance industry expert.
Businesses may pay J.D. Power to undertake a certified customer service audit that includes a customer survey, comparisons to industry standards, a best-practices scorecard, and a one-year license to utilize the survey and scorecard. Completing the program earns the firm a “Certified Customer Service Program” accreditation.

Criticism of JD Power

Because firms pay J.D. Power license fees, there are scenarios in which J.D. Power is generating money from the same companies it’s evaluating. This probable conflict of interest is something rival "Consumer Reports" highlighted in a May 2020 article. The report attracted attention to the fact that J.D. Power charges fees for organizations to obtain survey findings, reference the company in marketing, and participate in the Certified Customer Service Program.

However, J.D. Power says its surveys give, “independent and unbiased feedback from a representative sample of verified product owners,” which would eliminate, in principle, any bias toward its paying clients.

Furthermore, J.D. Power says, only the corporations that perform the best in specific areas may pay for a license. In other words, J.D. Power doesn’t throw out its licenses to just anybody who’s ready to pay the money.

Other Rankings Besides JD Power

J.D. Power is one of various rating and analysis tools you may use to analyze a business or service’s reputation and performance. Here are some others:

Consumer Reports: This nonprofit group gives hundreds of evaluations for items ranging from autos and vacuums to financial services like insurance and investing companies. Like J.D. Power, Consumer Reports interacts with consumers of financial services organizations to build its ratings. The group doesn’t sell its rankings to firms to make income. Rather, Consumer Reports’ economic model depends on paid memberships users buy to access ratings, reviews, and articles. 

Better Business Bureau (BBB): The BBB generates corporate profiles that contain a letter grade based on customer complaints and company answers. But take its ratings with a grain of salt. An “A” grade merely signifies the firm has met the BBB’s membership requirements, but not that it has satisfied customers with complaints. And a CNN investigation discovered a handful of A-rated corporations had severe government proceedings launched against them on behalf of customers.

National Association of Insurance Commissioners (NAIC): The NAIC creates insurance standards and best practices, analyzes regulations, and offers supervision in all 50 states, Washington, D.C., and U.S. territories. Its website offers profiles of firms selling consumer insurance and a complaint database detailing the amount of complaints a company receives and how its complaint rate compares to the industry average.

If you’re wondering about other rating and scoring groups, check to discover how they acquire information, do research, and receive financing. Ranking and evaluation organizations should be open in each phase.

If a ratings firm isn’t forthright about its approach and income, this can be a warning sign. High-quality ranking companies tend to be highly clear about their activities.

Key Takeaways

J.D. Power is one of the most important consumer study businesses in the world. 

While most people connect J.D. Power with the automobile business, the company undertakes research in other areas, such insurance, credit cards, and healthcare.

J.D. Power based its findings on customer surveys that probe people who’ve really utilized the product or service. 

Consumer Reports, the BBB, and NAIC all give numerous ratings and criteria you may use to examine a firm. 

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