Tesla vs. Mercedes: The battle for customer loyalty
A showdown between Tesla Motors [NASDAQ: TSLA] and Mercedes-Benz surfaced in CIO Magazine* recently, pitting the two automakers against one another to see who wins the battle for customer loyalty. Former research fellow at Forrester, Rob Enderle compares the two companies and finds that even though, "Mercedes Benz is arguably the oldest car company at scale and Tesla is the newest. If you measured customer loyalty you’d likely find that Tesla, which is modeled after Apple, has the higher score." To that end, Tesla was rated number one for customer satisfaction by Consumer Reports with 98% of Tesla owners stating that they would definitely buy the car again.
Image: Auto Motor and Sport
So how is Tesla earning such customer loyalty over Mercedes, the renowned industry-mainstay? Enderle explains, "The reason is because Tesla better instruments its cars and customers, it generally knows before the customer does if the car has a problem, it comes to the customer to fix it (you don’t drive to them). In addition, it will even let customers upgrade their car with current technology for a fraction of the price of a new car, whereas, Mercedes forces customers to buy a new car to get the new technology."
What other signposts demonstrate a changing of the guard? He compares their factories: "when you see the Tesla factory you see a factory that is ultra-modern, highly mechanized and very clean. The Mercedes factory, in contrast, is antiquated, doesn’t appear to have strong contaminant control, is highly manual and you have to literally step over puddles of oil on the floor."
And comparing the passé Mercedes gull wing doors (first invented in the 1950s) with Tesla's much-improved, all-new Model X falcon wing doors, he writes: "Tesla X doors auto-open and close, and they are articulated so they can open in tight areas... Tesla did them right and Mercedes did them wrong even though Mercedes had decades of experience Tesla lacked. Mercedes had to discontinue the [gull wing] doors again in their current car leaving Tesla as the only firm shipping a Mercedes innovation."
Image: Car Advice AU
Enderle notes, "Mercedes Benz has a huge line of cars, massive distribution and global reach. Tesla has two cars... a massive [stock market] valuation, Apple-like customer loyalty, and it gets hundreds of thousands of people ordering cars over a year before they are available. They are well along the path of doing to the car market what Apple did to the smartphone market."
Above: Australia's Drive pitted the Tesla Model S against the German luxury leaders, Mercedes and BMW, and Tesla was crowned king of the category (Source: Drive.com.au)
Enderle concludes, "Tesla has aggressively instrumented its customers and engages with them more deeply than Mercedes... if the bigger older car companies don’t come up to speed quickly they may, like the old smartphone vendors did, wonder where their market has gone."
*Source: CIO Magazine