by Rob Enderle

Why Tesla’s customer loyalty ratings beat Mercedes

Sep 16, 2016
Car TechCRM SystemsIT Leadership

Columnist Rob Enderle writes that marketing isnu2019t about selling stuff anymore. Itu2019s about selling experiences. A recent trip made it clear that Tesla gets this and Mercedes does not.

customer loyalty ts
Credit: Thinkstock

I just came back from what is likely the worst trip of my life and, sadly, this was an affinity program for Mercedes Benz.   Affinity programs are put in place to wed the customer to the brand. I get to review them from time to time. This particular program has been around for 50 years, but clearly the program has outlasted those that created it. It would seem that Mercedes no longer understands why the program exists and as a result is increasingly doing potential brand damage.

In this age of social media, and particularly when it comes to a luxury brand, you have a lot of people who are very active on wide-reaching services. So, if you piss one of them off and don’t address things in a timely manner the damage that can be done can be catastrophic.

Mercedes Benz vs. Tesla

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. You’d also likely find if you measured quality, Mercedes Benz has the higher score.

So why would the better car have less loyalty? 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.

[ Related: Tesla’s free Autopilot 8.0 update shifts focus to avoid car crashes ]

Oh, and Tesla has regular customer events where it showcases new technology, a modern intuitive user interface, and wow features like self-opening and closing doors that get customers to rave about their cars long after the typical excitement over a new car should have declined.  

Two examples, 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.

The other example is the gull with doors both firms had. Mercedes doors go back to the 1950s and one of the most advanced cars of that time, however when it brought them back they were largely unchanged. This means if you are short you can’t reach them, and if you are tall you can knock yourself out by hitting your head on one (which I nearly did when I had their newer car).   The Tesla X doors auto-open and close, and they are articulated so they can open in tight areas. But Tesla did them right and Mercedes did them wrong even though Mercedes had decades of experience Tesla lacked. Mercedes had to discontinue the doors again in their current car leaving Tesla as the only firm shipping a Mercedes innovation.

Mercedes builds a car, Tesla is building an experience and their CEO is personally engaged in assuring Tesla’s image and customer experience.

Mercedes European delivery

I couldn’t figure out why this program actually existed. Other than a fast factory tour, it has nothing to do with Mercedes Benz. They call it a rally, and maybe it was at some point, which might have made sense because then you could have a guide, you’d have a group traveling together, and you could weave in more Mercedes content. But as the program currently exists, it is an unguided tour in a foreign country with signs you can’t read using a GPS system that has been partially crippled in a car that delays delivery, from the time you pay for the car, by up to 6 months, that takes you to places that apparently don’t want you there, and costs an extra $1,800.  

The Mercedes part is getting your car from the factory. But the dealerships do a better job of car delivery, you get the car more quickly from the dealership, you get to keep your trade-in and money far longer, and the car is better protected until you eventually get it. I found no advantage to picking a car up at the factory. It’s just stupid, even if you lived next to the factory, you’d have a hard time justifying this option because you’ll need the relationship with the firm that sold and services the car not the one that built it.

You don’t fix that — you step back, figure out what you wanted to accomplish, and start over from scratch with a tight focus on the goal. If you don’t even know you have a problem, you’ll never do this. But Mercedes likely doesn’t even know they have a problem because they haven’t instrumented the customer adequately.  

Automated customer engagement

Mercedes Benz has a huge line of cars, massive distribution and global reach. Tesla has two cars, isn’t even wel- represented in every U.S. city and isn’t profitable. Oh, and it sells cars that don’t work with the existing gas based eco-system. Yet it has a massive 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.

Go back and search on the number of CEOs who were very vocal about how the iPhone would never be successful and then count the number that still have jobs, or even companies, today.

The market isn’t about selling phones or cars anymore; it is about selling experiences. Firms that get this can, and have, rolled over firms that don’t and you can’t sell experiences unless you connect with customers.

Tesla has aggressively instrumented its customers and engages with them more deeply than Mercedes, or any other company (though GM seems to be rapidly going in this direction), does. This is paying massive dividends and 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.