Mercedes-Benz is No. 1 in Customer Retention; Dog Bites Man

Mercedes-Benz was No. 1 in yesterday's J.D. Power and Associates 2009 Customer Retention Study, capping a few years of struggle, relatively speaking, for one of the world's most prestigious brands.

In journalism school they use the figure of speech, "Dog bites man," for a routine occurrence that's not newsworthy on the face of it. Journalists are encouraged to pursue unusual angles, like, "Man bites dog."

For Mercedes-Benz to be No. 1 in customer loyalty is a "Dog bites man" story. It's what you would expect, considering the brand's reputation. But for a while there, customer loyalty for Mercedes-Benz was a "Man bites dog" story, because other brands were on top.

In 2005, Mercedes-Benz was No. 8 in the J.D. Power study, behind plebian brands like Chevrolet, Hyundai and Ford. I was working at Mercedes-Benz then, and make no mistake, being that far down the list galled and worried the Mercedes-Benz people.

A closely related problem was that Mercedes-Benz was having some well-publicized quality problems, including unflattering coverage in Consumer Reports. Now, that was a real "Man bites dog" story.

Mercedes-Benz quality was way below industry average in the 2006 J.D. Power Initial Quality Study - just below Kia. Since then, Mercedes-Benz has clawed its way closer to the top in IQS. In the 2009 IQS, Mercedes-Benz was No. 6, ahead of Toyota. In 2008, it was No. 4 in IQS.

As quality improved, so did customer retention. Mercedes-Benz was No. 8 again in the 2006 Customer Retention Study; No. 6 in 2007; No. 4 in 2008. The difference in rankings statistically is generally not that great, but symbolically of course, it's nice to be No. 1 in anything.

To be No. 1 in customer retention has to be especially gratifying, since as I noted earlier this week, it's proverbially more expensive to recruit a new customer than it is to keep an existing customer - although to be a growing brand, of course you have to do both.

Chart: J.D. Power