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How J.D. Power Ratings Work

        Auto | Buying & Selling

How J.D. Power Ratings are Determined
J.D. Power uses consumer surveys to gather opinions on products.
J.D. Power uses consumer surveys to gather opinions on products.

While many believe that knowledge is power, J.D. Power and Associates operates on the principle that information is money. J.D. Power collects information regarding consumers' likes, dislikes, habits and tastes regarding the selection, purchase and satisfaction with a given product, then packages this valuable information and sells it to the producers of the product.

Companies pay J.D. Power upward of $100,000 for this valuable data in order to better gain an edge over the competition, because the competition is paying for this data as well. The survey results help manufacturers design and sell products that consumers want and shows them how consumers feel about products already on the market.

Surveys are conducted through telephone, mail and e-mail. This isn't a random approach to collecting opinions -- survey responders must be familiar with the product being surveyed. This is a very important facet of J.D. Power's offering to businesses. Nobody wants to pay for peoples' opinions about products they don't own or use. The company identifies polling groups largely through demographic research and purchased mailing or customer lists, and then selects random consumers to survey.

Surveys include questions about a wide range of topics, like ease of use, customer service and satisfaction with various features. However, some topics are weighted more heavily during analysis than others. For instance, a high safety score nudges a company's ratings higher than a high score for billing practices. J.D. Power and Associates then performs a statistical analysis of the information gathered and offers this to companies that are affected by the findings.

The company produces reports that compare products using different means of comparison, depending on the industry. One common comparison is "problems per 100 (products sold)." The ratings serve to contrast companies based on the best and worst performers. Since one company will always be tops over the others, there is never a report that lacks a top-rated company or product -- there will always be a winner and a loser in every category.

Next, we'll look at some of the industries and products that J.D. Power rates.