The Cult of Tesla Motors Inc: Why This Automaker Has the Most Loyal Customers

Tesla Motors has transformed from a start-up electric carmaker into one of the most popular luxury car brands in the world today. Here's one of the secrets to its success.

Sep 2, 2014 at 1:06PM

Tesla Motors' (NASDAQ:TSLA) cult-like following has catapulted the electric-car upstart into a global market flush with adoring fans. Unlike traditional automakers such as Ford and GM, Tesla doesn't have a massive advertising budget, nor does it conduct multinational marketing campaigns. Instead, Tesla relies on word-of-mouth marketing and mall showrooms for selling its cars. This works because of Tesla's tremendous brand loyalty.

In fact, Tesla Motors received the highest owner satisfaction score in Consumer Reports' annual survey last year. According to the magazine, "Owners of the Tesla Model S gave it the highest owner-satisfaction score Consumer Reports has seen in years: 99 out of 100.
Let's dig into the psychology of brand loyalty and see why Tesla Motors boasts some of the most loyal customers since Apple.

Make an enemy
One thing that helped set Apple apart from other computer brands was its ability to create an enemy in the minds of consumers. Renowned psychologist Henri Tajfel discovered that by establishing minor distinctions between two groups of people he could artificially create loyalty within the groups. Apple achieved this by targeting Microsoft as the foe, while also distinguishing Apple products as the anti-PC solution.

Tesla's enemies, on the other hand, are vehicles with internal combustion engines and big automakers. Many EV drivers today derive an emotional attachment from driving something that isn't your typical gas-powered car. Another advantage for Tesla is the fact that it offers customers something different: new tech from a new company. This is similar to Apple of days past, which offered a different tech platform than PCs and a small user base which identified with being "different." 

Tesla has also created an enemy out of auto dealer associations, which are fighting Tesla's disruptive model of selling its cars directly to consumers through its own company-owned retail stores. By publicly opposing the decades-old auto dealership model of selling cars, Tesla is blazing a new path and picking up loyal supporters along the way. This has spurred auto dealership associations to file lawsuits against Tesla Motors that hope to ban the electric-car maker from selling its vehicles in numerous states throughout the country. 

Tesla simply wants to sell its cars directly to consumers at its own retail stores rather than going through dealerships, which the company says make the bulk of their revenue from servicing customers' cars. Tesla, on the other hand, has vowed never to make servicing a profit center -- a move that only strengthens consumer support for the California-based company.

Missouri Capital

Tesla Model S owners met at the Missouri capitol in support of Tesla. Source: Tesla Motors. 

Scores of Tesla drivers have expressed their loyalty to Tesla by showing up in person at state capitols to protest dealer suits against the EV maker in various states such as Texas and Missouri.

On its popular blog site, Tesla posts entries such as this urging its loyal followers to join it in taking action against these state dealer associations. In May, dozens of Tesla drivers came to Missouri's capital to support allowing Tesla to sell its cars directly to consumers in the state. Meanwhile, dozens of consumers have posted messages on Tesla's blog this year regarding their intention to reach out to state legislators in support of the automaker.

According to various psychological studies, this outpouring of support and loyalty wouldn't be nearly as strong without an enemy, so perhaps the ongoing dealership battles are a blessing in disguise.

Establishing an emotional connection
Another way that psychologists explain brand loyalty is through emotional connection. All of the most recognizable brands today have one thing in common: They make an emotional connection with consumers. One of the easiest ways for a brand to do this is by standing for something. In fact, a study by marketing research firm CEB found that rather than being loyal to a company per se, people are loyal to what that company represents.

Tesla wins major points in this regard because it is passionately dedicated to promoting mass adoption of electric vehicles in hopes of one day solving our planet's energy problem. People feel good about driving a Tesla because they no longer need to buy gas, and as a bonus, they're helping the planet in the process.

Many Tesla drivers have launched meet-ups or social gatherings for fellow owners and enthusiasts to connect with one another. There are also dozens of meet-up groups around the world for electric-car enthusiasts in general. The important takeaway here is that creating sustainable energy solutions is an increasingly important cause today, one to which millions of people are committed.

Transparency is key
In today's increasingly social world, transparency is key for creating enduring brand loyalty. Companies want to build lasting relationships with their customers, and one way to do so is through open communication. No automaker does this better than Tesla Motors.

Tesla in recent years has built its reputation for quality and customer support by communicating with consumers on social media and its own blog. Last year, when Tesla was hit with negative publicity involving a Model S fire, CEO Elon Musk was quick to address the issue in a blog entry and via social media channels such as Twitter and Facebook. Tesla even published its email correspondence with the Model S owner whose car caught fire (with his permission, of course), so the public might better understand what happened.

Screen Shot

Source: Elon Musk, Twitter.


Source: Tesla Motors.

Because of this transparency, customers feel like they have a personal relationship with Tesla. A great example of that occurred this week when two Tesla drivers submitted an open letter to Musk via a full-page ad in a Palo Alto, California, newspaper. As you can see in the picture, the letter asked that Tesla make a few changes to its Model S.

Challenge accepted. Not only did Musk personally respond via Twitter, but he also said Tesla would indeed implement some of the suggested changes. If that doesn't foster brand loyalty, I'm not sure what does. Whether it is effectively communicating its brand mission with consumers or publicly taking a stand against dealerships, Tesla Motors knows how to cultivate brand loyalty.

Tamara Rutter owns shares of Apple, Microsoft, and Tesla Motors. The Motley Fool recommends Apple, Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Apple, Ford, Microsoft, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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