Apple Effect

Tesla’s ‘Apple Effect’ and how similar both companies’ customers are

By Apple Effect, Tesla

Tesla’s Apple Moment, Apple Effect and the true difference

There have been many articles comparing Tesla to Apple and going far enough to claim that Tesla’s “Apple Moment” will be when they launch the Model 3. Different reporters have made the metaphor citing the long lineups for the Model 3 similar to those lineups for the iPhone. The reporters on CNBC’s Fast Money went as far as to say Tesla was a “hype stock” and that it would be wise “to at least take some money off the table” back when Tesla’s stock was at $229 US. You can watch the video here:

However, nothing could be further from the truth. Just because people line up for a product launch & there is great customer anticipation of these products doesn’t make the companies or their stock any similar. People lined up for Adidas’s Yeezy shoes, Snapchat’s Sunglasses, and yes even Supreme’s Brick yet these companies remain quite different

The truth is Tesla is similar to Apple but not due to its lineups and definitely not due to its stock movements. It is not merely a fleeting “Apple Moment” but rather, an eternal “Apple Effect”.

The similarity lies in the customer experience and how the two companies treat their customers. Furthermore, their customers are very similar:

  • Both companies manage and control the whole customer experience throughout the sales cycle. They both don’t rely on dealers or franchises but open their own stores in each territory
  • Both companies enjoy enormous brand equity where the perception of the brand is matched or surpassed by the reality. They both charge a premium for their brands
  • Both companies built a closed ecosystem of products & services which lures customers into it with one gateway product; (the iPhone or the Tesla car)
  • The sales cycle from their websites to their stores are top notch. Their after sale experience is second to none with Apple’s Genius Bar & Tesla’s Service Centres. This is enforced throughout the corporate culture engrained into each company
  • Both companies listen, and quickly adapt to their customers. Elon Muskreplies and actions Tweet suggestions while Tim Cook replies and considers customer emails
  • Most importantly, customers of both these companies do something, few other companies have ever experienced: When there is a defect or default in their products, customers do not complain, bitch or moan. They merely mention the issue with a smile on their face and are happy to get it fixed. They almost feel like its a privilege to have such products, and feel bad for those that haven’t experienced it
  • This makes these customers die hard fans or fanatics just like when a person is a lifetime fan of a sports team, they never bad mouth their home team or switch sides to support another. They stick with them through the thick and thin, making all Apple / Tesla owners a tribe, a community that feel a strong sense of belonging and are the greatest mouth piece any advertiser can ever buy.

This is not to say that Tesla will also have its “Apple Moment”. If you define Apple’s “Apple Moment” as the time it went from a niche to the mainstream, I would argue the real moment was not when the iPhone was released but rather when Steve Jobs launched iTunes on Windows. This allowed the iPod to be accessible to everyone, not just Mac users. This “Moment” for Tesla will not be when the Model 3 comes out, but rather when (if) Elon Musk opens up the Supercharger Network to all electric car users and sell adaptors that go the other way: From Tesla connectors to those used by the Leaf, Prius, Bolt and all other EVs.

Tesla is ‘actively talking to other automakers’ about opening up its Supercharger network, says CTO JB Straubel

This will partially help in making Tesla the world’s most valuable company. You can read more on this in my other article: “How Tesla will become the world’s most valuable company”

While the “Apple Moment” is a turning point in history, the “Apple Effect” is an end result defined by the relentless struggle to master the perfect customer experience.