Random Musings on the Real “Competitive Advantage” of Customer Service

In some ways, this article by Josh Bernoff at Forrester is nothing we haven’t already heard: “In the Web/Sales/Marketing/Customer 2.0 world, the buyer has all the power.”

But I was interested by his particular take because it pits “customer engagement” against traditional competitive advantages: A customer obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of an engagement with customers, and prioritizes these over maintaining traditional competitive barriers.”

The forces of disruption mean that unless you’ve got a huge competitive advantage in a critical market area—and maybe not even then—at some point during its life cycle, your business will have no other true value differentiation other than:

  1. customer satisfaction, and
  2. the processes you use to create it.

It’s very similar to something Guy Kawasaki mentions in this interview with Brian Solis. Customer “enchantment,” he states, comes from the recognition that traditional competitive advantages are incredibly difficult to attain, and even more difficult to keep—and thus customer engagement becomes a critical factor for success.

For example, Guy states, Apple’s real competitive advantage isn’t “engaging” with customers, at least not in the “social media/customer feedback” sense. Based on his first-hand observations working for the company over the years, Guy feels Apple’s corporate approach is actually kind of stand-offish and aloof. The difference is that their competitive advantage—integrating the best possible user experiences into their products—is so far ahead of everyone else they don’t need to be as outwardly “engaging.”

Josh Bernoff echoes, “You think the iPad came out of [customer engagement] surveys?”

No, it came out of Apple’s clear understanding of an “unarticulated” customer need: the desire for a smaller, lightweight, mobile, Web-enabled device with 85% of the functionality of a laptop, yet with a more intuitive, easily accessible interface. Apple has maintained its competitive advantage to this point out of sheer momentum, existing loyalty, and great product.

Why has Wal-Mart’s brand started to erode from its 1990s position of power? Because its competitive advantage—depth of distribution—no longer carries the weight that it used to. We no longer care that Wal-Mart has everything (cheaply) under the sun; we can get that sitting in the living room in our pajamas (and not have to deal with dank, underlit stores, crowds of people, ignorant customer service reps, and slow checkout lines).

The increase in customer buying power has exacerbated competitive pressures on businesses (Josh particularly mentions Harvard’s Michael Porter and his Five Competitive Strategic Forces). When customers exert more control on their markets, businesses must in turn increase responses to other competitive elements (rival organizations, threat of new entrants, bargaining power of suppliers, threat of replacement/substitute products).

Ultimately those pressures manifest themselves in different ways for different organizations.

It’s your business, your decisions. You know your executive team, your suppliers, investors, customers, employees, distributors, artisans, detractors and (hopefully) evangelists.

The question is, which of them really, deep-down, gets the most attention?

Author: Ken Krogue |
Summary of Ken Krogue’s Forbes articles

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