Think of how your customer experience keeps customers coming back? Do you have a plan? Do you follow a model? Michael Porter, author of the customer experience competitive advantage, describes the 3 competitive advantage models which incorporate some type of customer experience. Not all customer experiences are the same.
Each customer experience competitive advantages comes with their own positive and negatives. What customer experience model are you currently following and how are you using it to get a bigger and more sustainable return on your customer experience investment?
3 Types of Customer Experience Advantages
- Customer Experience Cost Advantage (Lowest-cost provider)
- Customer Experience Product Advantage
- Customer Experience Service Advantage
1. Cost as a Customer Experience Advantage
Competing on price is the easiest advantage to create in the market. All it takes is being willing to offer something for less than the competition. It works, at least in part, because when you’re willing to give or do something for less, there are always people who will take it. Price conscious customers are always available. Price is a field of dreams when it comes to business. If you lower your prices enough, they will come.
The problem is that the cheap solution creates massive problems for you in the future. Brad Smith over at FixCourse, talking about the customer experience dilemma of being the low-cost provider. The lowest cost denominator is an easy differentiator to begin with, but it’s tough to sustain. Successfully sustaining profit-generating low-cost solutions requires massive scaling capabilities. Think Walmart big.
Low price leadership is difficult to maintain. There’s always a competitor willing to cut prices, cut corners, and give something away for free in order to lure customers away. The most price conscious customers are always willing to go, because in the end, they’re loyal to price, not service. Each transaction is a battle between what you offer and a competitor willing to undercut in order to win new business. Add to that Brad Smith’s reason’s for why it’s difficult to build a quality brand around a low-cost experience model:
- Price concious people don’t care about you or your brand… they care about how much it costs.
- The people who are loyal and who have money to spend, don’t want to do business with a company that’s poorly run and has a bad product/service.
Have you found a special way to stay on top?
2. Product as a Customer Experience Advantage
A product-based customer experience is a better route than simply being a pricing leader. Product or feature experience is standing out because of what you offer. Product is still copyable, but it’s tougher to start. It takes time, energy, effort, organizational commitment.
The competition can replicate your product, your features, your tools, and your offering, but being first to launch will let you build a nice community around it. Being first to market with your offering will keep a core group dedicated to you since you’ll be seen as a market leader.
Customer experience based on product innovation and feature offerings is a solid foundation for long-term customer loyalty and sustained customer growth.
3. Service as a Customer Experience Advantage
The customer experience based on service is the Shangri-La of customer experience advantage. The hardest to replicate, the most exhausting to implement. Service experience takes the most organizational and individual energy. It’s not simply a matter of deciding to do it, or building a function. It takes constant practice, constant action, and commitment from each individual involved in the process.
Don’t just sell a product. Sell an experience.
-Brad Smith, FixCourse
The beauty about service as a customer experience model is that it’s flexible. The service customer experience model allows you to add components from low-cost, value offerings, it allows you to add product and feature focus. But ultimately, it gives direction to your organization and your people. It offers a blueprint by which your customer actions are measured.
There’s no hard limitations on what you can and can’t do, if it’s in the best interest of the service. Service can include price-conscious offers; service includes product and feature differentiation.
Are You Stuck in the Customer Experience Middle?
So where do you stack up when it comes to your customer experience advantage? If you don’t know, you’re probably stuck in the middle. And though it’s not at the bottom, the middle isn’t an ideal place to be.
Average customer experience doesn’t lead to long term sustained growth. It doesn’t lead to brand development. It doesn’t lead to customer loyalty.
- Average customer experience typically means average profitability.
- Average customer experience means average customer loyalty.
- Average customer experience means average business success.
How are you making sure you stay out of average? What organizations have you worked with that successfully use customer service to stand out from the competition? What customer experience lessons have you learned from what’s making them successful?