In this world of ever
increasing commoditization,
key to winning the battle of
the marketplace is a clearly
differentiated (and better)
customer experience
Question: How is it that a person will spend over three dollars for a cup of coffee at a trendy coffee shop when that same cup of coffee could be enjoyed at an upscale hotel for two dollars and fifty cents, a casual restaurant for a buck and a half, a fast food place for a dollar, or in the comfort of your own home for a total cost of about twenty cents?
Answer: It’s not about coffee . . . it's about the customer experience!
Think about it. Regardless of what you are buying, your decision as per whom you buy it from is more dependent on the total value proposition (convenience, service experience, image, ambiance, trust, packaging, etc.) than it is about the product or price.
The same holds true for almost any product. Take financial products and services for example. You can get a mortgage, open an RRSP, or receive financial advice from any number of financial services providers ...and all for pretty much the same price. Why do you bank where you do?
Long gone are the days when all you had to do was build a better mousetrap and customers would beat a path to your door. Today, new and improved product and service offerings can be replicated by the competition in a matter of days, if not hours. Now, to get the customer to come to you, and stay with you, you must present a better total value proposition!
That is what customers are really buying and knowing what customers are really buying is key to selling more of it!
Answer: It’s not about coffee . . . it's about the customer experience!
Think about it. Regardless of what you are buying, your decision as per whom you buy it from is more dependent on the total value proposition (convenience, service experience, image, ambiance, trust, packaging, etc.) than it is about the product or price.
The same holds true for almost any product. Take financial products and services for example. You can get a mortgage, open an RRSP, or receive financial advice from any number of financial services providers ...and all for pretty much the same price. Why do you bank where you do?
Long gone are the days when all you had to do was build a better mousetrap and customers would beat a path to your door. Today, new and improved product and service offerings can be replicated by the competition in a matter of days, if not hours. Now, to get the customer to come to you, and stay with you, you must present a better total value proposition!
That is what customers are really buying and knowing what customers are really buying is key to selling more of it!
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Good post Jim. There was a time when people chose their bank based on where their parent's banked. But no more. Practically every buying decision is a lifestyle decision.
ReplyDeleteLooking at technology players, with the exception of Apple, and possibly Samsung, very few of them have any livestyle brand values.
Similarly at the corporate end, very few suppliers have real brand equity beyond the global management consultancies.
So there's lots of work to be done if their sales staff are going to move up the value chain from services to experiences.
Thanks Ade. Now that you mention it, the technology companies really do have a ways to go. I find that a bit curious as I would have thought engineering the customer experience would be an obvious play for them. Perhaps there lies an opportunity for someone...the likes of you or me.
ReplyDeleteJim - loved the coffee customer experience tag. However, was appalled at the foreign spelling of commoditiSation - tee-hee.
ReplyDeleteThat was a very clever trip into a business market proposition, and I hope that it gets a bite or two of business for you. Since we first met, CUSTOMER EXPERIENCE has been your constant theme and you are a clever exponent of original ways of arriving at methods to highlight its importance. This was another one.
Boy, do I miss working with you.
Good hunting
Ray
Interesting post, prior to reading it I wouldn't have considered the importance of brand image (as part of the overall total value proposition) in the financial services market.
ReplyDeleteImportantly the article underscores the dangers of seeking to gain business by competing only on price - which has the real potential to lead to a steeply downward spiral in profitability. In the business I work in - which manufactures and sells top end bespoke home studies - over 30% of our business comes from referrals. This is either the same customer coming back to buy again - or because they have heard very very positive feedback. As is often the case the focus the customer can have on price often quickly fades away when they realise the quality of the product and the quality of the buying experience (which we set out to make an enjoyable one). The challege is getting customers through that initial price hurdle - but when you do there's a very good chance they'll be with you for the long term. Interestingly - my present company also offers a Lifetime Guarantee on all it's products. The message - we have enormous confidence in the quality of our products - so you can have too! Peter
ReplyDeletePeter, Many thanks for posting your very insightful comment. I especially like how it brings home the message that it's not all about price.
ReplyDeleteUntil recently, I had a quote on my website that said "Repeat business is as critical to the success of your business as water is to a fish!" To your point, repeat business is much more a function of service and product quality, than it is a function of price.
In any event - based on what you said, I'm betting that even more than 30% of your business come from repeat business and referrals.
Noticed how much effort companies put in to customer acquisition? And so little focus on retention. How about doing something outstanding for your existing customers? Surprise them with something nice, send them some free products, vouchers, discounts, special sneak previews, real customer appreciation events. And personalised too. Now wouldn't that be something.
ReplyDeleteExample: I once worked for a financial institution and when we provided customers with a mortgage I would make sure the proud new home-owners had a beautiful "Welcome to your new house" present waiting for them when they walked in. All contents picked out by me and personalised for the individuals in question - as I had actually taken the time to listen to them and find out a little about their likes and dislikes. Or when I extended a line of credit for a couple to buy a nice new big fridge - guess what was inside when it was delivered?
I'm sure there are millions of great ideas out there. Wouldn't that make you want to stay and do more business with that company?