Another competitive strategy is price. Wal-Mart was built on this foundation from day one. It kept its overhead lower that the competition’s and changed the world’s retail landscape. Unless you’ve built your organization from the ground up with a low cost strategy, you’re not likely to become low cost anytime soon. There are many examples of companies that have attempted to compete on price without having a low cost position and lost. K-Mart almost went out of business and Midwest Airlines ended up on the airline junk heap with Eastern, Pam Am, TWA and others.
Most executives, when seeking competitive advantage, don’t consider customer service. Maybe because it’s not glamorous (“Oh, we have to have that, but we try to keep costs down”). Maybe they don’t strongly consider it because they didn’t teach it in business school. We feel customer service will be the next big “discovery” in driving successful, profitable growth. All the leading business school professors and Blue Chip Consultants will claim to have discovered the key to business growth. It will be the next big buzzword, like the overused “consumer insights” and “analytics”.
Business goes through phases, trends and fashion, just like clothing styles and music. For example, at one point it was fashionable to be vertically integrated. If you made cars, you owned ore mines. If you made paper, you owned forests. Today the opposite is true. Today’s fashion statement: If it isn’t a core competency, it’s outsourced. Remember the American Automobile Association example we mentioned? The pendulum will swing back, and organizations will discover customer service as a way to differentiate their brands.
The great thing about developing customer service as a differentiator is that it can’t be created overnight. You might ask why that is great. Because it’s somewhat of a subversive competitive weapon. For example, if you drop your price, your competition hears about it, usually from your customers, and they can follow you almost immediately. With customer service as a differentiator, by the time it begins having a noticeable impact on your business results, it would take your competitors years to catch up. As a strategy, it’s sustainable and ownable. It’s an equity builder. And it’s measurable, which we’ll discuss later.
What makes it great also makes it problematic. Today’s business executives seem to have Attention Deficit Disorder. This is brought on by the need to create instant results so they can demonstrate action at the next board meeting. That makes it challenging to “sell” a strategy that may need a couple of years to begin showing results. On the flip side, your competition would be faced with a similar uphill battle. If you capture the high ground before they do, it’s less likely they will want to simply copy you.
In summary, until an organization decides to seriously establish customer service as a core business driver, it will be viewed primarily a cost center. In this regard, investments are designed to reduce costs, not establish a unique and highly differentiated customer service platform.