If You are Competing on Service Only, Close the Business!

Too often I hear managers saying that the only difference between them and their competitors is the service that they offer. Needless to say sooner or later they start competing on price also. Here’s some free advice: close that business if you can’t get past that, “all we have to offer is service” mindset, for your customers, sensing your weak competitive position, will still screw you for price anyway. But if you want a better alternative here are three things you must do.

1. Recognise that in most instances your perceived superior service is at best a point of parity, not a point of difference.

2. Stop confusing customer service with customer value, because they are quite different. Check out the difference for yourself and having discovered what the difference is, go for customer value.

3. Learn how to create customer value. Hooley et al. (2012) speak of three value disciplines: product leadership, operational excellence and customer intimacy. If you can master two of them you’re well on the way. Let’s look at each of them while thinking of how we can apply them in real world.

  • In many instances the basic product may be the same, but smart business people are always looking for ways to offer an augment product. Not easy: but you differentiate, or die.
  • Achieving operational excellence in the core process of order fulfilment, supply-chain management, logistics, service delivery and transaction processing is critical. Every minute detail matters. If, for example, you operate at 95% efficiency, how many dissatisfied customers would you have?
  • Finally there is customer intimacy. Remember BlackBerry? Customer intimacy is the most difficult of the three value disciplines to achieve. It is also the most difficult to imitate, and the most easily destroyed. Customer intimacy is about delivering precisely what specific customers want in cultivated relationships. The core requirements are flexibility, a “have it your way,” mindset, mastery of “mass customisation” to meet distinct needs of micro-segments of the market and the ability to sustain long-term customer relationships.

Sounds theoretical? Not really, for business is a mix of art and science, and science requires theory and models. Speaking of customer intimacy, a successful bank in my native Jamaica captures it very simply. “We’re turning all our customers into clients, and they are loving it.” Yeah mon!

Herman D. Alvaranga is president of the Caribbean School of Sales Management.

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