I saw this topic on Twitter recently and decided to weigh in and hopefully provide some insights in answering the question: “How does your company go from a commodity to an experience.
Companies that provide a commoditized service are challenged to show why they are better, and worth more to a customer than other companies that provide the same service. When competitors provide identical products and services there is a tendency to focus on price (the lower the better) as the primary point of difference. While it is highly likely that a number of buyers are price sensitive, competing on price is a zero sum game that puts additional downward pressure on razor thin margins.
For a number of commodity businesses, a culture shift is required to switch focus from the product (e.g., price) to the customer (e.g., experience). Providing a superior experience at each customer touch point is a more sustainable point of difference over the long term than engaging in price wars.
Senior management must lead this culture shift by demonstrating their commitment to achieve superior levels of customer service. Despite the significant choices that exist for today’s consumers, the bar for high quality customer service across all industries is quite low. Companies that commit to creating a customer service culture would immediately set themselves apart from their competitors with relatively small improvements.
There are several examples of companies that focus on the customer experience.
Amazon.com has a self-described “customer obsession” which is championed by their CEO Jeff Bezos. Bezos, the chief proponent for this focus on customers has consistently rejected the urging of Wall St to discontinue Amazon’s policy of free shipping, yet Amazon continues to place customer satisfaction over profits and ranks among the most admired companies.
Apple has become a cult brand because of its extreme focus on the customer experience. Apple orchestrates every detail of the customer in store experience. It begins by hiring employees whose personalities align well with their philosophy of customer focus and giving them extensive training on how to provide a superior customer experience. As a result, Apple “commodity” products never compete on the basis of lower price and in fact, command a premium price over competitors that offer similar products.
Ritz Carlton the iconic luxury brand hotel has a corporate culture that is built around “wowing” their guests. Ritz Carlton employees can spend up to $2,000 to make any single guest satisfied without approval from their general manager. The company hires just 2% of the people who apply for jobs and once onboard their employees are among the best trained in the nation.
So how does a Company go from a commodity to an experience? There are several key characteristics of Companies that have done this successfully.
- Senior management is profoundly customer centric and committed to building a corporate culture focused on delighting customers.
- There is a complete understanding of what customers want and expect based on solid research and customer knowledge.
- They hire people whose personalities are aligned with customer centricity and train them extensively on how to deliver a high quality experience.
- The operating strategy is the brand strategy and as a result the brand, the strategy and the customer experience are intertwined.
These companies create a culture that when things are going wrong, employees are not fearful of coming up with creative ways to satisfy a customer. They hire people that are aligned with their customer centric values and train them extensively so they have the control to deliver an amazing customer experience.
Companies that provide a commoditized service can avoid the death spiral of low price competition by going through a senior management driven culture shift.