Strategic advantage through customer service

Customer service is not always crucial to the success of an organization. Its importance is determined primarily by supply & demand. If there are few suppliers and many consumers, suppliers can dictate the terms of the relationship, and customers may have no choice but to accept them.

Most organizations, however, are not so lucky. Competition has exploded the cozy castles of all but a few protected markets, and will continue to undermine those as well.

Where competition flourishes, customer service is essential to an organization's long-term viability. It must be central to its strategy. A company can outperform rivals only if it can establish a difference that it can preserve. Customer service is such a difference.

Few companies are able to excel at customer service, because it is very difficult to control. Left to itself, the level of service may vary greatly between two servers in the same restaurant. One salesperson may offer great service to one customer, then aggravate the very next person in line. The difficulty is compounded when you have a multi-unit operation. In addition to variability within units, you also have variability among units.

That is both the challenge and the opportunity. The consistent delivery of superior service requires the careful design and execution of a whole system of activities that includes people, capital, technology, and processes. The few companies that can manage this system do stand out, and are sought out. This is the foundation of what Michael Porter calls their sustainable competitive advantage.

But although it does require an almost heroic effort to build and maintain such a system, it's not so hard to get it started. Service today is in such a sorry state that it doesn't take much to surprise most customers, and to make them want to come back for more. The trick is to get started before your competitors do, then to stay a few steps ahead.

By doing so, you'll be doing your whole industry (or community, or strip mall) a favor. Unlike price competition, which tends to sink all players, competition on the basis of service is one of those tides that lifts all boats.

Comments

[Meir]

I believe that most companies have a hard time seeing the benefits of customer service. It is truly a question of long-term versus short term. The companies are satisfied with the status-quo, not aware of the possibility of a win-win. It's our job to make them understand.