Disruptive innovation will push your company to more precisely segment its customers and then develop new services for each segment. The opportunities to do so are so immense, it can be paralyzing.
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The Three Levels of Innovation framework provides a straightforward way to start thinking about what services your company could customize for its customers. It identifies three categories of variables:
1.) Customer Location: In many, but not all, circumstances, knowing a customer’s precise location creates the opportunity to provide customized services. You can either think of location in general (i.e. “Boston”) or specific (“headed southwest at 1.1 miles per hour”) terms. The former lets you recommend merchants, dining establishments and social events; the latter lets you monitor an elderly person in their home to ensure they are going through their normal routine safely.
2.) Service Mode: To be effective, a service must understand what a customer’s needs are at a given point in time. Even the best service turns irritating if it offers workday solutions to a person who is relaxing on a Saturday night, or silly games to an executive about to give the most important presentation of the year.
In other words, a service needs to know what “mode” a customer is in, or at least provide the customer the option to choose his or her mode. The framework shown here provides some examples of modes, but modes can change based on different companies and industries. For example, a B2B company would never have to concern itself with a customer’s “play” or “entertainment” modes. The important point is not the specific modes shown here, but rather the notion of accommodating the relevant modes.
3.) Customer Preferences: While modes can change from minute to minute, customer preferences often remain reasonably static. A person who earns $15 an hour is nearly always going to be price-conscious. Likewise, an innately private person is always going to opt for the highest possible levels of privacy. Learning and storing a customer’s preferences – or enabling the customer to easily do so – will generally save the customer time, money and/or effort. This is what makes meaningful customization possible.
Taken in combination, these “three rings” can allow your business team to think about its own service possibilities. For example, if your firm knew a customer’s location, that he was seeking to educate himself about the best practices in your industry, and that he bought top-end equipment and services… what should your response be? Likewise, if this customer’s firm goes through a rough patch and needs to cut costs, how should your firm react before your competitors notice?