Addressing a Customer Pain Point as the Basis for a New Business


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What’s at the heart of a good customer-centric business model? We believe that it has four significant components:

1. Ensure that the model is designed to address or mitigate customers’ moments of truth.

2. Ensure that you address those moments of truth with innovative
approaches that take full advantage of available technology.

3. Hone an efficient execution engine that: a) lets you make money
while you’re meeting customers’ moments of truth, and b) builds
barriers to entry through experience, scale, and distance traveled on
the learning curve.

4. Entice customers into contributing value to your business as they
reap the benefits from the products and services you provide

Back in 2003, we described Netflix
as a good example of a company that built its very successful business
by addressing moments of truth in the “I want to watch a movie at my
convenience” scenario. Netflix Netflix’s innovation was to eliminate the guilt
and inconvenience associated with returning rental movies and the
affront of being charged late fees. The new Netflix customer scenario
was a big hit: Pay a monthly fee. Rent as many movies as you want each
month. Return them when you’re done with them and get a new one in the
mail within 2 days. No pain. No fuss. No bother. And a great database
of movies to choose from.

Now that digital
downloads are easy, NetFlix still continues to thrive, having built
customer loyalty by addressing the rental movie convenience issue and
by embracing digital downloads aggressively. Although I have lots of
other choices for digital downloads (on demand from my cable supplier,
Amazon, etc.), I still think of Netflix first when I want to watch a
movie or a television re-run.

Most NetFlix customers now enjoy both forms of movies—the ones they
receive in their physical mailboxes each week and the ones they
download on impulse. (The fact that Netflix is still thriving is
reinforced every time I go to my local U.S. Post Office, which has
three mail slots: Our Town, Out of Town, Netflix.)

I interviewed Netflix founder, Reed Hastings five years ago, and asked
him what he thought Netflix’s most enduring “secret sauce” was. What he
said surprised me. He said that it was his millions of customers’
ratings and reviews of movies. When I thought about it, I realized that
he was right. There’s a lot of value to me in Netflix’s ability to
recommend movies that I will like. There’s also a lot of value to
others in being able to recommend movies that I have watched and
enjoyed to other people who have watched some of the same movies.

The fact that my movie watching behavior and ratings helps both me and
others find more movies we would like is a virtuous circle that
benefits Netflix, me, and other customers.

Another Customer Pain Point: I’m Not Home When the Package Delivery Arrives
Kinek is a new company with a new service that is just rolling out. Kinek It
too is designed to solve a customer pain point. Providing alternate
locations for packages to be delivered is not a new idea (neither was
movie rental). But there is definitely room for someone to “nail” this
scenario in the U.S. In Japan, customers are used to stopping by their
local 7-11 neighborhood store to pick up packages that are mailed to
the store to be held for them so they don’t miss a delivery when
they’re not home. In North America, there isn’t one player that
everyone thinks about when they want to have an important package
delivered without waiting at home to sign for it.

Ronni Marshak took a look at the Kinek Package Delivery Service that
is just now rolling out in the U.S. and soon in Canada and other
countries. She evaluates the customer experience as well as the
business model. The service delivers peace of mind as well as packages
by using simple technology well.

Kinek relies on multiple business partners to serve as its package
pick-up locations. The other thing it looks as if they’ve done right is
to make it easy for partners to join their ecosystem. Link to Ronni Marshak's Report

Republished with author's permission from original post.

Patricia Seybold
With 30 years of experience consulting to customer-centric executives in technology-aggressive businesses across many industries, Patricia Seybold is a visionary thought leader with the unique ability to spot the impact that technology enablement and customer behavior will have on business trends very early. Seybold provides customer-centric executives within Fortune 1 companies with strategic insights, technology guidance, and best practices.


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