Don’t choose between operational excellence and customer intimacy!

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The modern customer relationship combines both operational excellence and customer intimacy.  And that's not all. No matter how paradoxical it might sound, the digitalization of recent years has once again turned the human element into the key differentiator. In addition to efficiency and extreme customer orientation, modern companies add a strong emotional bond to their relationship with their customers.In their management classic 'The discipline of market leaders' Traecey and Wiersema argued that companies need to choose between operational excellence, product leadership or customer intimacy. Operational excellence leads to a low-price offer for the market. If you are the player with the lowest cost structure, you can also charge the lowest prices. Companies with product leadership can win the hearts of their customers thanks to the super-high quality of their goods. Customer intimacy is about building a strong emotional bond with your customers by providing the best possible service. Many strategic planners use these strategic insights as the basis for determining their long-term strategy. In my new book 'When digital becomes human' I contend that this model is now outdated. The modern customer relationship combines both operational excellence and customer intimacy.  And that's not all. No matter how paradoxical it might sound, the digitalization of recent years has once again turned the human element into the key differentiator. In addition to efficiency and extreme customer orientation, modern companies add a strong emotional bond to their relationship with their customers.

Digital changes the rules - you don't need to choose anymore!

The new digital superstars like Uber and AirBnB succeed in winning the hearts of their customers (customer intimacy) in an efficient manner (operational excellence). Instagram has built up a company worth one billion dollars with just a handful of staff. The same is true of What's app. At the start of August, Facebook became worth more than IBM. Facebook has just 7,000 employees, in comparision with IBM's 400,000. The digital superstars score in several different management fields. What's more, their products (or services) are near perfect. Uber and AirBnB have an interface that requires no explanation.

A perfect digital relationship is the new form of operational excellence. A Harvard blog described this trend as 'when operational excellence meets customer intimacy'. Companies strive to achieve an ultimate level of efficiency combined with outstanding service and far-reaching user-friendliness. The rational aspects of the business model are automated, which leads to digital operational excellence (a better customer service and greater efficiency).

Digital as a commodity?

Companies that can develop this new type of digital customer relationship will have a major advantage over their competitors in today's marketplace. But it will not always be that way. When every company has adopted the new management model, digital excellence will no longer be enough to make a difference. Managers will need to look for a new differentiator, and they will find it a new type of emotional bond with their customers.  A recent study compared the customer perception of classic hotel booking sites like Booking.com with AirBnB. In general, customers were satisfied with both AirBnB and Booking. However, the intensity of the customer relationship was much higher with AirBnB. Consumers often described their relationship with AirBnB as passionate. I have experienced this for myself; whenever I meet AirBnB users they always exhibit a kind of group pride. People really love the concept. Why? Because AirBnB is not a purely digital relationship. You hire your accommodation from private individuals, which inevitably means there is a lot of human contact. This is not the case with Booking.com, even though their digital service is first-class. The same is true of Uber. The customer and the driver are both required to evaluate each other, so that a close relationship is built up between customer and supplier. The company's digital systems form the basis, but it is the human element that makes the difference.

The human touch as the extra element in the modern customer relationship

The necessary emotional aspects are injected into the customer relationship by adding a human touch to digital excellence. This human touch must be an extension of the 'customer first' attitude, focused on the development of a positive emotional bond. The two sides of the customer relationship - the digital and the human - are both important. Both add value to the relationship in their own areas of expertise. If you can shine in both domains, you will create a superior added value for your customers. The customer will experience a strong customer orientation, since both the digital and the human parts of the relationship will be implemented from a customer-based perspective. The customer loves the efficiency and the digital precision, but enjoys the human contact as well. This is the emotional bond that makes him want to be a customer of your company.

Republished with author's permission from original post.

Steven Van Belleghem
Steven Van Belleghem is inspirator at B-Conversational. He is an inspirator, a coach and gives strategic advice to help companies better understand the world of conversations, social media and digital marketing. In 2010, he published his first book The Conversation Manager, which became a management literature bestseller and was awarded with the Marketing Literature Prize. In 2012, The Conversation Company was published. Steven is also part time Marketing Professor at the Vlerick Management School. He is a former managing partner of the innovative research agency InSites Consulting.

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