How Customer Centricity Creates Significant Competitive Advantage?


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Competitive advantage has been a great buzzword for a long-time. That is something any company in an established market is searching for. And I suppose that makes sense in a world, where USP means Unique Selling Proposition rather than Service (not to mention Value). Companies that create true value through customer-centric efforts will have automatically a competitive advantage. Simply, clients will perceive them more valuable than other options in the market.

How customer centricity has then become a competitive advantage? There are several changes in global business environment, which has caused this to happen. Actually, those changes are in historical order: manufacturing, logistics, information and internet (Source: Forrester Research). It used to be so that manufacturing-centric companies had the competitive advantage, since they were able to produce goods faster and better than others. Next step from that, was to have a logistical advantage. That was the time when companies who could move things around faster and better were successful. Then we invented internet and started using information as an advantage. There was even talk of Information Age, where those companies who had the best information at hand, were the ones thriving. Today, when adoption and use of internet has become so wide, none of the previously mentioned competitive advantages are really advantages anymore. Internet has truly changed the whole business world around and especially value perception. Let me give you a case example of a lifestyle business gaining and losing the previously mentioned competitive advantages.

A young, brilliant business woman wanted to start her own business. She had some ideas on selling jewellery to other women. Now, that is one of those businesses that are highly competitive. It’s not enough to have beautiful artefacts (unless you have huge marketing budget or you appear in one of those airheaded reality TV shows). Well, she didn’t have either. She used the Customer Experience Blueprint technique to first chose a target customer group: business women who work in offices and care about their style. Then she started looking into problems they have. On that time memory sticks were really popular, because that was the easiest way to share files. Cloud file sharing services weren’t really popular yet on that time. So, she made this innovative idea of creating memory stick jewellery first for women and later for men, too. It took her couple of weeks to create the design and send it to factories in China to receive quotes for manufacturing. Then it took her couple of weeks to find a reliable and affordable logistics solution without having any stock for herself (to minimise the invested capital). Finally, she needed a database of high-class business women, who appreciate design and need to share files. That was easy to buy from a market research company. In less than three months, she had everything sorted out and her products were sold in several local jewellery stores. It picked up and soon they were sold everywhere. And you can guess what happened then. People started copying those products and now you can buy them very cheaply from everywhere. Also cloud services have rendered memory sticks fairly useless in terms of need to share files with a memory stick. How come she still makes huge money every year from that business? She offers superb customer experiences around the jewellery. Also she has designed tens of other products based on her customers’ needs. Only way she can beat the cheaper prices and huge competition is by being perceived to offer much better customer value and experience.

Since traditional competitive advantages are becoming less distinctive in this new customer-centric world, we need to put more priority on customer centricity as the most effective advantage. It has been proven many times over that serving and keeping existing clients is much more profitable than only focusing getting new ones. When you create loyal customers, you won’t have to pay acquisition costs repeatedly. Also happy customers are proven to buy more than new or unhappy customers. These are really good reasons why to put efforts in to customer centricity.

And what is customer centricity anyway? It is a strategy for consistently delivering more value for clients in a profitable way. It means that the customer, not the company, is at centre of action and focus. What’s the situation like in your business? Is the customer on the agenda of everything that you do? If not, then you are losing both, competitive advantage and revenue.

Janne Ohtonen, Ph.D.
Dr Janne Ohtonen, Director of Customer Experience Management, has dedicated his life to making this world a better place to all customers. He fights against bad customer experiences, ensuring that companies serving their customers are not only profitable but also enjoyable to do business with for a long time.


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