We all know that smart, digitally empowered consumers research, connect ,and purchase online with laptops, tablets, and smartphones without a second thought. After all, “they” are “us.”
They have smartphones that–on average–are loaded with about 65 apps. These apps let them check prices, compare service agreements, read reviews, and check in with their friends–even as they talk to your employees. In many cases, smart customers know more than companies do about their own products. And whether the news is good or bad, they tell everyone.
They have access to more automated tools than the most advanced enterprises had as recently as five years ago. What were once closely guarded trade secrets around pricing, inventory, and competitive options are now accessible to almost anyone with an Internet connection or mobile device.
Put another way, the era of the smart customer is here. This combination of digital innovation and always-on connectivity means that customers are increasingly empowered to take control of their commercial relationships in ways that should terrify executives.
As Bruce Kasanoff and I discuss further in our book (Smart Customers, Stupid Companies), this is because smart customers have the potential to drive traumatic change for all established companies in every industry. Why? Because the traditional roles between customers and companies has irrevocably changed–with the customer increasingly in control.
A gaping chasm has opened between smart customers and the companies that wish to serve them. This happens because many companies don’t really understand their customers, or what they want and need. They aren’t truly connected. They keep data in silos. They don’t incent their divisions or employees to work together.
They think that what’s worked in the past will work in the future–and they’re wrong.
In The Era Of Smart Customers, Traditional Competitive Advantage Can Be A Liability
During the industrial revolution and into the 1960s, entrepreneurs relied on manufacturing capabilities to dominate their markets. Investments in factories were huge–but worth it. As more and more factories were built around the world, the ability to move products through distribution channels drove competitive advantage. More recently, control of data, systems, and processes driven by information technology across global networks created barriers to market entry during the Information Age.
But in the era of smart customers, these traditional competitive advantages–often gained through massive infrastructure investments and decades of strategically planned growth–are rapidly turning into disadvantages for well-established firms. Manufacturing prowess, distribution expertise, and information technology–one by one, each has been commoditized.
Today, almost anyone from almost anywhere can access the same factories, the same shippers and truckers, and most of the same data as even the most sophisticated enterprise… and can do so from any wireless device or computer.
As a result, the business of designing, creating, selling, and delivering products and services is changing forever–again. And those companies that continue to behave “as they always have” run the risk of being “as if they never were.” From buggy whips and floppy disks to rotary phones and personal music players, unknowns will become market leaders, while major players will become minor players or disappear completely.
In The Era Of Smart Customers, Customers Have More Power Than Ever
In the era of smart customers, the greatest possible competitive advantage stems from knowledge of customers that your company has, and your competitors lack–assuming, of course, you actually use this knowledge to better serve each customer.
This means becoming smarter about your customers than anyone. By relentlessly obsessing over ways to leverage digital innovation to better serve them, make their lives easier, and eliminate the persistent pain points that every industry has. Through a deep understanding of what a customer likes, what they buy, when they buy, and how and why they buy. And through a customer-centric focus that means you have their best interests at heart, and the systems and processes in place that allow you to deliver on your promises at every touchpoint, across all channels, segments, and units.
Think about it: In the era of smart customers, your competitors can duplicate your product quality, prices, IT infrastructure, distribution channels, and even your service levels. But if you have truly learned what makes one customer different from other customers and tailor your communications, products, and services to them based on this understanding, then you’ll have the ability to compete (if not dominate) in the era of smart customers.
So embrace your customers by learning what they truly want and need, and give it to them whenever, wherever, and however they want it. You’ll raise the standards of customer experience, confound your competition, and create new opportunities for growth that you likely cannot even imagine today.
Considering that the era of smart customers has only begun, those companies that know how to serve them will be the real business winners in the fast-moving years to come. Smart customers? They’re winning already.
Adapted from the book Smart Customers, Stupid Companies: Why Only Intelligent Companies Thrive, and How to Be One of Them, by Michael Hinshaw and Bruce Kasanoff, (Business Strategy Press, 2012). Follow Michael and Bruce on Twitter, and visit them at SmartCustomers.com
