So what can be done to stand out from the competition in times when everything has already been thought of? By making a difference in your services and the customer experiences they provide – for example. Even that’s no longer a new or unique idea. However, differentiation can still be achieved through skillful execution and the right finishing touches.
As competition intensifies the functionality of basic processes is no longer enough, because everyone else is also investing in that area. Before long everyone will achieve more or less the same standard.
In the end, competitiveness will be measured by how well a company succeeds in exceptional situations, in other words, when customers do not do what they’re expected to. For example, exchanging a product at a retail store might be thought of as part of a company’s basic processes, but there are significant differences in how this is done.
One of my colleagues praised his recent experience with the online clothing retail store Zalando. Customers can exchange products that are the wrong size, simply by returning them in the same box in which they were delivered. As part of the process, the customer fills out a form in his or her online store account, providing information about what was returned and what product they would like in exchange. The two-part form is then printed; one part is enclosed in the package and the other serves as an address label.
Zalando’s clever insight was to ensure that the merchant does not process the transaction as an exchange, but as a return and repeat purchase. This allows the online store to speedily process delivery of a new product. The customer gets a new product quickly and is satisfied.
My own experience with the online retailer XXL was somewhat different. According to their exchange and returns policy, exchanges can take place either via mail or on-site in a brick-and-mortar outlet. However, the instructions don’t mention an important detail, which is that customers who choose the postal option must wait 30 days for an exchange even if the delivery time for a new product is just a few days.
I discovered this unpleasant surprise only when I asked a customer service representative about the matter. In the end the exchange process for a pair of ski boots for downhill skiing took 52 days altogether. At least their customer service responded quickly and in a friendly manner.
No doubt XXL could have handled the exchange process faster. Their ability to quickly deliver the initial order was proof of that. XXL simply didn’t think the issue was very important. This was a very short-sighted choice from a business perspective.
It’s essential to understand how you would respond if someone asked whether or not you would recommend a particular online store. One week after placing the order I would have recommended it – but not anymore.
The customer experience is formed by the entire transaction process and the perceptions that arise during that time. A top class online store design won’t result in many gains if the entire experience isn’t carefully thought through.
It’s most important to start off by considering the customers’ needs and to understand them, down to the tiniest detail: how you or I would search for a product, and what factors influence our decision making. What is especially important is to see each customer as an individual. Everyone also uses online services individually. This means we have to be prepared for exceptions.
A successful digital customer experience is based on an understanding of customer needs and processes that have been refined to fulfill those needs. Information systems should support the execution of these processes and should be presented to customers in an easy-to-use format.
Visualization helps us to understand this process. In the Blue Ocean Strategy model your own and your competitors’ competitive factors are mapped on a value curve. The curve is drawn to show how well you implement certain competitive factors.
Nowadays the value curves of different businesses are, in practice, converging. Everyone is making similar investments in more or less the same areas, for example, in product range expansion, lower prices, and rapid delivery mentioned earlier.
However, definitive differentiation emerges when we use customer knowledge to discover new competitive factors and implement them effectively.
In this way we can use customer experiences to create competitive advantages for the digital business environment.