Management 2000 Blog

Business Strategic Planning: How “Customer Focus” Came About.

The Changing Nature of the Customer and of Competitive Advantage

 A customer is anyone who uses your products or services and as a result you produce value for them.  The purpose of this blog is to understand that a customer is the ultimate end user of your business, company owned or franchise operated.

 It is commonly agreed that the reason for business is economic performance.  Truthfully, the purpose of a business strategic planning is to create and keep customers and the result of a business is VERY satisfied and loyal customers. 

• Very satisfied customers drive branding today.

•  Very satisfied customers do business with a company at a factor of 6 times over satisfied customers and they personally recommend, rather than simply refer that business to friends and family. 

 Branding used to be defined by measuring “how well known” a brand was among consumers.  This ranking was done with either the technique of “aided top of mind awareness” or the technique of “unaided top of mind awareness”.

 The new way of looking at Branding is known as “Emotional Branding” and has been written about by Marc Gobe [Emotional Branding – ISBN # 1-58115-078-4].

 Reality is changing the way businesses are thinking about how they do business.  Simply put our economy is being transformed from a manufacturing mentality and economy, to an experience mentality and economy. This is starting to transform companies that use franchising as a growth strategy.

 Today’s consumers want to have very satisfying experiences when receiving a product or a service from a brand and its representatives. The Harvard research over the past thirty years has indicated that our economy has evolved since the 1950’s through four stages of “Competitive Advantage.” These stages are:

 1.    Points of Distribution [1950’s – 1970’s]

 □             This stage was characterized as having Distribution networks each of which had a Dealer network.

 □              This stage was primarily concerned with manufacturing, distributing and selling more “stuff” than competitors. So the focus was on the acquisition of Distributors and Dealers.

 2.    Quality [1960’s – 1980’s and to the present]

 □             Quality, we learned from the Japanese, became the next competitive advantage.   Quality replaced “built in obsolesce” as a principle of business and was replaced by Total Quality Management, Zero Defect Management, ISO 9000, Six Sigma, etc.

 □             Quality, often combined with points of distribution, became the next competitive advantage. This became the key to success.

 □             One of the slogan’s of this era was; “Processes Are More Important Than People.”  Many economists give credit to this era of quality systems to the increases in productivity the world has been experiencing over the past 40 years or so.

 □              Quality systems are designed after two questions are asked and answered: [1]”What is the most effective way to do a thing?” and [2] “What is the most efficient way to do the most effective thing?”

 □              In many ways this era gave birth to franchising as a system and process way of replicating business practices.  Franchising reinforced the era’s slogan “Processes Are More Important than People” by often saying of their franchises; “Anybody can do this.”

 3.    Customer Service [1980’s – 2000 and to the present]

 □        Customer Service, characterized by slogans such as “Knock Your Socks Off Service,” “Exceeding Customers Expectations,” “Doing Whatever It Takes To Please The Customers,” became platitudes of this next stage of Competitive Advantage. 

 □        Companies that were able to have numerous points of distribution, with excellent systems, creating high quality products, by employees dedicated to serving the customer with excellence and exceeding their expectations experienced growth and their profits increased.  These companies experienced a competitive advantage over others who could not do what they did.

 4.    The Customer Experience [1990’s – to the present and into the future]

 □             In order to “fix” the inconsistent quality resulting from individual, dedicated, employees attempting to create great customer experiences, senior executives began to ask themselves some questions.

 □             Could the things learned from Stage 2 where quality could be controlled by having well trained, engaged and dedicated employees executing systems and processes designed to produce zero defect products be applied to the interaction employees had with customers?  Or were there too many variables involved in the service experience that made controlling the customer experience impossible?

 □              We know the answer is that the customer experience can be controlled, and that it can be measured.  So the ultimate competitive advantage for today’s businesses is accomplished by having the dominant number of locations with quality, defect free products and services delivered within a controlled experience by well trained, developed and engaged team members resulting in very satisfied and loyal customers who return frequently and recommend the business to friends, family and colleagues.

 

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