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Four Types of Customer Experiences for Competitive Advantage

Last updated: 05-22-2019

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Four Types of Customer Experiences for Competitive Advantage

What's the secret to a winning business model and long-term competitive advantage? It's not just about technology, products and services. Yourcustomer experience may just be the ultimate competitive advantage.

Strategy and innovation experts Nicolaj Siggelkow and Christian Terwiesch just published a new book called Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage.  The authors contend that at every step of the customer experiences continuum there's an opportunity to either delight customers, or uncover a pain point or negative experience for them that can be turned into an opportunity.

Customer "journey maps" have been around a long time. Understanding the steps customers go through allows you to simplify or add value within a step or across the full journey.  Siggelkow and Terwiesch distinguish three phases of any customer journey:

Their research into connected strategies revealed four distinct approaches that organizations use to reduce the friction within the customer journey--i.e., four types of connected customer experiences. These customer experiences are distinguished by the part of the customer journey they affect:

Their research into connected strategies revealed four distinct approaches that organizations use to reduce the friction within the customer journey--i.e., four types of connected customer experiences. These customer experiences are distinguished by the part of the customer journey they affect.

Even when you deliver on these customer experiences, there's another element critical to create a truly connected customer relationship: Repeat. If a firm is able to learn from repeated interactions with a customer, it can become better with the Recognize, Request and Response sequence. What makes the repeat dimension so powerful is that it involves positive feedback effects that, over time, can create a tremendous, sustainable competitive advantage.

A tight fit between customer needs and available products--the high degree of personalization--leads to more value, either in the form of higher willingness-to-pay by the customer or by higher efficiency. This allows the firm to provide more value to current customers, creating more future interactions with these customers, which increases the individual-level learning. At the same time, the increased value allows the firm to attract new customers, enhancing the widespread learning. With more learning at the individual and population levels, the firm continuously improves, creating ever-increasing degrees of personalization. It is a process that feeds on itself and can allow a company to get ahead of its competitors and continue to expand its competitive advantage.


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