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Customer intimacy as a competitive edge

May 10, 2017

Customer intimacy as a competitive edge

Listening to Reid Hoffman’s new Masters of Scale podcast this week reminded me of the work of Michael Treacy and Fred Wiersma.

In 1997 in their book The Discipline of Market Leaders Treacy and Wiersma described three competitive strategies that businesses could focus on – operational excellence, customer intimacy and product leadership:

  1. An operational excellence strategy aims to accomplish cost leadership. Here brands focus on automating processes and work procedures in order to streamline operations and reduce cost. Think Guy Russo’s 2008 strategy to turn the Kmart business around in Australia where the teams investigated every inch of the business to cut costs and deliver the lowest price in the market.  This type of strategy lends itself to high-volume, transaction-oriented and standardised production that has little need for much differentiation.
  2. Product leadership as a competitive strategy aims to build a culture that continuously brings superior products to market. Here product leaders achieve premium market prices thanks to the experience they create for their customers. A brand like Apple would be considered a product leader. They don’t ever discount and spend a lot of money of marketing their expertise.
  3. Finally, the customer intimacy strategy, as described by Treacy and Wiersma, focuses on offering a unique range of customer services that allows for the personalisation of service and the customisation of products to meet differing customer needs.

Today, 20 years on, I would argue that the only competitive edge is one of customer intimacy.

With so many categories being disrupted and customer expectations more demanding, being able to talk about your customers, users, consumers, tribes whatever you want to call them, with real feeling and connection means you can actually build something of use. This will give you the edge you need to succeed in today’s business world.

So how do you build your customer intimacy and your competitive edge?

  1. Embark on ethnographic research.. regularly! Participate in your consumers’ world, getting involved and up close so you can unearth meaningful insights that your competitors will find hard to uncover and most likely ignore.
  2. Define your customers. Frame your customers’ behaviours within the environment and community that surrounds them to help you pinpoint the opportunity and your likely competitive edge more accurately. If you come away thinking, ‘that’s not what we designed the product for’, then you have unearthed real insight into the needs of your customer.
  3. Develop real empathy for your customers’ painpoints. Access your current channels to interactive with your customers and build up a set of customer irritations. Read your complaint and social media pages, take calls in your call centre and serve customers in your shops.  Try and solve the problems that your customers have with your brand experience at the coal face so you can build an empathetic view of what it is like to deal with your business.

Reid Hoffman spoke to AirBnB’s CEO Brian Chesky about how they built the ideal brand experience in the first episode of his new podcast series. The best advice Brian said he got was from Paul Graham at Y Combinator, ‘Go to your users, get to know them and make something directly for them’.

That kind of customer intimacy worked for Brian and gave AirBnB its competitive edge – what are you going to do to get intimate with the people that buy your brand?

Written by Pip.

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