Competitive advantage begins with customer focus

What do you think is the chance that in the next 12 months customers will raise the bar and demand more from companies they do business with?

And what is the chance that during this same period our employees will expect a raise after so many years of cuts and salary freezes?

The result will be increased pressure on financial margins and the tendency to cut costs even further. For companies that want to succeed — and even flourish — in this challenging economy, the solution lies in strengthening our competitive advantage through delivering more value to customers.

Howard Hyden, president of the Center For Customer Focus here in Colorado Springs, recently spoke to a group of business owners who were committed to surviving and thriving during this economy. Howard is convinced that during challenging times, most companies follow the same path by trying to compete through the same diminishing efforts.

“In today’s highly competitive marketplace, ‘product parity’ abounds. Therefore, unless you want to compete on price, adding value is the only other course to gain a unique competitive advantage.”

Most companies are naturally product-focused and driven by a subtle form of “inside-out” thinking according to Howard. More product features is considered better, and the specifications of the product or service are determined primarily by the company. After all, who knows better what customers need?

However, companies that are gaining a competitive advantage focus around the customer instead of the product and think quite differently — they think “outside-in.” In these companies, business is driven from the customer’s point of view. Customers are delivered the products and services they want, at a reduced cost, while simultaneously at a higher value to the customer.

Every employee adds value to the customer through the way they listen and in how they deliver value to the customer. Every internal process, every form, every customer interaction, every customer question, is analyzed whether it is driven by “inside-out” thinking or “outside-in” thinking. Every person, from employee to management, is tasked to be customer focused and to deliver greater value to the customer. For example:

A forklift company encourages its field service employees to repair broken parts in the field at a fraction of the cost to the customer instead of ordering new parts.

A restaurant creates a huge competitive advantage by surprising customers who order a two-egg breakfast with a third egg at no extra charge. The cost to the restaurant is just pennies, but the value to the customer creates raving fans.

A medical practice observes the annoyance of its customers every time they are asked to fill out the same multi-page admission form with its confusing medical-speak. They redesign the entire process using iPads that save the customer time, avoid asking for repeat information, and have fun in the process.

The customer service staff of a publishing company change the hours they operate to accommodate the times when customers want to call, not when it is convenient for the employees.

So, go ahead and be counter intuitive and develop an unbeatable competitive advantage. When the rest of your competitors are cutting costs, focus every employee on adding value. When everyone else is focused on inside-out thinking, train your company to think outside-in. When the rest of the world is eliminating employee training, add more training. And when every other company is advertising lowest cost, communicate the value you add.

Kent Wilson (PhD) is a business practitioner and leadership specialist. After running companies for 30 years, he now serves as an executive coach with Vistage International and the Nonprofit Leadership Exchange in Colorado Springs. He can be reached at kent.wilson@vistage.com.