“Customer Experience” as a Sustainable Competitive Advantage

I went to Costco the other day and one gentleman told me about a new Indian Restaurant that got opened in Newark, CA and suggested that I should visit. This gentleman gave me a history of this family run business and how they maintain the taste, quality and customer service. I have plenty of choices here in Fremont, CA for Indian restaurants and we really wanted to see how this new restaurant is. So, I took my family to this restaurant for dinner.

We entered the place around 6.30pm, the two (restaurant) employees were busy doing their own business. We did pick our own table and looking for a high chair (for my 1.5 year old). After i went and asked one of the employee, he did gave me a high chair. Fortunately there was a menu card on the table and once we decided, I was waiting for the order to be taken. When i called an employee, they said the order has to be given at the POS table. I went to give the order and the employee neither cared to look at me nor smiled. Got the order, had the food and we came out. My wife said, this is the last time we are coming to this restaurant. Not because the food was bad, but because the overall experience was bad. It was not a negative experience but at the same time it was not a positive experience.

This experience made me conscious of couple of things that we must do on the consumer side or on enterprise side. In the knowledge and information economy, companies no longer compete on making “great” products because it is a given. But we compete on providing the best “Customer Experience” (Apple, Zappos, Maybach, …). The restaurant marketing/sales guy (who I met at Costco) did a wonderful job of bringing me to the restaurant. But the folks at restaurant could not make a memorable experience to the customer and missed a chance to build a reference customer in the long term. (or may be they don’t want to, I don’t know). May be they don’t have the right employees there in the restaurant. May be the standard operating procedures are not spelled out. There could be may reasons, but the result is they have lost someone who could otherwise be a loyal and referenceable customer.

This means a lot to many who provides solutions to enterprise customers. Enterprises spend Millions of $s on Marketing to generate the leads. Everyone knows that it takes enormous effort to get that customer on to the door and make him try your solution. Organizations often forget the fundamentals on how to treat customers and I feel that every industry should adopt and focus on providing a great “Customer Experience“. Don’t mistake this with the “Customer Service” which is more of “after the fact” (usually a department is dedicated to this). But the “Customer Experience” should be considered by everyone in the organization including Marketing, Sales, R&D, Consulting, Customer Services, Product Management and others.

In summary, irrespective of the size of the business, business executives should understand Customer Acquisition Costs, Customer Retention Costs, Creating a Referenceable Customer, Introducing a Product and Implementation feedback. Most importantly communicating the unified message across the organization is key to the success else you will end up in having disconnected internal departments and confused customers. Providing a Customer Experience is the new mantra because that’s the only differentiating factor in this new economy.

I am glad to hear your Comments, Suggestions and Thoughts.

Update (11/26/20130) : Some of you have asked how does it effect an industry with Monopoly. I believe that Customer Experience has various positive side effects.

1. For the startups, “Customer Experience” brings in more customers and possibly increase the market share.
2. For Mid-size companies, “Customer Experience” increases the number of satisfied customers and thus potentially increases referenceable customers.
3. For large companies, “Customer Experience” helps the companies thrive. In fact, larger companies lose a lot of “brand value” when they have more and more dissatisfied customers.

In general, monopoly in an industry does not mean that there are no other companies competing with this monopoly. These small / mid-size companies can use “Customer Experience” to their advantage to gain the market share. Remember that as companies become monopolies, they tend to ignore (a segment of) customers and this is the opportunity for the small/mid-size companies.