One of the first Harvard Business Review articles that I ever read was a feature piece entitled Why Should Anyone Be Led By You? When the article came out I had just become a manager for the first time and I was responsible for leading a small team of consultants. I was grappling with how to be an effective leader and the simple question in the title of the article fuelled hours of introspection and caused me to make decisions and confront issues that I believe made me a better leader in the end.
To give customers a compelling reason to buy, you need to be distinctly different. We live in an age of hyper competition. Customers are bombarded with endless choices. There are more products and services available now than ever before. To be successful you need to cut through the clutter and stand out from the crowd. Failing to distinguish your offering from the plethora of products and services out there is a recipe for entrepreneurial disaster.
Opportunities for Differentiation: The Customer Consumption Chain
A useful method of identifying valuable opportunities for differentiation is to map the customer consumption chain for your product or service. A customer consumption chain is the chain of events that customers go through when learning about, selecting, buying and using your product or service. The consumption chain forces you to see things from a customer’s perspective and will enable you to identify customer pain points – areas where customers experience a level of difficulty sufficient to motivate them to seek an alternative solution.
Wherever there is a pain point within the consumption cycle there is an opportunity for distinctive differentiation. To be successful entrepreneurs need to attack the pain points within a customer consumption chain with innovative and effective new solutions.
Not all pain points in the customer consumption chain are going to apply to all businesses. You need to figure out which items in the chain are most relevant and most painful for your customers and then come up with differentiated solutions for addressing the pain points pertaining to those items.
How do people become aware of your offering?
In order to be in the game you need to make target customers aware of what you do. There are multiple ways of doing this but the key is to build awareness in a way that appeals to your target customer base and to stand out from the crowd in the process. When Gary Erickson launched Cliff Bar he built awareness of his sports bars by giving them away at endurance events and by sponsoring mediocre but passionate local athletes. By creating a presence at local sporting events and being part of the community, the company soon became top of mind for grassroots athletes and Erickson effectively cracked into a tightly held sports nutrition market.
Checklist: building awareness
- Does your company appear on the first page of search results when people search for your product or service on the web?
- Do you connect directly with customers on a regular basis reminding them of what your product can do?
- Do you track how new customers learn about your product or service so that you know where and how you are effectively building awarenes
- Do you provide compelling stories to the media (online and offline) about the interesting work your company
- is engaged in?
How do people select from a number of different alternatives when choosing your product or service?
After learning about your product or service in the awareness phase, customers narrow their choice and make a selection. Can you make the selection process more comfortable, less irritating or more convenient? Can you allay fears and clearly communicate a value proposition at the right moment. It is critical to develop a clear understanding of the criteria that people use to select products or services in your sector and then develop a differentiated proposition around those criteria.
Checklist: aiding selection
- Do you clearly understand the criteria on which different groups of customers make choices at the point of purchase in your industry?
- Do you provide tools, information or services that enable potential customers to understand how your company meets their needs on important selection criteria
- Do you provide opportunities for past or current customers to share their good experiences and provide positive feedback to future customers?
3. Order & Buy
How do customers order or buy your product or service when they have made their final decision?
I am drawn to shop on Amazon.com, Audible.com or iTunes because they make it so easy to complete the transaction – within three clicks I can be done. Part of being different is making it easy to transact. When customers are faced with a choice, the ordering process that puts up the least barriers will almost always be the one that wins out. Research has shown that at a subconscious level customers are put off by complex ordering processes.
Although they may not consciously decide never to buy from the company again, subconsciously they eliminate that company from their choice of options. It is also important to align the ordering process with the customer profile you are targeting. Early online grocery companies failed to recognise that although a large number of households in the USA had computers, the people using those computers at the time (late 1990s) were not the same people buying groceries. There was thus a fundamental disconnect between the target customer and the ordering process that contributed to the demise of most of these businesses.
Checklist: differentiating the ordering & buying process
- Do you minimise data gathering and form-filling in the ordering process, especially for repeat customers?
- Are you keeping up with changes in customer preferences and aligning your ordering and buying process with their emerging preferences?
How is your product or service delivered?
A number of different aspects of delivery can be a differentiator – speed, customer experience or accessibility. A good friend of mine built up a highly profitable business by being willing to deliver industrial bearings at any time of the day or night. He charged a huge premium for this service because he realised that when a machine in an industrial plant went down due to faulty bearing, no price was too high and if he could develop the infrastructure to get a new set of bearings to clients as soon as possible, he would be distinctly different within the industry.
Other companies differentiate themselves through the experience they provide when they deliver their product or service. When Primi Piatti first opened up in Cape Town I remember feeling encouraged to eat there because of the upbeat, off-the-wall attitude of the waiters. They provided an experience that brought the place to life.
Checklist: differentiating on delivery
- Are you getting your product or service to your customers exactly when they need it in a hassle-free way?
- Are you providing the best possible experience for your customers? Is it memorable? Is it appropriate?
- Is it different? Are you giving them a reason to tell others about the experience?
How is your product assembled and/or installed?
The assembly and installation element of the customer consumption chain is a much-ignored opportunity for differentiation. Yet it is distinctive differentiation in this area that is at the core of the world’s largest furniture business. Ikea sells quality designer furniture at a reasonable price in a broken down format. This makes it easy for customers to transport the furniture; you can buy a piece of furniture and take it home right away.
By providing clear and simple instructions, with pictures, on how to assemble each piece of furniture, Ikea hands over a critical piece of the value chain to customers and this has been a recipe for unbridled success. Best Buy also recognised an opportunity for differentiation in the installation link of the consumption chain. As home theatre systems became more complex they began providing an expert to help customers set up their big screen TV and surround sound in their living room, thereby eliminating hours of pain and frustration. This caused many technologically anxious shoppers to choose Best Buy as their point of purchase.
Checklist: differentiating assembly & installation
- Have you eliminated the pain of assembly and installation
- Have you considered how alternative modes of packaging, installation or assembly may create extra value for clients – doing it for them, getting them to do it for themselves, or providing easy access to others who will do it?
How is your product or service paid for?
The payment process may not seem like an obvious place for differentiation but many customers will make critical, and often impulsive decisions based on payment options. If your company offers options that are distinctive and attractive, you may be surprised by the leverage this element provides for winning over new clients. Pay-as-you-go revolutionised the cell phone industry in South Africa, opening up markets that others thought never existed.
Checklist: differentiated payment options
- Have you considered all the payment alternatives and assessed whether each option will appeal to clients? Alternative payment options include upfront payments, month-to-month payments, barter arrangements or adjusting installation, delivery or service fees to create differentiated payment arrangements.
7. Assistance & Repair
What do customers do when they need assistance with your product or service?
Over time your ability to assist a customer when they have a problem with your product or service may serve as a key differentiator. The customer service policy and the attitude that relates to that policy will always be a key factor when I choose an email or web hosting provider for personal or business use. If I have a problem I want to be able to talk to a competent person (not a machine) at any time of the day or night and I am willing to pay for that privilege. On the other side of the coin, there is a cell phone provider in South Africa with whom I will never again do business because of the frustration I have had when trying to resolve customer service queries with them. After-sales service can therefore be either a selling point or a repulsion point, depending on how you treat customers.
Checklist: for differentiating assistance & repair
- Do you make it simple for customers to get assistance when they have problems with your products or servic
- Are they able to speak to someone about their issues
- Does that person care?
- Do you follow up when people have had a problem to ensure that their issue has been resolved?
How easy is it for products to be returned?
My wife will only ever buy clothes from a store that has a liberal return policy. Although she makes an effort to select clothes in the store, she says that they always look different when you get home. If a retail clothing store does not do returns they lose her as a customer. Certain companies have distinguished themselves with their no questions asked return policy – the most famous example being Nordstrom, the US department store, which, because of this policy, has developed an iconic reputation for customer service. Although this policy is expensive to implement, Nordstrom management believes that it has paid for itself multiple times over because of the loyalty and reputation benefits it has offered.
Checklist: differentiating your returns policy
- Do you make it easy to return products or get money back for faulty services?
Systematically working through the customer consumption chain and analysing each element within the chain is an intensive process. But, by going though this process you will be able to identify the customer pain points in the process and put solutions in place to directly address those pain points, thereby creating a unique and clearly differentiated product or service offering. People sometimes assume that unique business solutions come from moments of ingenuity, yet those moments of ingenuity are often brought on by systematic and rigorous processes such as the one described here.
Many managers and entrepreneurs will be too lazy or busy to invest time and energy in assessing their customer consumption chain and they will continue to do the same old things in the same old way, hoping for better outcomes. They will have no compelling answers to the question: Why should anyone buy from you? and they will probably be overcome with the sameness syndrome.
It is those who are willing to invest the time and energy in going through this process who will identify where and how they need to change to deliberately build a business that gives customers a compelling reason to buy from them. They will definitively defeat the sameness syndrome and set themselves on a trajectory of success.