Creating Competitive Advantage Through Customer Experience
Winnie Tang
SaaS Product Management | e-Procurement & B2B Marketplace | Globalisation & Localisation | Commercial Solutions | 15 years + Professional Experience | Multilingual | Artist
Why Customer Experience Is Your Competitive Advantage
Price and Quality Isn’t Enough Anymore
In today’s highly competitive environment, there tends to be little difference between the quality of the products or services available. And customers have more choices than ever before - thanks to the internet and with it, readily available access to technology. So when they need to pick between two competing products, the one with the 'above and beyond' customer experience (CX) wins hands down. For companies choosing to compete on price, it's a race to the bottom.
As customers want more than just the product or solution, companies have to compete on CX.
A customer-centric mindset is one that puts the customer at the centre of everything.
You're constantly thinking about
If a customer is happy with their experience with you, they'll come back. Meeting and exceeding their expectations gives a sustainable competitive advantage because their customer journey with you will be unique and not easily replicated by others.
But when those expectations aren't met, customers are ready to wave 'bye, bye'.
Companies entering new markets face the challenge of setting themselves apart from existing players. However, a strong CX strategy can help them stand out by providing positive and memorable experiences that resonate with the new target audience, building brand loyalty and trust.
Customer-Focused Companies Are 60% More Profitable
Data has shown that investing in CX is a worthwhile exercise. Customer-focused companies are 60% more profitable than companies which don’t focus on customers.
And companies earning $1 billion a year can expect an average gain of $700 million within 3 years of investing in customer experience.
SaaS companies can expect to increase revenue by $1 billion.
According to the 2023 Zendesk Customer Experience Trends Report, 64% of businesses said that customer service had a positive impact on their company's growth, and 60% said it improved customer retention.
On the other hand, 60% of customers would defect after only one bad experience. (Unfortunately, the 2023 report no longer seems to be available.)
A compelling customer experience translates directly into brand loyalty and financial performance.
And so for businesses looking to move into new markets, CX is more than a strategy about standing out from established players in the market. It's being different and better in a way that's meaningful to your target audience.
But what turns 'mediocre' CX into a memorable encounter for all the right reasons? The key involves tailoring customer experience to align with local nuances, and actively using customer feedback to continuously increase user acceptance and improve product success in the new market.
How can businesses effectively convey their commitment to CX in a way that resonates? One answer lies in customer-centric messaging, a crucial component of the strategic market entry process. It goes beyond simply relaying information but building relationships, fostering trust and creating a lasting image in the customer's mind.
Customer-Centric Messaging As A Market Entry Strategy
A communication strategy that focuses primarily on customer needs and interests can positively impact market entry and product adoption. Placing the customer at the heart of all communication efforts is what customer-centric messaging is about.
How deeply do you truly know your audience?
When customers feel understood and valued, they are more likely to adopt new products and services. The Jobs-to-be-Done (JTBD) framework helps with gaining deep customer insights needed to craft effective messaging. It uncovers what truly motivates your customers which is vital for creating and tailoring communication that meets their expectations and drives product adoption.
Use Jobs-to-be-done (JTBD) to Gain Deep Market Insights
JTBD looks at products, customers and markets through a different lens. The theory suggests that individuals 'hire' products or services to complete a specific 'job'. And so, while the product hired to do the job may change over time, the fundamental job itself doesn't. Unlike typical market segmentation tools, it’s not about creating a persona based on demographic and behavioural characteristics.
Markets in JTBD revolve around groups of people trying to solve a specific problem and get a job done. What's the job that your customer is trying to accomplish and what's the motivation behind it?
A classic and one of the most illustrative examples of applying JTBD to real-life scenarios comes from Harvard Business School professor Clay Christensen's study of McDonald's milkshake sales. He showed how McDonald's could more effectively tailor their product by understanding the specific jobs customers hired their milkshakes for, such as serving as a filling and convenient breakfast whilst driving to work.
As Christensen noted, 'The jobs-to-be-done point of view causes you to crawl into the skin of your customer and go with her as she goes about her day, always asking the question as she does something: 'Why did she do it that way?''
The Swedish furniture giant IKEA uses JTBD to understand why customers choose their products. It's more than simply buying furniture. It's about the job of creating a comfortable, functional and aesthetically pleasing home, with no waiting time and being able to DIY your bookcase. Their store is set up by rooms rather than aisles of products so customers can visualise their cosy home with IKEA furniture.
And when IKEA bought Taskrabbit in 2017 they enhanced the customer buying experience by offering an option to eliminate the tasks of assembling furniture. Now customers can easily add Taskrabbit assembly services when purchasing their DIY furniture. IKEA understood that ultimately, people just want a nice and cosy home. Putting together flatpacks? That's optional.
Uncovering the genuine reasons behind your customers' choices not only helps reveal the direct benefits your products offer but shapes product development, guides market segmentation, and informs strategic messaging that directly speaks to their actual situations and needs.
How can these benefits be strategically communicated in your marketing efforts?
Benefits-Led Value Propositions in Strategic Marketing
Insights from JTBD research can help you steer your product's value proposition towards the key benefits. Since customers 'hire' a product to accomplish a task, what truly matters is the outcome, not the particulars of the tool itself.
As Harvard Business School Professor Theodore Levitt famously said: 'People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.'
This sentiment is at the heart of benefits-led marketing, highlighting the solution, rather than the means to the solution. The features of a product are simply the means to an end. The true value lies in the benefit delivered, which ultimately captures customer loyalty and drives product adoption.
Translating the job a customer needs to accomplish into tangible benefits is key to effective positioning. This in turn can transform your product from just another choice to an irreplaceable solution for your customers. As April Dunford explains in Obviously Awesome, 'Positioning is the act of deliberately defining how you are the best at something that a defined market cares a lot about' (Dunford, 2019, p.4).
In today's crowded marketplace, it's important for businesses to speak directly to the aspirations and challenges of their customers versus simply listing product features. Messages that not only explain but also foster the customer's journey offer clear reasons for customers to choose one product over another.
'The best marketing clearly articulates the problem consumers have, and goes on to explain how the product or service solves that problem.' Justin Owings, author & marketer
Having identified the key benefits that your product offers, these insights can be woven into an empathy-driven market strategy. This approach ensures that your engagement with customers goes beyond mere transactions.
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Empathy-Driven Strategy for Market Alignment
Empathy extends to feeling what your customers feel and to seeing the world from their perspective. An empathy-driven market strategy requires a deep understanding of their context.
Questions that help reveal what your customers are truly seeking:
Answers to these questions inform an empathy-driven business strategy, framing it within the real-world scenarios of your customers.
Successful outdoor brand Patagonia is a brand that has mastered the empathy-driven approach. The company deeply understands their customers' desire for environmental sustainability. AND their desire for a company that cares about these issues as much as they do.
Furthermore, in September 2022 Patagonia Founder Yvon Chouinard transferred the company's $3billion ownership to a trust and non-profit, dedicating its estimated $100million annual profits to combating climate change and protect global landscape.
By authentically connecting with their customers' concerns about the planet, Patagonia has positioned themselves as not just another outdoor company. Customers know how the company is different to what's already out there. This empathy-driven approach has helped Patagonia built a loyal community and a strong market position.
When a customer encounters your product, what specifically are they looking for? Are they looking for someone to share their pain? Or are they looking for an expert to solve their problem?
Understanding the customer's needs at the moment they encounter your product helps with crafting a strategic narrative that connects with customers authentically and effectively.
Immersing yourself in your customer's world will show up in every business decision made - from product design to marketing and customer service. Consequently, this ensures that every business aspect aligns with what your customers seek at the most fundamental level.
In doing so, your business and products do more than solve problems; they build relationships and become integral to the customer’s life.
An empathy-driven approach not only aligns your market strategy with customer needs but also enhances the entire customer experience. By placing the customer at the centre of your business strategy, you foster a culture of customer-centricity. This adds value to every interaction, thereby nurturing long-term loyalty and trust.
Leveraging VoC for Strategic Positioning
The way you see your product - and your competitors - often differs from how your customers perceive them. And your opinion isn't the one that matters when it comes to positioning your product. Hence, obtaining Voice of Customer (VoC) data is crucial for understanding how customers perceive your products and services and what they truly value. They serve as a guide for strategic positioning, offering invaluable insights into customer sentiment and behaviour.
While thorough customer interviews and surveys are traditional methods of gathering VoC data, they can be resource-intensive. An alternative and less resource-demanding approach is to analyse online customer feedback. By mining reviews and comments, you capture authentic customer language and sentiment.
Review mining involves examining what customers are saying in their own words across various digital platforms. (Here's a quick guide on how to conduct an effective review mining.)
The insights gained from VoC research offers strategic insights beyond writing copy. They can inform how you position your product in the market. By adopting the exact language that customers use to describe their challenges and how they use products to overcome them, you can more accurately align your product's messaging with customer expectations and experiences.
VoC data reveal how customers perceive your product relative to competitors. Features and benefits are valued only in comparison to other options available. Identifying aspects of your product that customers view as more effective solutions to their problems can become a key differentiator in your positioning and messaging. Similarly, if a particular feature or benefit is frequently praised in customer feedback, it should be emphasised in your positioning strategy.
Incorporating VoC data into your messaging strategy ensures that your communication not only resonates more deeply but also reflects the actual needs of your customers. This way, your messaging isn't just heard but also truly felt.
A 'You-Centric' Strategy for Customer Engagement
A 'you-centric' communication strategy shifts how a company engages with the audience. It communicates on a personal level and addresses specific needs and desires. It closely aligns with the concept of hyper-personalisation. By applying data-driven insights to customer engagement you achieve a level of personalisation that creates highly tailored and relevant experiences for individual customers.
Hyper-personalisation recognises and responds to the unique needs and desires of each customer. It's a transformative process. By framing communications and strategies around a customer's specific context, interactions evolve from generic to memorable. A you-centric approach not only fosters customer loyalty but also aids in acquiring and retaining customers, building lasting relationships in the process. According to Twilio Segment, 69% of businesses surveyed were increasing their investment in personalisation, despite the challenging economy.
In your business, every message, whether in marketing, customer service, or product descriptions, is an opportunity to emphasise the customer's importance. Adopting this approach requires changing the way you think about and interact with your customers. The goal? A customer-focused experience that keeps customers engaged every step of the buyer journey.
Social Proof as a Strategic Trust Builder
When launching your product in a new market, social proof is essential for building brand credibility and easing market entry, especially in culturally diverse markets. It connects potential customers to those who have already benefited from your products or services, thus creating trust through relatable experiences.
Testimonials and case studies demonstrate real solutions for real customers. They resonate strongly with potential customers as they see reflections of their own challenges and goals. Beyond creating connections, social proof also enhances the emotional appeal of your product and builds trust with your prospects.
Case studies go even further than testimonials as they tell a story of transformation experienced by a customer with your product or service. They address objections and highlight success while simplifying information and eliciting emotional responses. Research has shown that messages wrapped as stories are up to 22 times more memorable than facts alone, demonstrating the power of narrative to engage and persuade.
Using case studies strategically in your marketing presents compelling evidence of your product's value in a way that overcomes cultural and contextual differences.
Incorporating social proof into your market entry strategy is key to adopting a customer-centric approach. How has your product positively impacted real customers? Answering this question shows that you understand and are committed to your audience's needs. This approach not only bridges cultural and contextual differences but also minimises scepticism and forges strong emotional bonds, making it easier to break into new markets.
CX - Key to Standing out in a Crowded Market
In today's fiercely competitive marketplace, the key to standing out is delivering exceptional customer experience (CX). Competing on price and quality alone isn't sufficient anymore. Consistently delivering what truly matters to customers helps secure a sustainable competitive advantage.
Customer-centric messaging is a crucial element of a successful market entry strategy. By leveraging the Jobs-to-Be-Done Framework and benefits-led value propositions, you ensure that your offerings meet and resonate with customer expectations, driving product adoption.
Using Voice of Customer (VoC) data allows you to see your products through your customers' eyes, crafting tailored messaging that reflects genuine customer sentiments and effectively connects with the market. Moreover, adopting a 'you-centric' strategy and hyper-personalisation enhances engagement at every stage of the buyer journey.
Social proof helps establish trust and entry into new markets. Sharing real success stories connects with new audiences, bridging cultural barriers and overcoming scepticism.
The ability to continuously empathise, adapt and evolve with a customer-focused mindset will be key to successful market entry and sustained growth. Integrating customer insights into every aspect of your business creates a loyal and engaged customer base.
When times are economically challenging, investing in CX initiatives and strategies could be seen as a 'nice to have' rather than a necessity. However, CX remains a crucial differentiator for achieving long-term business success and securing a sustainable competitive advantage. Artificial Intelligence (AI) is already playing a significant role in delivering personalised interactions to each customer. However, the role of AI isn't to replace the human touch but to enhance the customer journey. Each interaction ought to be effective and meaningful.
The result?
Standing out in a crowded marketplace.