(ARA) - Companies are facing intense competition
right now. Industry after industry is confronting a situation called
“product parity,” in which one company’s product or service looks just
like the competitor’s when looked at through the customers’ eyes. This
results in competition on the basis of price. What can companies do
to relieve some of the pressure on price?
“You must either innovate or evaporate,” says
Howard Hyden, president of the Center for Customer Focus and an expert
on improving competitive advantage. “The winners are constantly looking
for ways to ‘add value’ in creative ways to get away from strictly competing
on price.”
According to Hyden, innovative companies are
continuously learning. The speed with which an organization learns from
a variety of sources out in the marketplace is what he called its “learning
velocity.”
The most important learning source for any business:
their customers. By asking their customers what they are doing right
and wrong and what possible changes they see down the road, companies
can gain valuable information that will help them adapt and even stay
ahead of the competition. It’s what Hyden calls examining your company
from the “outside in.”
“Only 7 percent of marketing executives have
incentives tied to customer satisfaction,” says Hyden, who believes
that too many companies are unaware of or indifferent to their customer’s
needs. Since the majority of executive compensation is tied to profit
and loss, that’s what they pay attention to. They don’t spend their
time thinking about their customers. “Instead of just focusing on the
financial statements, companies that listen to their customers’ needs
and innovate will be the ones that succeed,” he adds.
To illustrate his point, Hyden gives the example
of NorthStar Print Group which has been a long-time provider of labels
to Miller Brewing Company. The brewing company regularly called on NorthStar
to create labels on a rush basis, but with a lot of other customers
to serve, they found it difficult to deliver. Finally Miller issued
an ultimatum: either deliver on time or they would take their business
elsewhere. Because Miller represented 40 percent of the company’s business,
they knew they needed to do something drastic.
Hyden conducted a workshop with the printing
company’s employees who said that they were frustrated by Miller’s failure
to forecast its label needs. When asked to imagine the situation from
Miller’s perspective -- thousands of bottles of beer coming down the
line filled and capped, but held up because there were no labels --
the printing company’s employees understood immediately the urgency
of Miller’s needs.
“They were able to turn the situation into an
opportunity to add value for the customer,” says Hyden. The employee
team decided to analyze the brewer’s past order history so that they
could forecast for Miller and better anticipate the size and frequency
of orders. Not only were they able to reduce employee stress, but they
significantly boosted Miller’s customer satisfaction and have since
won numerous awards for being Miller’s best supplier. By listening to
the needs of their customer, they were able to innovate internally and
significantly increase their profit margins.
“This turnaround resulted from simply changing
their focus -- to a customer focus,” adds Hyden. “Real competitive advantage
comes not from looking at the bottom line, but from listening to what
your customers have to say.”
Howard Hyden is a businessman and nationally
recognized expert who speaks to organizations about how they can improve
their competitive advantage and employee satisfaction -- resulting in
an improved bottom line. For more information, visit www.customerfocus.org.
Courtesy of ARA Content
