Is eliminating the bargaining power of customers more important than working on the Customer Experience?
Listening to the Steve Jobs biography by Walter Isaacson I am left with the impression that nothing was more important to Steve Jobs then using technology to produce great products that delivered a great user experience. Good enough was good enough, even great, for many in the computer industry. Only insanely great was good enough for Steve Jobs. Anything less was simply not good enough, it was not ‘art’ and not ‘worthy of artists”; great artists don’t want to put their names on good enough art.
Given that Apple, Amazon, Zappos, USAA, SouthWest Airlines, Zanes Cycles, Richer Sounds, Salesforce.com, O2, American Express.. have shown what can be done by focussing on the customer, why aren’t companies focussing on the Customer Experience? According to Mindshare the biggest issue with companies and executives is turning VoC into changes in the business such that a powerful impact is made on the Customer Experience. Why is it an issue? Because of ‘Other Priorities’. What can these other priorities be?
Clearly THE priority is the share price and the way to hit that is to focus in revenue generation and profitability. How do you increase that? The standard framework is that put forth by Michael Porter in the Five Forces model. According to this model, the companies that do well are the ones that:
- Reduce/eliminate the bargaining power of customers”;
- Reduce/eliminate the bargaining power of suppliers;
- Reduce/eliminate the threat of new entrants;
- Reduce/eliminate threat of substitute ‘products’; and
- Reduce/eliminate competition by ‘taking out’ competitors
Do you notice what is implied in this framework? Do you notice that the assumption is that the company and the customer are in competition? The aim is to reduce the bargaining power of the customers. It occurs to me that the Tops are not sitting there fretting over customer and the Customer Experience. It occurs to me that they are sitting there figuring out how to outmanoeuvre customers, suppliers, competitors and regulators.
The financial crisis, the BP Gulf of Mexico oil spill and the phone hacking scandal (in the UK) have shown that regulators are easy to ‘buy’/outmanoeuvre. That leaves customers, suppliers and competitors. Isn’t the best way outmaneuvering customers to set up barriers to entry (patents, ‘buying off’ regulators, buying/holding key assets…), buy up/share the market with the competition and creating a difference where no difference exists through advertising and PR?
As I was mulling this over the folks at The Simple Dollar emailed me this graphic about how AT&T and Verizon are doing extremely well due to the duopoly that they have created and maintain. I can’t help but think that to arrive at this place is business nirvana for just about every CEO and his band of merry men (the Board of Directors)!
Posted on May 14, 2012, in Case Studies, Customer Experience, Customer Philosophy, Customer Service, Customer Strategy, Leadership / Change / Transformation, Marketing, Sales and tagged Apple, customer experience, customer service, Five Forces Model, Other Priorities, outmanoeuvre customers, Southwest Airlines, Steve Jobs, strategy, USAA. Bookmark the permalink. 4 Comments.