Customer Service Becomes the New Brand Differentiator

Brand managers have always sought a point of differentiation for their brands. Typically, these were unique selling propositions or technical points that would convince a customer that the brand was different and worth more than competition. The field has typically followed the traditional marketing and PR formulas for finding differentiation, but what we should be realizing is that customer service is rising as a key point of differentiation and most companies do not do well.

If we look at ways that companies can differentiate, we have basically three choices: product innovation, operational innovation or customer innovation (we actually should think of this as stakeholder innovation since all stakeholders can derive, create or destroy value). The real winners differentiate in all three areas. Southwest Airlines gained customer favor by cutting costs through operational efficiencies while at the same time increasing customer service beyond the level found on most other commercial airlines. WalMart has been an expert in operational innovation, gaining its leverage through supply chain management that shifted the inventory burden from WalMart to its suppliers. This helped them to further cut costs and free up resources for customer service beyond the typical discount operation. Apple has been an expert in product innovation and customer innovation. The list goes on.

Increasingly, companies are finding that it is difficult to sustain differentiation in product and operations. These are fairly easy to mimic. There are many consulting firms that will help a company copy its best competitors. The really difficult task is excelling in customer service. And, increasingly this is separating the good from the also-ran companies.

While companies say they care about customer service, they really don't. Most customer service operations are looked at as being a cost center and a burden. Customer service people are not well paid. Often, customer service is outsourced and forgotten. Too often, companies do not know what it happening in customer service and actually reward people for getting in as many calls as possible--not solving the problem, but rather handling them.

A few companies, like Comcast, Southwest, IBM and others are excelling at customer service through the use of social media. They are listening and responding to problems and actually getting involved in helping people with their concerns.

For marketers who think in transaction terms of price, quality and service, it is time to shirt the emphasis to the latter. Price and quality can quickly come to parity, but customer service, which seems easy, is not and actually creates distinct advantage since it often exceeds expectations, which helps build loyalty.

It's time to take customer service out of the "back office" and make it front of the house.