What makes your store different from your competitors? Is your store different or does it simply blend in with the rest of your competitors? I believe this is the most important question you should ask yourself everyday if you want to keep your stores viable, relevant and profitable. If I were to ask your customers if your store was different than your competitors, how would they answer? What does your store stand for in the minds of consumers?
Whenever I ask business owners what makes their stores different from their competitors, I always get responses like product selection, store design or location. Do you think consumers would answer that question the same way? I doubt it. Things like product selection, store design, hours of operation, competitive pricing and store location don’t make you different. These things are what I like to refer to as price of entry; the ante just to get into the game and compete today. The only way these things can make you different and give you a competitive advantage is if your competitors can’t touch you on them.
For example, Wal-Mart stands for low prices. Many years ago when Wal-Mart was found, they made a strategic decision that they were going to stand for low prices. As a result of this decision, Wal-Mart went about structuring everything in their organization to ensure that the end result was low prices.
Now you can argue that Wal-Mart doesn’t have the lowest prices on everything. That’s irrelevant because Wal-Mart has created the low price perception in the minds of consumers. Take your own survey. Ask your friends, family, and customers, what major retail brand stands for low prices. The majority of the answers you’re going to hear is Wal-Mart.
When it comes to creating a competitive advantage for your stores, the first decision you have to make is what are you going to stand for in the minds of consumers?
Customer Service – the unclaimed battleground:
Whenever I get into the discussion of, “What does your company stand for?” I will on many occasions get a response, customer service. My follow-up question is, “What is your evidence?” Always remember this, it’s not about you the business owner, it’s about the consumer. It’s what the consumer thinks that matters. If I were to list what business owners think of their stores and compare it to a list developed by their customers, do you think the two lists would match up? Hardly! Which list is more important? Right – the customer list; the only list that truly matters.
My suggestion is to create a point of differentiation for your company based on customer service. I’m suggesting customer service for two reasons: 1) to choose another competitive dimension such as quality, low prices, performance, etc. is extremely costly and time-consuming, and in all likelihood you’ll have to reinvent your entire organization—systems, processes and supplier relationships—in order to consistently deliver that particular competitive dimension; 2) very few companies today stand for customer service, therefore you have an opportunity –the door is open. The million dollar question is do you have the courage, commitment and discipline to go through the customer service door? Consistently delivering a high level of customer service is the exception not the norm. If delivering a great customer buying experience were easy, every company you do business with as a customer would stand for great service. Do they?
Very few companies have planted their flag and claimed the customer service hill. Companies who stand for customer service in my mind based on my own personal experiences are, Southwest Airlines, Wegmans grocery stores and Ritz Carlton. Do you think these companies are profitable? Do you think there’s a correlation between customer service and profitability, or is it merely an accident? Southwest Airlines has made a profit for the past three decades. Coincidence? I don’t think so! Yes, Southwest Airlines does have low prices as well as great customer service. But when you hear stories about Southwest Airlines and talk with their loyal customers, what do you consistently hear, low prices or their legendary customer service? It’s their customer service, trust me.
Editor’s Note: Next month, Terry will explore employee driven customer service and the “Cheers” business model.