Customer Service Can De-Commoditize Your Business

The American Express Global Customer Service Barometer stated that 70% of Americans are willing to spend an average of 13% more with companies they believe provide excellent customer service. A recent Harris Interactive survey of more than 2,200 consumers indicated that 10% of consumers are willing to spend 25% more for good customer service. What’s the point?

It doesn’t matter if you are a business-to-consumer or business-to-business type of company. While the numbers may not be the same for both types of organizations, the numbers prove that many customers will spend more for a better experience. Unless you are in a commodity driven, price sensitive industry, consider the following:

The companies that get their customers to spend more for the experience have figured out how to become de-commoditized. They have figured out what value they have to give their customers, not just to get their business, but to get them to even pay a little more for it. There is a very delicate balance here.

The hotel industry is a great example of this. There are a range of hotels that range from budget to luxury. As I travel the world on speaking and consulting assignments, I get to stay at both types of hotels, based on where my clients are holding their meetings. On any given day, I see families and/or business people in both categories. In some cases it is based on what they can afford. In other cases it is what they are willing to spend for the experience they desire. That is why a Ritz-Carlton is more expensive than a budget priced hotel, even though both offer the same basics to the customer/guest; a nice sleeping room, with a bathroom, shower, television and a phone.

And, both types of hotels (budget and luxury) may offer great service, but the Ritz is more expensive because of their overall guest experience, which might include value-added extras like thicker towels, robes, bigger rooms, turn-down service, valet service and a host of other amenities.

Again, I’m not implying that you can’t get great service at a lower priced organization. I’ve stayed at very nice budget priced hotels that offer fantastic service, especially for the price. But they are not going to give me the same overall experience.

Important point: Customer service is just one part of the overall customer experience, but it may very well be the most important part.

Want to break out of the commodity trap? Consider these discussion questions:

1. First, are you and/or your company a commodity?
2. What are your value-added extras that might get you out of the commodity trap?
3. What extra level of customer service or confidence can you provide to your customers?
4. Is this extra level of service different than what your competition is offering?
5. Would your customers be willing to spend more for it?
6. Finally, and this is a big one, why would a customer choose to do business with you over your competition? (If it is price, beware that another organization offering a little better over-all experience can take your customer away from you, even if they have to pay a little bit more.)

Answer these questions. They should spark some great ideas that will help you break away from being a commodity and create more value for your customers.