The ability to manage information is playing an increasingly central role in competitive strategy. In most industries, companies can no longer achieve sustainable competitive differentiation simply on the basis of the performance characteristics of their products alone. The pace of technological development means that any product innovation a company makes today is likely to be quickly copied by competitors and become a standard feature tomorrow. Coupled with this, globalization is exposing companies of all sizes to unprecedented levels of competition.
As a result companies are increasingly being forced to look at how they can increase the value they provide by tailoring their offer to customers’ individual needs whether that is through customizing the company’s core product or adapting a range of supporting services (e.g. billing, shipping, customer support etc). Such an approach not only serves to provide a basis for short term differentiation, it also has longer term strategic benefits too.
The more a company learns more about a customer’s individual needs and tailors its products and services accordingly, the greater the value the customer receives. Similarly, the greater the value the customer receives, the more important the company becomes to them. Progressively, the customer faces the prospect of ever greater disruption were they to consider switching to an alternative supplier owing to the time it would take any other company to acquire the same understanding of their needs and deliver a comparable tailored service.
Consequently, even though there may be other companies providing a comparable core product, such a strategy enables a company to develop strong relationships with its customers and an enduring hold over the revenue they generate. Indeed, in business-to-business markets, a company can find its relationship with key clients becoming so strong that it almost becomes an integral part of their businesses.
Learning about a customer’s particular requirements and marshalling the resources of the company to deliver tailor-made solutions is increasingly the only way for companies to avoid being drawn into commoditized price-based competition. For more and more companies, the integration of the front and back office is thus becoming a strategic necessity with the ability to capture and manage information effectively a critical core competency.
Help your company realize the value of customer data by downloading “Assembling the Jigsaw- Realizing the value of data”.