Why your customers are actually always …competitors and there is no such thing as a customer for life…
In a free market economy, customers have numerous options. There are always a few exceptions to the rule, but I think that we would all agree that 90 – 95% of the time we have numerous options in buying any service or product. This applies to almost every industry out there. If you want a phone, there is Apple and Samsung and others. If you want clothes, you can go to a mall with hundreds of options in almost every category. If you want a computer, you have 5 – 10 different companies which in turn have over 500 different models to offer. If you want training or consulting, or education, or coffee, or wine, or an events planner you have hundreds of options. Arguably, there are a few organizations that have created some sort if monopolistic competition such as Amazon, or Google or e-baby and some others. My point is that customers have options and switching costs are low, especially in the era of technology and disruption.
This is why organizations are focusing on customer service and differentiation. They are aware that their customers can easily – in most cases – move to a different provider / supplier or product without any real penalties even in the case where there is an agreement present. Breaking an agreement has become an easy task through legal clauses protecting consumers more than ever and the duration of agreements are becoming shorter thus allowing customers to manoeuver.
In such an environment, it is safe to say that your customers are not necessarily customers, but always competitors. Or at least this is the context in which they need to be seen. Let’s say you sign a contract with a client to deliver a service. You need to service this client in the best possible way from day one as you know that if there is a problem, you cannot “lock” your client in any agreement. Clients have more rights than ever, while even if you do have an agreement and the customer is dissatisfied, other prospective customers can find out as we are living in the era of transparency (i.e. social media) and this may backfire.
The point is that as customers we are spoilt in this area. Every company is trying to offer excellent customer service, or a unique customer experience while extending offers and “locking” customers by creating a ‘web’ of services like Apple is using its inter-connectivity. So if you have an apple phone, you would be interested in an ipod or a macbook as you can save everything on the cloud and stream devices etc. Service companies need to understand this strategy as well. If you are a school, maybe you can create your own “cloud” of services in such a way to ‘lock’ in clients (sports, community events, extra programmes, material, on-line etc.). Whatever the case, clients are clients only for a moment and this is how sales forces should think. Creating loyalty requires ‘locking in’ a customer not through agreements, but through the creation of true relationships and excellent customer service.
You need to feel as if you only have customers for a day as they are your ….competitors (in a certain sense). This assumption is based on the fact that you are always “competing” for them and they do affect your profitability if they switch sides. They are spoilt and they will retaliate if something goes wrong. I think we should change the term ‘customer service’ to ‘competitor service’. It may actually make organizations give more attention to loyalty, quality and the creation of relationships and even help them in finding more ‘ideas’ to create a bundle of services as a necessary prerequisite in making switching costs higher…
Bite Size Thoughts by Dr. Constantine 'Dino' Kiritsis