Which Companies Will Thrive as the Economy Picks Up?

(ARA) – Companies are facing intense competition right now. Industry after industry is confronting a situation called “product parity,” in which one company’s product or service looks just like the competitor’s when looked at through the customers’ eyes. This results in competition on the basis of price. What can companies do to relieve some of the pressure on price?
“You must either innovate or evaporate,” says Howard Hyden, president of the Center for Customer Focus and an expert on improving competitive advantage. “The winners are constantly looking for ways to ‘add value’ in creative ways to get away from strictly competing on price.”
According to Hyden, innovative companies are continuously learning. The speed with which an organization learns from a variety of sources out in the marketplace is what he called its “learning velocity.”
The most important learning source for any business: their customers. By asking their customers what they are doing right and wrong and what possible changes they see down the road, companies can gain valuable information that will help them adapt and even stay ahead of the competition. It’s what Hyden calls examining your company from the “outside in.”
“Only 7 percent of marketing executives have incentives tied to customer satisfaction,” says Hyden, who believes that too many companies are unaware of or indifferent to their customer’s needs. Since the majority of executive compensation is tied to profit and loss, that’s what they pay attention to. They don’t spend their time thinking about their customers. “Instead of just focusing on the financial statements, companies that listen to their customers’ needs and innovate will be the ones that succeed,” he adds.
To illustrate his point, Hyden gives the example of NorthStar Print Group which has been a long-time provider of labels to Miller Brewing Company. The brewing company regularly called on NorthStar to create labels on a rush basis, but with a lot of other customers to serve, they found it difficult to deliver. Finally Miller issued an ultimatum: either deliver on time or they would take their business elsewhere. Because Miller represented 40 percent of the company’s business, they knew they needed to do something drastic.
Hyden conducted a workshop with the printing company’s employees who said that they were frustrated by Miller’s failure to forecast its label needs. When asked to imagine the situation from Miller’s perspective — thousands of bottles of beer coming down the line filled and capped, but held up because there were no labels — the printing company’s employees understood immediately the urgency of Miller’s needs.
“They were able to turn the situation into an opportunity to add value for the customer,” says Hyden. The employee team decided to analyze the brewer’s past order history so that they could forecast for Miller and better anticipate the size and frequency of orders. Not only were they able to reduce employee stress, but they significantly boosted Miller’s customer satisfaction and have since won numerous awards for being Miller’s best supplier. By listening to the needs of their customer, they were able to innovate internally and significantly increase their profit margins.
“This turnaround resulted from simply changing their focus — to a customer focus,” adds Hyden. “Real competitive advantage comes not from looking at the bottom line, but from listening to what your customers have to say.”
Howard Hyden is a businessman and nationally recognized expert who speaks to organizations about how they can improve their competitive advantage and employee satisfaction — resulting in an improved bottom line. For more information, visit www.customerfocus.org.
Courtesy of ARA Content