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Beyond Better Products: Capturing Value in Customer Interactions

July 15, 2002 | Mark Vandenbosch, Niraj Dawar | Operations

Why do your customers choose to buy from you rather than from your competition? For the past three years, marketing professors Mark Vandenbosch and Niraj Dawar have posed that question to more than 1,500 senior executives in interviews and group discussions. And despite the vast range of industries represented by the executives they probed, the responses they got were remarkably similar. The executives agreed almost universally that offering great products, technologies or services is merely the entry stake into the competitive arena. Most spoke of the need to maintain an edge in the way their companies interact with customers; that is, they recognized that customers often value how they interact with their suppliers as much or more than what they actually buy. As the main drivers of customer choice, the executives cited cost-oriented factors such as convenience, ease of doing business, product support and risk-oriented factors such as trust, confidence and the strength of relationships.

Strategies built around reducing customers’ interaction costs and risk are strategies that offer a systematic way to tap into new sources of customer value while avoiding the often futile attempt to compete on product innovation. The authors illustrate five different strategies that some companies are using to build a sustainable advantage through their approach to customers. These strategies are not easy to devise or implement; they require creativity, imagination, hard work and a willingness to take risks. But as the examples in this article demonstrate, the rewards are more than worth the effort.

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