Differentiating on Service: Why It Matters and How to Master It
[Estimated read time: 6 minutes]
Did you know that 80% of consumers would pay more for a better service experience? Gone are the days when having a great product or a competitive price was enough to succeed in the marketplace.
Market changes driving the need for differentiation
Four key changes in the market have increased the importance of differentiating on service. First, quality differences in the “store brand” vs. premium products are perceived as very small, or even non-existent. Today’s customers don’t believe in paying a higher price for a product that isn’t that much better than the other options available.
Second, consumers’ expectations are more unreasonable than ever. For example, imagine being a passenger on an airplane and there’s a problem with the WiFi onboard. These days, most passengers would be furious and frustrated by such a disruption to their web browsing. The fact that they are comfortably and safely hurtling through the air at 30,000 feet is no longer enough to impress them.
Third, customer expectations have become “liquid” across lines of business. For instance, if a customer has a stellar experience at the local coffee shop, not only is she going to expect the same or better experience on her next trip to Starbucks — she will now expect it from every company she does business with. For more on liquid expectations, read 5 Trends in Consumer Demand for Digital Self-Service.
Lastly, market disruptors are proving that the experience is more important than the product, since many of them do not actually own any inventory. AirBnB rents more rooms across the globe than the largest hotel brand, without owning a single room. Uber is winning against taxis and car rental services, without owning a single car.
The table stakes of service
With these market forces necessitating service differentiation, it can be tempting to jump right into pursuing a differentiation strategy. But before you do, you’ll need to check these three prerequisites off your list:
- Knowledgeable agents: Your employees need to be able to provide accurate answers and to effectively resolve customer complaints.
- Multi-channel communication: Make sure you’re actively providing multiple ways for customers to contact you.
- Acceptable speed: Whether it’s a service resolution or product delivery, it needs to happen in a timely manner.
Once you have achieved competency in these three areas, you’ll be ready to move on to the big leagues.
How to differentiate on service: Ease vs. Delight
There are two main ways to differentiate on service: ease or delight. You can distinguish your service experience by being easy to work with or by exceeding customer expectations. You don’t want to be where that orange X is: smack in the middle, just okay at everything. It’s much better to stand out than be average in every area.
How to differentiate on ease
In order to differentiate your service on ease, you have to “smooth the road” for customers all along their journey. Companies that choose to differentiate themselves on ease do so by providing customers with speed, self-service, availability, or a no-hassle experience. Here are some examples of brands that use these ease differentiators:
Speed: Jimmy John’s promises to be “freaky fast.” Similarly, Amazon Prime guarantees fast delivery. What makes their brand promises stick is not just that they’re fast but that they’re reliably fast.
Self-service: Gartner predicts that by 2020, 85% of customer interactions with brands will not involve a human on the other side. It’s not that customers are becoming anti-social — they simply prefer to do things on their own time and their own terms. Fifth Third Bank’s online banking options are a great example. Customers can choose to do their banking at 11pm on a Sunday night instead of visiting a branch during so-called “bankers’ hours.”
Availability: This differentiation strategy is all about giving customers choice. Uber is a good example because, not only do they give customers the choice of the car that picks them up at what time and where — customers can also choose the route the car takes and what music they listen to during the ride.
No hassle: Costco exemplifies the no-hassle concept with their 90-day no-questions-asked return policy. Although a few people are likely to take advantage, the net result is higher loyalty from customers who believe it is risk-free to shop at Costco.
How to differentiate on delight
Differentiating on delight is all about giving an experience that exceeds the expectation of the consumer. Given that consumer expectations are unreasonably high, this is no mean feat! There are four main ways companies differentiate on delight: personalization, “magic,” going the extra mile, or being proactive. Here are some examples of brands who use these differentiation strategies:
Personalization: State Farm promises to treat you “like a good neighbor,” meaning, as an individual who deserves personal attention, instead of just another policyholder. A good neighbor takes an interest in your well-being and is someone you feel comfortable asking for help.
Magic: Anyone who has ever visited Disneyland can attest that magic is a major element of their brand. Their goal is to create an immersive experience for park guests, allowing the outside world to fade away. Every employee, even if they aren’t a Disney character, is referred to as a “cast member” and is part of the show. In addition, the park is a no-fly zone — no airplanes are allowed to distract park-goers from the experience. In fact, Disneyland has a special zoning requirement for the surrounding area: if your building can be seen from the park, you have to paint it to blend into that part of the park!
Going the extra mile: The brand promise of Avis car rental is “We try harder.” They’re not promising better, cleaner cars or quicker service, just that they will try harder than the competition to ensure you have a good rental experience. Customers appreciate the effort.
Being proactive: Ritz-Carlton is legendary for their ability to anticipate what guests will need. They train employees on three ways to gain guest loyalty: a warm, sincere greeting, a fond farewell, and anticipating guests’ needs at every moment in between.
Which differentiator will you choose?
Now that you have seen some examples of brands using ease and delight as service differentiators, it’s time to decide which differentiator makes the most sense for your brand. We’ve developed an assessment worksheet to help you determine a differentiation strategy based on three factors:
- Goals: What you’re trying to accomplish
- Momentum: What the market already knows about you
- Core competencies: What you’re good at
Using the assessment will help you drill down to the differentiator that deserves your full focus. For more details, as well as advice on executing your new strategy, check out our on-demand webinar “Finding Your Service Differentiator.”