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Kurai Chitima
Business Consultant, South Africa
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Is Superior Value to Customers a Competitive Advantage?
🔥 Could superior value to customers imply competitive advantage? Considering that competitive advantage is achieving superiority over rivals.
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Providing Superior Customer Value Creates a Competitive Advantage Yes, Kurai, providing superior value--in whatever form--to customers would create competitive advantage. The challenge for the provider, of course, is to remember that companies are constantly evolving. The metaphor I use is looking at the planet Saturn through a strong telescope. I've done that, and Saturn, with its beautiful rings, is truly a spectacular sight. But if you look away from the planet to have a short conversation with a colleague or companion, then when you look back through that telescope again, Saturn is nowhere to be seen. In free markets, everything is also constantly evolving.
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Jaap de Jonge
Editor, Netherlands
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Is Superior Value to Customers a Competitive Advantage? Agree with Warren. Superior Customer Value is definitely a competitive advantage. It is in fact one way of accomplishing one of its 3 main forms, being "Differentiation". See the Summary of competitive advantage.
So far that is perfectly clear and simple. But note that actually achieving this is not!
And even if your firm manages to deliver superior customer value, a key issue remains if you can keep on doing that, in other words are you able to provide a sustainable competitive advantage. Because it is really hard to keep on providing superior customer value over time (just like keeping Saturn constantly in focus of your telescope requires constant adjusting).
Moreover, the competition is not standing still. If you are successful with your competitive advantage, other companies will try to emulate and even surpass you.
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John Henry
Project Manager, United States
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Components of Customer Value and Competitive Advantage Fully in agreement with Warren and Jaap. This value may have more heads than a hydra however:
- Quality of the product - maintaining superior value here is imperative, and it is a moving target, always improving quality (ahead of your competition) is the key.
- Customer service - providing customer care, support of product, quality and timeliness of this support is also key to maintaining this competitive advantage.
- Delivery - availability and timely delivery of additional product or service is also critical. Your product/service may be important for your customers, so your ability to deliver, on time, is a strong component.
- Profitability - You and your customer must be profitable for you to continue to be their preferred vendor. If you are operating at a loss, you are not a viable vendor. If they can not make any money because of the high cost of your product, they can also not remain viable.
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Gautam Mahajan
CEO, India
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Customer Value Added Customer Value Added is the ratio of the Value your company adds to your customers, divided by the Value your competitor provides to its customers. This can be measured and we do it all the time.
Customer Value Added studies tell you if more people will buy and apart from competitive advantage it increases market share and profits.
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Jaap de Jonge
Editor, Netherlands
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Customer Value Added Expresses a Customer Value Advantage @Gautam Mahajan: Interesting! I understand that one can "calculate" (with many intangibles) this ratio. You could then see who has the competitive advantage based on superior customer value - you or your competitor...
But could you please elaborate a bit more on how Customer Value Added calculations actually contribute to a competitive advantage?
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Anand Brambha
Consultant, South Africa
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Is Superior Value to Customers a Competitive Advantage? Superior value to customers is providing them with outstanding products, outstanding quality, and outstanding service at the best price whilst exceeding customer expectation, i.e., the value proposition basket. These words are usually found in mission statements or claims in some cases made by big and small businesses and in reality is a BHAG which can be a 5 or 10 year plan to achieve. The challenge that the 'goal posts' are not constant due to micro economics is lucidly explained by both Jaap and Warren.
Convincing current and future customers why your products and service offerings are or will be of greater value to them than those your competition is currently offering will heavily depend on your historical track record.
I would be loath to separate Superior Value and Competitive Advantage as first you acquire a customer and the consequence of doing business creates the competition which has to be defended constantly.
Whatever happened to 'give the customer what they want '? Sometimes at our own peril, the over expense, over selling can be the direct demise of a well-established business. Good frequent communication and customer satisfaction surveys may be excellent indicators of what needs tweaking.
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Maurice Hogarth
Consultant, United Kingdom
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Provide what the Customer Needs (and not More) @Anand Brambha: Some good points. Consider:
- "Quality" is what is required to do the job that the customer wants at a price they can afford. Provide this and you have a competitive edge over a product-service mix that provides more than the customer needs or requires more than the customer is willing to pay.
- If you don't not know/understand and then not provide to the potential customer PRECISELY what they need, when they need it at a price they can accept that is a problem. Meeting this is what gives you the 'edge'.
- Trying to 'beat the competition' by providing more (of what is not really needed) than they do is not a strategy likely to have long term success.
Don't worry too much about what your 'competing' businesses are doing. Focus on what you are dong to meet the needs, as expressed through market research, of your target customers.
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Gautam Mahajan
CEO, India
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Why Customer Value Added Increases Competitive Advantagew @Jaap de Jonge: First, a positive Customer Value Added makes more people buy from you. Thus you increase your top line.
Then you make fewer mistakes because you understand your customer better.
Lastly, you get to understand your competitors and why people buy from them and not from you.
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Iulian Ursache
Management Consultant, Canada
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Superior Value to Customers as Competitive Advantage Chasing Superior Value to Customers is a very popular and very obvious approach used by organizations to achieve a Competitive Advantage, however, it is not always necessary nor sufficient. Check out my definition of competitive advantage.
Based on that, to identify what would contribute to a concrete competitive advantage, an organization should define first:
- Target market segment
- Opportunities in the target market segment
- Threats/constraints in the target market segment
This would help to identify the potential factors that help the organization gain a competitive advantage in the target market segment. Then, the organization would have to assess the competition they would encounter in the target market segment, to tailor to the relevant competitive factors.
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Robert Versteeg
Management Consultant, Netherlands
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Two Sources of Real Competitive Advantage I would like to agree. However research I've studied shows it is not as one dimensional as stated. How to compete, that's the question many organizations ask themselves in pursuit of competitive advan...
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Krista Decat
Manager, Belgium
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How to Focus on Strategic Learning @Robert Versteeg: Interesting approach to this matter. Especially the continuous learning part, which is, in my opinion, always necessary to gain a sustainable competitive advantage in a constantly ev...
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Is Any Sustainable Competitive Advantage Possible? @Krista Decat: Thank you for your interesting comment. For starters, I question the use of the word 'sustainable'. In free markets, where customers, suppliers, and competitors are constantly evolving,...
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Robert Versteeg
Management Consultant, Netherlands
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Understanding What's it Worth to your Customer @Krista Decat: A continual improvement process, also in literature often called a continuous improvement process (abbreviated as CIP or CI), is an ongoing effort to improve all sorts of efforts incl....
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Krista Decat
Manager, Belgium
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Customers and Providers @Warren Miller, CPA, CFA: Thank you for your reply and I hope that I will be able to clarify some aspects! I'll start with your last question: with "them" I mean "customers" but in fact also "provider...
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martin Anih
Management Consultant, Nigeria
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Continuous Customer Satisfaction is Challenging @Anand Brambha: Well said Anand, customers and companies have different satisfactions to actualize. Like you said, customer satisfaction that imperils a company's profit need to be relooked at as the ...
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Reply To: Martin Anih @Krista Decat: My comments are below, Martin:
When you mention that 'the aim of every business is to make a profit and stay in business,' you're right, of course... But, in the short term, staying in...
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John Henry
Project Manager, United States
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Superior Customer Advantage If you do not provide superior customer advantage to the people you provide goods or services for in your business they will find someone else who does....
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Maurice Hogarth
Consultant, United Kingdom
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Who Decides 'Superior', on what Basis? Q) "Does superior value to your customers mean a competitive advantage?"
A) Yes.
Q) How do you determine what "superior" means?
A) You don't. The customer does. (It will mean different things to di...
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Re: Who Decides 'Superior', on what Basis? Thank you for a first-rate Q&A. I agree with you 100%.
I hope I don't offend anyone when I point out, yet again, that free markets don't stand still:
1. Competitors (a.k.a. rivals) are looking for w...
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Gautam Mahajan
CEO, India
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Why Customer Value Added Increases Competitive Advantagew Warren, you are right. It is the value you add at time of purchase that determines repurchase. That is why your customer value always has to be higher than competition. This is a major flaw of NPS, be...
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Re: Why Customer Value Added Increases Competitive Advantage Thank you, Gautam. Would you mind enlightening me about what 'NPS' stands for, please?
I think it's worth mentioning that there is a multitude of ways that customers measure value. The easiest way is...
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Maurice Hogarth
Consultant, United Kingdom
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Re: Who Decides 'Superior'? @Warren Miller, CPA, CFA: Thank you Warren.
Picking up on point 2: It is not unknown for customers to opt for the more expensive provider, because of the "intangibles" that the seller provides; from ...
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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Re: Maurice Hogarth @Maurice Hogarth: Thank you. I'll just say this: You're preaching to the converted, as surely you must know....
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Gautam Mahajan
CEO, India
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Meaning of NPS Warren, Net Promoter Score or NPS is the measure of whether you will buy again or not or whether you will recommend.
It is made when you buy something, and not when you rebuy, by which time the value...
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Gautam Mahajan
CEO, India
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How to Learn to Measure Customer Value Add @Jaap de Jonge: Jaap, the Customer Value Add measurements were started by Ray Kordupleski in 1987 at AT&T and written in his book, Mastering Customer Value management and in Gautam Mahajan's books, Cu...
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Gautam Mahajan
CEO, India
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Make Profit while Creating Value @Anand Brambha: Anand, Adding Customer Value is a distinct advantage. But do not give too much away as you want to make a profit....
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Warren D. Miller, CPA, CFA
Strategy Consultant, United States
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More on Customer Value Added @Gautam Mahajan: Let's assume that a company has more than one competitor. Based on your post, that appears to suggest that a company with multiple customers has multiple values for 'Customer Value Ad...
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