Business Strategy Essentials: Competitors, Service, and Loyalty

Competitor Analysis: A Strategic Approach

1. Identifying Your Company's Competitors

Direct Competitors:

Offer products/services that could serve as a similar substitute for yours and operate in your same area.

Indirect Competitors:

Provide products that are not the same but could satisfy the same need.

2. Competitor Objectives, Strategies & Reactions

Once true competitors have been identified, determine what to evaluate from them and how.

Benchmarking:

The process of measuring the performance of a company's products, services, or processes against those of leading businesses to identify best practices and ways to improve quality and performance.

3. Selecting Which Competitors to Attack or Avoid

Key Areas for Competitor Analysis:

• Business: Analyze competitor product lines, quality, pricing, and discounts offered.
• Sales: Examine their sales process, channels used, annual revenues, and total sales volume.
• Marketing: Analyze competitor websites, online and offline advertising campaigns, social media presence, customer service, and reviews.

Understanding SERVQUAL Dimensions for Service Quality

Reliability:

Doing what you said you would do, when you said you would do it. It's more important to be reliable than to have shiny new equipment. A provider's first and best efforts are crucial.

Responsiveness:

Responding quickly, promptly, rapidly, immediately, and instantly. Do not wait too long to return a call or email. It's important that customers feel providers are responsive to their requests.

Assurance:

Service providers are expected to be experts in the service they are delivering. If a service provider is highly skilled but customers don't perceive that, their confidence will be lower. Service providers must communicate their expertise and competencies before they do the work. This can include certification logos on emails, letters, and reports.

Empathy:

Customers may not feel provider employees care about them during delivery. Service delivery matters. Provider employees should be trained on how to interact with customers and their end-users.

Tangibles:

Service providers will still want to ensure their employees' appearance, uniforms, equipment, and work areas are well-maintained. The danger is for providers to focus too much on making everything look sharp, potentially overshadowing other dimensions.

Customer Relationship Management (CRM) Pillars

Acquisition: Attracting New Customers

Attracting new customers is an objective that requires:

1. Prospect identification.
2. Contacting potential customers.
3. Development of communication activities.

Retention: Maintaining Customer Relationships

Aims to maintain relationships with the highest proportion of the current customer base over the long term. Retention strategies include:

1. Creating customer delight.
2. Adding customer-perceived value through:
   • Loyalty schemes.
   • Customer clubs.
   • Sales promotions.

Development: Growing Customer Value

The process of growing the value of retained customers. Development objectives relate to:

1. Cross-selling: Selling additional products and services to an an existing customer.
2. Up-selling: Selling higher value or higher priced products and services to an existing customer.

Types of Customer Loyalty

Cognitive Loyalty:

A buyer prefers a particular brand over others.

Affective Loyalty:

Some kind of brand loyalty or an attitude towards a brand develops as a result of repeated purchases.

Conative Loyalty:

Evolves as a consequence of countless positive experiences and involves a strong commitment to the repeated purchase of a specific brand.

Action Loyalty:

Motivated intention turns into a real act of buying. This is when a consumer maintains the intention of repeatedly buying something “under any circumstances, at any cost.”

The Customer Loyalty Ladder

• Suspect: Someone who comes across your company's promotion.
• Prospect: Someone who pays attention or is interested in your promotion.
• Customer: Someone who purchases your product/service.
• Advocate: Promotes your business; they are so enthusiastic about your product/service that they tell others, providing unpaid advertising.