Products and prices can be copied. The customer experience can’t.
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A very small percentage of products and services offered by companies and brands are so unique that you can’t get them anywhere else. Which means that almost everything that is sold is a commodity. For example, if I want an 85-inch LG TV, I can go to dozens of stores in the area or shop online to make my purchase. If I want a Dell computer, I can go directly to Dell or to many other technology retailers and buy that same computer.
So, if everyone is selling the same thing, how does a company differentiate itself?
Typically, the customer’s decision comes down to two criteria: price and service.
If there ever was a commodity industry, the automotive industry is it. Customers do not typically walk into a dealership, see a car and pay the “sticker price” on the window. No, there is almost always a price negotiation. The industry has trained customers to expect it.
Recently, I read an excellent article in the Wall Street Journal that featured an interview with Daryl Kenningham, CEO of Group 1 Automotive, an auto retailer that employs over 20,000 people and has more than 250 locations in the U.S. and U.K.
To my point about automotive being a commodity product, Kenningham said, “Everyone in auto retail has the same products and sells at virtually the same price point.” So, what does Group 1 do since it sells essentially the same products at essentially the same price as competitors?
It competes on the customer experience.
The Experience Is the Differentiator
This isn’t anything you don’t already know, but highlighting how Kenningham thinks about the experience is worth noting. He recognizes something every business leader must consider. You may sell the same product as your competitors, but you don’t have to deliver the same experience that they do.
When product and price are virtually the same, the customer experience becomes the product.
Group 1 focuses on reducing friction, building trust and getting the service experience right. Buying the car is just part of the experience. The way the customer is treated after the sale, specifically when they bring their vehicle in for service, is what’s going to get the customer back.
Making Price Less Relevant
This year’s annual customer service and CX research found that 59% of U.S. consumers believe customer service is more important than price. That doesn’t mean price is irrelevant. Price will always be a part of the customer’s buying decision. However, the right customer experience can make price less relevant. You still have to be competitively priced, but you don’t necessarily have to have the lowest price.
There’s a big difference between irrelevant and less relevant.
Customers will often pay more when they believe they are getting more, and that “more” can come from convenience, confidence, expertise, trust or just an easier experience.
Think about companies you enjoy doing business with. Chances are you do business with a company that doesn’t offer the lowest price, but you continue to do business with them because you know what to expect.
That’s the opportunity. If you sell what everyone else sells, you must give customers another reason to choose you.
Find Where the Customer Comes Back
According to Kenningham, customers return for service about 12 times more often than they return to buy a car. That caused him to rethink the business that Group 1 was really in. It wasn’t in auto sales. Kenningham said, “The business we’re in is aftersales.”
So, the question to consider is: “What business are you really in?”
An auto dealership may sell cars, but the ongoing relationship is built in the service department. A technology company may sell software, but the relationship is built through customer support. A retailer may sell clothes (or anything), but the relationship is reinforced every time a customer needs help, makes a return or has a problem.
Look at your business and ask where customers interact with you most often after the sale. Those interactions may be more important to the future of your company than the customer’s original purchase.
In the world of selling cars (and many other industries), you’ll often hear someone say, “I closed a deal.” Smart leaders and salespeople know that a sale is not the end. It’s just the beginning. Everything that happens after the sale validates the customer’s decision to buy from you instead of the competitor.
Final Words
You may sell the same products and services as your competitors. You may even sell them at virtually the same price. That doesn’t mean customers see you as the same.
The difference is the experience.
Kenningham and Group 1 Automotive recognize that the sale of a car is just the beginning. The service experience that follows is the reason customers choose to come back.
So, if your competitors sell what you sell, don’t just focus on the product. Focus on how you’re selling it, how you’re going to service it and how you make the customer feel about the entire experience. That’s what “de-commoditizes” your company and gives you a competitive advantage.
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