The only sustainable competitive advantage

If our business has to compete in the long-term, there are (with apologies to Michael Porter and his chums in the business theory business) really only three ways to do so – and just one that endures.

There’s no point in competing solely on price because that kills margins and can’t be sustained.  And there’s no point in competing just on innovation because sooner or later everyone catches up and no-one, no matter how good, can churn out new technologies on a treadmill forever.

Which is why so many companies now choose to compete on customer experience.  It’s one of the few ways an organisation can offer genuinely sustainable differentiation and protect margins; it makes for more enduring, loyal customers; and it is very effective in building a strong, sustainable brand.

The purpose of customer experience

But most government departments don’t have competitors.  Their customers typically have to use them, whether they want to or not. So does this mean that public sector organisations can ignore customer experience? Or should they, if they want to minimise costs? After all, it’s just another management fad, right?

Quite the opposite. Competitive advantage is not the goal of customer experience – it is merely an excellent side-effect.  Let’s not forget that the main purpose of any organisation is usually to offer a product or (more usually for public sector organisations) a service that their customers value.  If an organisation can offer a good customer experience, this enables that organisation to do what it exists to do – but better.

This applies just as much whether an organisation is selling cars, building houses, collecting taxes or handling planning applications. The only difference is that in the public sector, value to the taxpayer is paramount and the purpose is service, not profit.

The return on customer experience

The benefits of offering a good customer experience have particular resonance for the public sector.  Benefits such as these:

• Fewer people complain, so an organisation saves on resources it would otherwise spend on handling exceptions and resolving issues.
• A good customer experience relies on consistent service delivery (how else does an organisation keep its promises?), enabling organisations to benefit from reduced variation, lower complexity and more economical  service delivery.
• Better and more fundamental understanding of the customer, so organisations learn how to adapt and learn faster and more flexibly.
• And organisations that offer a good customer experience are usually good places to work, so they keep good people and help them to stay motivated.

The public sector payoff

Any organisation would value such returns. So would their customers.  And for public sector organisations, these translate into two other, distinctive benefits.

First: any public sector organisation that delivers services well, efficiently and in ways which its users value – this  immediately reflects well on the elected officials responsible for it. This political dividend has unique value in the public sector.

And second: we are all invested in public services, as taxpayers and users – so when a public service delivers an excellent customer experience with all the return that we see here, we all benefit.

And that has to be a good thing.

This is slightly revised version of a blog I originally posted at Business Value Exchange; a site well worth a visit.

(Image credit: Ralph Walker, Commerce and Industrial Development Collection, Missouri State Archive, Public Domain).