Customer Intimacy – the Compassionate Strategy of Successful Service Firms
Those of you who have read my previous posts on the importance of being interested rather than interesting, and the birthday gift have most likely detected a theme. It’s a theme concerned with why some of us choose to run businesses as consultants or experts for hire and ideally, solve problems for others. My belief is that success comes from taking an interest in those whom you wish to serve.
These posts have been pointing the way to the core of value-pricing or, in a bigger context, customer intimacy.
“[Customer intimacy is] a marketing strategy where a service supplier or product retailer gets close to their clients. The benefits of greater customer intimacy for a business might include improved highly tailored problem-solving capabilities and greater adaptation of products to customer needs, as well as higher customer loyalty levels.”
But what does “getting close” mean? Let’s take a look in the history book.
The History of Customer Intimacy as a Strategy
Back in the 1995, Michael Treacy and Fred Wieresma published a book called “The Discipline of Market Leaders”. It outlined three competitive business strategies. Those of you familiar with Porter’s generic strategies will recognize some of the ideas.
To summarize, the first two were operations excellence - which affords cost leadership as well as convenience, and product leadership – i.e. having the best and most features. Whether these are either-or choices, I leave unsaid. It’s been argued that the best is a blend but as with most strategies, maintaining multiple risks leading to a lack of focus, which is a risk in itself.
The third one is the topic of this post and the one I find most interesting, and rewarding: customer intimacy.
“Rather than a standalone profitable transaction, such a relationship is oriented towards a long-term win-win. Customer intimacy is a competitive strategy, corporate culture, and organizational design—all rolled into one—supporting multiple such relationships.”
Reading on we find this definition of "close":
“unmatched value was not in product or price, but in the extraordinary level of service, guidance, expertise, and hand-holding” provided to clients; companies who “continually surprise customers with knowledgeable, caring, and unhurried sales personnel who give sage advice about the products and their application.”
My position is that in order to deliver extraordinary value, it’s mandatory to embrace customer intimacy. Or put differently, you can do without it, but it’s much more difficult.
Customer intimacy might not be the best strategy for all businesses out there. But for those I work with primarily, professional service firms, it’s a rewarding and meaningful way to success for the business and its customers.
Benefits of Customer Intimacy
Effective implementation of customer intimacy has several benefits:
Customers turn into ambassadors who will not just appreciate what you do but also talk to others about it.
A high degree of differentiation from competitors through your degree of customer service, your ability to seemingly “sense” the customer’s needs before they can formulate them themselves and packaging and pricing that just make sense to buyers.
Massively reduced customer acquisition cost as a fraction of your total turnover as customers will rather return to you than take the risk of being disappointed somewhere else.
A huge competitive moat staving off other companies, making your customers hard to steal and your offering harder to emulate.
A sense of satisfaction knowing you’re actually helping other people and aren’t just in the business to peddle whatever you do then taking the money and run.
How to Achieve Customer Intimacy
Good news! Chances are you’re already doing at least some of it.
Here are some things that companies that implement this strategy do:
They engage in dialog with their customers, continuously, and are flexible in regards to what channels are being used.
They don’t consider sales support and early consulting to be something that detracts from the “real” business but see it as part of what they offer.
They focus on the entire customer experience. From the view of the customer, value isn’t so much about what you buy, as how you buy it.
They are proactive as far as the customer’s needs go and provide advice and ideas that help the customer solve real problems.
They set out to learn as much as they can about the customer in order to be innovative in new and better ways to serve the customer.
They understand that in order to provide value for customers they need to view what they do with the customer’s eyes and hence are ruthless about avoiding inside-out thinking.
They work to minimize complexity for the customer by packaging services, reselling services of other companies or bundling technology.
All of these activities and practices lead to increased insights about the customer’s most important and valuable needs, which in turn enables these companies to serve those needs. By focusing on those needs, and tailoring a customer experience that competitors have a hard time to emulate, they can capture more value.
Value-based pricing then follows naturally since by simplifying their offer and implementing fixed pricing based on value delivered, the customer knows what it's getting and at what price. They pay one price and get clear value for it.
In later articles I’ll dig deeper into how you can implement customer intimacy in order to build stronger customer relationships and deliver more value.
This article originally appeared on the old Leancept blog.