Competing on Customer Pain Points

In a recent Business Week article, Virgin Mobile and ING Direct were singled out as companies that are winning by defying industry trends. In particular, these companies are designing services that honor their customers’ preferences and aversions. The article quoted Peter Lurie of Virgin Mobil on its policy of abandoning the much-loathed customer lock-in:

It’s not about inventing a new technology; it’s about providing better service in an industry where [service] is done poorly.

Similarly, ING Direct has responded to its customers’ hatred of legalese and small print by creating a two-page home loan agreement. It’s similar to Commerce Bank’s decision to reject “bankers’ hours” and serve its customers on nights and weekends, when they actually have time to go to the bank.

We celebrate these examples because they are the exceptions. The norm was also captured in the article, personified by Duncan MacDonald’s experience as a Citibank executive when he warned against “penalty pricing,” or the use of fees for almost every imaginable infraction as a way to boost profit. “I was asked to resign three days later,” Duncan recalled.

I am often asked where to begin the service innovation process. One place to start is the well-understood customer pain points in your industry, the cracks in the sidewalk that everyone’s walking around, resigned to their existence and convinced that they’re not fixable. A brief history of service competition should convince you that these cracks are opportunities. Virtually every service industry I know is inflicting pain on their customers, which makes these industries ripe for disruption by a service model that champions the customer. In my experience the customer gratitude you’ll generate can translate reliably into profits.

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