Several years ago, the leading business guides glorified the importance of using a distinct business model for your company. And thirty years ago, The Value Disciplines of Market Leaders introduced the most remarkable frameworks of all times. The book clearly defined that market leaders achieve competitive advantage by excelling in any one of the frameworks:
· Product leadership, the frame that depends on better product performance.
· Customer intimacy, the structure that relies on creating a better customer experience.
· Operational excellence, the layout that offers better pricing and efficiency than fellow competitors.
By learning about each system, you can tailor-make a service or cherry-pick a bundle of products that exceeds client expectations. In most scenarios, we see companies employing only one of the strategies. But, any business could improve when they leverage an omnichannel journey. When channels or frames are connected, they build a fuller picture.
Why combine customer intimacy with operational excellence?
Customer intimacy is an advanced form of customer-centric business model, and it involves learning about your customers and meeting their specific needs, despite the prices.
On the contrary, operational excellence is a discipline that doesn’t innovate products or services. However, they provide hassle-free services at affordable prices. Here all the systems are built to be highly efficient and inexpensive.
A company cannot both provide tailored solutions and drive operating costs down. After all, individual services are custom-made and expensive, while cost-minimizations require a lot of standardization. At least, that’s what most professionals believe.
Recently, a study on Supply Chain Transformation was released, showing that companies like Pepsi, P&G, and Chiquita have been creating tremendous profits and market share gains, even during the recession period. When we dove further into the study, the study showed that these three companies did precisely what the traditional business books disparaged– combined customer intimacy with operational excellence. And slowly, we learned that excellent customer experience is the aftermath of operational excellence.
Here’s why we think more businesses should incorporate customer intimacy into operational excellence:
· The merger can increase your sales, often by 35% or more, even in highly-penetrated accounts.
· They often create significant revenue increases.
· The operating cost comes down.
This smart shift delivers new efficiencies for both parties and converts their companies into a lucrative expanse.
How to combine customer intimacy with operational excellence?
To integrate the process into your company, you must first move beyond the one-size-fits-all approach. While operational excellence suggests optimizing services at minimum costs, it doesn’t reflect the versatility of your customers. Each customer or market segment requires a specialized, appropriate, cost-effective solution personalized according to their operations.
Next, dive in for in-depth analysis, study your profit maps, and round up the list of customers who are your island of profit. Then, hop on to invest your resources and design tailored solutions to secure and grow these targeted relationships. It turns out that strengthening these connections means integrating your operations in a highly individualized way. When you do this, you lower your customer’s costs and increase customer profitability.
At the same time, you are also radically lowering your operational costs. How? By smoothing order patterns, deploying substitutions in selected situations, tuning customer inventories, and other measures. These steps shift the supply chain efficiency optimization from the vendor’s door to the optimization of the vendor-customer supply chain. The change enables vendor companies to gain new operational efficiencies and gather resources to make their customer journey more profitable.
However, you can develop relationships backed by more distinct service models for customers who are essential but unwilling to partner. You can also offer standardized menu-driven approaches suitable to your operation and budget.
Customer intimacy combined with operational excellence drives customer profits and creates large-scale revenue increases for the vendor company.
In Conclusion:
The next time you think about choosing operational excellence or customer intimacy as your go-to approach, hold on. The accurate answer is the right blend in the right places. And if you still need help with tailoring your operations, Lean Partner can help. We offer boutique solutions designed solely for your company.
