Do or die: why service is the new differentiator

I wrote last week of the importance of culture, and how it plays a vital role in creating the conditions for success to flourish. A key part of that is creating the right customer experience.

Las Vegas-based online retailer Zappos is brilliant at it. In a recent interview here on MeetTheBoss TV, founder and CEO Tony Hsieh outlined his principles for creating an excellent customer experience: “You can do a lot more if you get the culture right,” he told us. “Then most of the other stuff actually takes care of itself in terms of great customer service.”

It’s a lesson more firms could do with embracing.

Take the UK manufacturing sector, for example. For years we’ve watched as UK (and US and Western European, for that matter) manufacturers have struggled to compete with lower cost alternatives from the Far East and elsewhere – and as a result, 51% of British manufacturers now have production facilities overseas. Why? Because cost has become the overriding metric. Manufacturing costs per hour in Western Europe are about 15 times higher than those in China, for example. For many firms, offshoring seems like a no-brainer.

But according to the experts at Epicor, concentrating solely on price to the detriment of quality considerations – both product quality and quality of service – is a mistake. In a recent report, they suggest best-in-class manufacturers are increasingly adopting initiatives and strategies focused on improving the customer experience as a means to deliver more value and differentiation throughout the business.

So is price the right area to focus on? Or can an embattled sector be revitalised through a focus on improving the customer experience?

That’s the question I’ll be asking a group of manufacturing executives in an upcoming series of MeetTheBoss roundtables this April. And with a panel made up of – you’ve guessed it – UK manufacturers, I’m hoping they’ll have some interesting thoughts on the matter.

There are certainly some positive signs on the horizon. The latest Manufacturing Advisory Service Barometer revealed that 86% of respondents are planning to invest in capital equipment over the next 12 months – over half of it on IT and communications – with more than half also expecting to take on new staff, a sure sign of growing confidence.

What’s more, a small but growing number are reshoring their operations in a bid to improve quality, according to a recent report from the EEF manufacturers’ organisation. One in six British companies has brought production back to the UK in the past three years, with a further six percent looking to do so over the next three years.

But are enough of them focusing on customer experience as a key point of difference? And what role can those technology investments play in facilitating the required shift in culture? That’s what we’re looking to explore.