– Written by Natalie Both for the Center for Services Leadership
In a competitive market, there are many different barriers companies may face. What has been found to be the most problematic however, is changing customer demands. The age of mass production has passed, and now more than ever, consumers expect “personalized, immediate service at affordable prices.” Companies are having to face this reality and in order to compete, they must truly understand and serve their customers in a way that exceeds expectations.
An article published in The Economist examines this barrier confronting businesses today and provides methods for proactively meeting changing demands. Market data has shown there are two major challenges in keeping up with shifting customer demands: maintaining competitive prices and building consumer trust. Of the senior executives interviewed, 55% affirmed that the most important challenge to focus on is cultivating consumer trust. According to the annual Edelman Trust Barometer, “consumer trust in business, after increasing steadily over 2012 to 2016, declined by an average of 1.5 percentage points from 2016 to 2017 in the ten countries covered in the Business Reality Check.”
Increasingly, consumers are displaying a tendency to make purchases with certain companies based on shared values and beliefs, as opposed to price or product features. Research has shown that “30% of consumers make more purchases based on beliefs than they did three years ago. Developing trust with consumers – showing that the company shares the consumer’s values and beliefs – is a source of competitive advantage.” But how exactly are companies supposed to ensure these changing values and demands are met?
The key to better service is open innovation. This involves “engaging with customers and integrating their opinions into product development,” which allows for products to be tailored to certain individual demands, and for two-way communication and trust. A great example of this is Coca-Cola’s dispenser machines, which provide the option to mix different flavors and provide feedback for new flavors. Coca-Cola’s strategy includes the customer in the process of creating new products they would personally enjoy. This successfully creates trust in their company and provides overall better service to customers.
To read the full article go to The Business Reality Check from the Economist Intelligence Unit. (A fee may apply.)