Customer Service As A Competitive Differentiator

The ability to push past customer focused and into customer obsessed is where most companies are unwilling to go in both the B2B and B2C space. I’ve always placed customer service as top priority since I started J. Arthur & Co. 5 years ago, starting with a very basic ideology. Early on, I reasoned that my best chance of survival as a self-funded, bootstrapped startup was to get customers and to keep them, which would increase cash flow in a recurring monthly model and overtime would also help with referral accounts. Fairly simply logic, right?

As time went on I noticed a pretty clear difference in how clients were responding to the added attention in discovery meetings, throughout project management and the overall focus on details of product launches. It was clear that not only in my local market, but even in larger markets customers were not used to this type of service from their providers, specifically in the web development & management space.

It helped me keep customers and also had an impact on how successful I was in selling new products to current customers. This grew the lifetime value of each new account. Common sense & instincts naturally told me to increase focus here. Stick with what’s working and level up…

I began pushing this ideology more & more on team members. Fundamentals like: every client needs to feel like they’re your only client, immediately responding to emails, being direct when confronting problems or complications, transparent about timeframes, not leaking timelines weeks overdue, constantly contributing new ideas, reporting clear analytics and data reports on performance. These are only a few among many that startups can lose focus on as they grow, or are simply unable to scale accordingly as their client services list grows.

I was always fascinated by super successful customer centric companies like Amazon and how focused their culture was on the customer. Moreso how this culture built the company.

Bezos says, “The No. 1 thing that has made us successful by far is obsessive compulsive focus on the customer as opposed to obsession over the competitor.” See the full portion of the interview below.

In my particular industry, digital advertising & software development, the service side tends to be really, really bad. I know this by constantly talking with frustrated VP’s & Marketing Directors. Where service unions with creative, results and quality – it’s even worse. That’s one of the reasons I’ve stuck around, I feel we execute exceptionally on all three, with healthy room to improve of course.

Our success model is as follows: Customer, Product, Employee, Company, Founder.

Founders eat last, as they say. I really agree with this, how can you grow a company, especially a bootstrapped startup, if you are taking large % of profits out of it and putting it in your own pocket instead of investing into new growth? And yes, employees have to be willing to sacrifice for a superior customer experience and product quality. This ecosystem only makes their job more valuable over time.

OK, back to the customer and my question: Can customer service alone be a true differentiator?

To help answer this let’s look at Peter Thiel’s definition on what it takes to achieve true differentiation to the point of “escaping competition altogether,” which he argues all businesses should aim to do. In his book ‘Zero To One,’ he defines this (escaping competition) as being 10 times better than second best. Now, he’s mostly referring to something like proprietary software, which is a lot different than something so intangible as customer service… but I’m saying the idea can still apply.

In order to achieve absolute and total advantage over competitors, we’d have to be 10 times better when it comes to all facets of customer service.

Compared to consumer facing companies who potentially have thousands of users or customers, this should be significantly easier for a digital agency with a B2B client services model. I don’t know that there’s any way to measure this but for a bit of perspective, to be 10 times better we’d have to:

Respond to emails in 10 minutes instead of 2 hours
Troubleshoot and fix breaks/errors in 1 hour vs. half a day
Never give a client an excuse vs. 10 excuses
Etc, etc. So, that’s essentially the goal across the full customer service spectrum. Executing this as we continue to scale but making sure it’s embedded in the organizations core, so it becomes a key element to our scale – not something we just have to keep up with. As founder, this IS the most important facet of our growing culture. The recent data reported by McKinsey & Company (below) affirms that this will give us an edge and isn’t uber-stressed by other agencies, who may choose a product centric or internal brand building approach instead.

Perhaps because we’re still small I can afford this luxury, but this is one of the keen advantages startup companies have over larger corporate players. The larger a company a gets, the less agile they become by definition. Bureaucratic structures become stiff and bulky, putting multiple players in the middle of what used to be a seamless customer interaction. While many chips are stacked against startups from the get, this is not one of them and what I’ve defined as a distinct advantages over larger agencies. I aim to keep this agile mindset even as the company continues to grow.

Of course customer service differentiation alone still probably wouldn’t be enough to achieve the level of growth we need. What Peter Thiel also alludes to is that the more proprietary technology a company can create & own, the more valuable it becomes. This is also a transformational shift in strategy moving forward, in building new software that we alone own and operate as opposed to strictly doing this as a service for clients. Stay tuned.