I have noticed that many business strategists talk about the importance of innovation and the need for a unique selling proposition to differentiate the business from its competition.
Innovation underpins competitive advantage, which in turn creates profit. Being indistinguishable from everyone else means operating with a micro-thin profit margin, if not losses.
The critical first question for any would-be innovator should not be how but where. Deciding where to innovate – and where not to – is a strategic exercise requiring a clear
understanding of a company’s existing and potential sources of competitive advantage.
The target should be one in which a company has an opportunity to establish a meaningful and defensible point of differentiation. However, in reality, differentiation often does not mean truly unique, just not the same as the majority of a company’s competitors.
When developing the Mortgage Intelligence proposition, we identified broker service as a way to achieve sustainable differen-tiation. Many organisations understand the importance of providing good service but most do not grasp what is required to deliver it. I think excellent service delivery requires explicitly defining what customers want, meas-uring how well you deliver on requirements and hiring the type of people who are suited to providing good service.
What brokers value most in terms of service are two key attributes – reliability and responsiveness. Reliability means being dependable, accurate and honest and delivering on your commitments. Responsiveness means being eager to help, offering an appropriate number of choices, and demonstrating both flexibility and simplicityCreating sustainable differentiation is a daunting task but providing great serv-ice gives a business a hard to replicate value proposition.
At the heart of the issue is focus. Marketing should focus not on product offerings but on customers. In turn, some managers understandably presume that creating an army of satisfied customers is an obvious way to build a business. But satisfied customers are not necessarily good customers. Satisfaction is a measure of what people say whereas loyalty is a measure of what they do. Many managers still use customer satisfaction and customer loyalty interchangeably as though they were synonyms.
Furthermore, companies perceived as being only 1 per cent better or those that get a headstart and can use this initial advantage to gain even more reputation and market share may overtake all the others. It is not dissimilar to an Olympic 100 metre final, in that the difference between winning and losing is always very small. But the winner invariably gets all the fame and fortune that goes with being a winner – all because of that extra 1 per cent. So, whether in sport or the mortgage industry, small differences can create the big difference.
Sally Laker is managing director of Mortgage Intelligence