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Posted by Rob Brosnan on September 6, 2011
Over the weekend, an experience with Apple prompted me to think about marketing technology’s role in creating economic moats. According to Warren Buffet:
In days of old, a castle was protected by the moat that circled it. The wider the moat, the more easily a castle could be defended, as a wide moat made it very difficult for enemies to approach. A narrow moat did not offer much protection and allowed enemies easy access to the castle. To Buffett, the castle is the business and the moat is the competitive advantage the company has. He wants his managers to continually increase the size of the moats around their castles.
Apple’s retail presence is both a revenue engine and a cornerstone of its customer experience strategy. Retail pulls in average revenue of $10.8 million per store for Q3, 2011, generating the highest retail sales per square foot of all US retailers. Importantly, the stores guarantee the company a beachhead from which the company can educate consumers and resolve problems directly. For the quarter, 73.7 million people visited Apple stores.
In my case, I scheduled a visit on apple.com with my local Apple store after the home button on my iPhone stopped responding. Within half an hour, I left the store with a new phone. No one quibbled, or even asked, about my warranty or purchase records. Later in the day, the company emailed a survey to ask about my experience. Apple’s cross-channel (online and in-store) experience clearly differentiates it from manufacturers that leave customers’ problems to a confusing chain of channel sales, service providers, and warranty servicers. Firms that take the latter approach should note that customers who experience fast problem-resolution are more loyal than those who never experience a problem in the first place.
Not every business can field a retail presence like Apple, but all can use modern cross-channel CRM techniques to deliver a customer experience similar to Apple’s. As Brad Terrell, VP and general manager of Digital Media at Netezza, recently told me, “My customer base has a common thread: a scarcity of appropriate human resources in the context of solving problems. Where they excel is in recognizing that they can create competitive advantage from customer exhaust, i.e., from data.”
CI professionals – with their experience and access to data, analytics, and marketing technology – can play a critical role in delivering competitive advantage. CI pros should start with next-generation techniques, including:
Moats around economic castles can take a variety of forms. CI professionals should not leave moat-making to their peers in brand marketing. Companies that successfully use these techniques can leverage marketing technology to differentiate themselves and create competitive advantage.
I will present at Forrester's Consumer Forum in Chicago, October 27-28. I hope to see you there.
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