Differentiation from Others, and What Really Matters

In the context of customer perceived value, the competition has never been more felt than in our present time where consumers are more informed than ever before, and their loyalty may be more tentative than ever before as a result of this availability of information.   Although the framework of customer-perceived value has been around for more than a decade, its focus has intensified as the shift from target marketing to value based marketing is now the primary emphasis among firms aiming at customer loyalty.  What’s more, emphasis alone does not appear to be enough,

A customer-focused corporate culture, epitomized by the behavior of the CEO, is often a key factor in allowing companies to prioritize customers’ interests in the face of competing pressures: Intuit, Southwest Airlines and Cisco are all well-known examples…Yet, despite such widespread acceptance of the basic theory and so many laudable examples of it being put into practice, why do so many customers feel let down by companies? (Barwise & Meehan, 2005).

According to the American Customer Satisfaction Index, the ACSI index has fallen to its “biggest slump since 2008” (ACSI, 2011), yet among some product and service providers, scores have never been higher.  However,

Even though the economic recovery has gained a bit more momentum as of late, it remains sluggish. With low job creation and deteriorating customer satisfaction, as tracked by the American Customer Satisfaction Index (ACSI), the uncertainty of what will happen to consumer demand is not going away (ACSI, 2011).

This is not surprising considering the corresponding slumps on the graph above with the periods of, or just following economic recession.  With 1994 as the baseline for measurement, followed by a dramatic decrease, and somewhere around 1999 being the inception of a customer-perceived value model, the pattern seems to be continuously trending positive on an overall scale, with cyclical periods of slump such as our present time.  Where this really gets interesting is the inconsistency that exists among industries and competitors when you drill down into the source data.  Generally, 1994 was the baseline measurement but internet based business has only provided data since the year 2000.  I selected four broad categories below:

E-Commerce includes Charles Schwab, Fidelity, TD Ameritrade, E*Trade and others.

Internet Retail includes nearly everyone you would expect such as Amazon, Netflix, Newegg, Overstock, eBay, Buy.com and many others.

Retail Trade includes stores such as Nordstrom, Kohl’s, J.C. Penney, Dillard’s, Target, Macy’s, Sears, Wal-Mart and other similar brick and mortar stores.  And finally, Supermarkets:

The important takeaway of course is, what does this tell us?  According to Kotler and Keller,

Successful marketing companies invert the (org. chart pyramid). At the top are customers; next in importance are frontline people who meet, serve, and satisfy customers; under them are the middle managers, whose job is to support the frontline people so they can serve customers well; and at the base is top management, whose job is to hire and support good middle managers (2009).

And how does this correspond to some of the measurements above, then translate into customer loyalty?  It is clear that although satisfaction is a major component, satisfaction alone will not retain customers.  One method is tying customer satisfaction to specific relationship oriented benefits that are important to particular customers.  Another is ratcheting up the value of existing customers through additional services, longevity, answering customer inquiries, and shifting resources to high value customers (Kotler & Keller, 2009).  These methods are accomplished by both service to the customers, and technology that enables the measurement of service and profitability.  This profitability is expressed using the customer lifetime value (CLV) using standard present value calculations, while the service is measured and managed using customer relationship management (CRM).  But whatever method is appropriate for a given organization, they are all working toward something inherently personal, and speak to relationships.  These relationships are the key to present and future profitability.


(2011). ACSI Commentary February 2011. American Customer Satisfaction Index. Retrieved April 14, 2011 from http://www.theacsi.org/index.php?option=com_content&task=view&id=241&Itemid=264

(2011). February 2011 and Historical ACSI Scores. American Customer Satisfaction Index. Retrieved April 14, 2011 from http://www.theacsi.org/index.php?option=com_content&task=view&id=241&Itemid=264

Barwise, P., & Meehan, S. n. (2005). The myth of differentiation. International Commerce Review : ECR Journal, 5(1), 16. Retrieved fromhttp://search.proquest.com/docview/199561306?accountid=10355

Kotler, P., & Keller, K. (2009). Marketing Management (13th ed.). Upper Saddle River, NJ: Pearson Education, Inc.

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