A service design project often starts with defining whether the aim is to build a better competitive edge, or to improve a company’s competitiveness. Competitive advantage means the ability to create the best services and products on the market and standing apart from other companies in the same sector. If the goal of service design is to improve the company’s competitiveness, the efforts are more focused on, for example, the optimisation of individual processes and general business development.
The goal of improving your competitive edge is to stand apart within your own market segment as well as in the customers’ minds. By creating a unique concept, you gain a competitive edge and begin seeing changes in the following:
1. Increased likelihood to buy. If you offer great experiences your customers will buy more of your products or services, which has a direct short-term impact on sales. One way or another you will start to see a positive trend in your sales.
2. Increased customer loyalty. Irrespective of your sector and sales cycle length, by analysing your customer base and tailoring your products and services to meet their needs, you can see concrete signs of customer loyalty when the same customers choose your company more frequently than before.
3. More room for price optimisation (better profit margins). Strategic and more long-term observations show that a designed concept, which significantly differs from the prevailing customer service models, presents the company with new opportunities for pricing its products and services. However, this requires the competitive edge of the new product or concept to have been so strongly differentiated from the competitors that the customer no longer directly compares the features of your product or service to those of a competing product or service. Improving your competitive edge in this way frees your product from the fierce price competition, as exemplified in Hellon and Musgrave’s “Baby” project.
4. More effective Word of Mouth. Having your customers recommend your product or service to their friends and family improves your competitive edge. This also has a direct impact on point 1 of this list, meaning that likelihood to buy will increase as recommendations enable people to find and buy your product. If your customers are satisfied with your product or service, it is guaranteed that your customer loyalty and NPS (net promoter score) will improve too. After all, this is hardwired into human behaviour; recommendations and testimonials have a significant impact on the success of products and services. Read more about how we helped a well-known financial services company improve customer loyalty using service design.