by Doug Tanoury
Date Published May 23, 2012 - Last Updated May 11, 2016


Most businesses claim to use their customer service organizations as key differentiators in creating competitive advantage in the marketplace, but this claim does not withstand closer analysis. The service the vast majority of these companies provide is actually the same as their competitors, so the question is, what’s the difference? Where does the differentiation come in?

Customer service has become an undifferentiated commodity. It is a necessity—the price of doing business—just like building, utility, and labor costs. And customer service’s stakes are just as high, as failure in just one of the many areas of quality (quantitative or qualitative) is a failure in the overall customer experience. The sheer complexity associated with managing all aspects of the customer experience renders most organizations’ customer management activities merely mediocre.

The figure below illustrates some common aspects of quantitative and qualitative quality in customer management activities. Most customer service operations never reach the level of sophistication required to achieve even adequate levels of quantitative and qualitative quality. For these companies, customer service is an anchor that weighs down the organization by driving up costs and inhibiting revenue generation. Of those organizations that do achieve operational excellence, success is a hollow victory, because they’re providing the same service as every other company, they’re just better at it. Nothing sets them apart; their customers aren’t dissatisfied, they’re merely satisfied. But simple satisfaction is not a true differentiator. True differentiation comes from surprising and delighting the customer. And services, like products, benefit from innovation. It is that unexpected touch, that something different, that creates a competitive advantage.

Service Innovation

The secret to service delivery success is putting resources not toward what other companies are doing, but into innovative service that will surprise and satisfy your customers. But where do you start? Think about the self-service applications or interactive voice response (IVR) systems you’ve used or encountered; these are rarely designed from the customer’s point of view. Therefore, always start with the customer. Look at the service from the customer’s perspective; try to think like the customer. The litmus test of any service process or action should be the following question: Does it serve the customer or enhance the customer experience? If not, don’t do it. Applying this rule to every customer contact and all related processes will drastically alter how an organization interacts with its customers, which is the foundation of service ingenuity.

Next, review your industry, your competitors, and your own company to identify customers’ unmet service needs. Developing new solutions to old problems and breaking away from the pack (i.e., doing what everyone else is doing and also doing what you have done in the past) will put you on the road to service innovation.

As we have noted, customers are the real power behind service innovation, so you must solicit routine feedback and listen carefully what they say. This is one of the most important stages in the process, and it can affect your overall success or failure. So much of what we do is based on what we think our customers want, not on what they have told us they want. This information can be gathered through customer focus groups, interviews, meetings, and surveys. Detailed analysis of this feedback will give you a list of actionable problems; very often, when sufficient data has been gathered, it will point to specific problem areas, such as order entry, fulfillment, access, staff, etc.

Customer response is one of the most accurate measures of the effectiveness of service innovation. (Sales revenue is another; customer satisfaction and sales revenue are positively correlated, with a rise in one being indicative of a rise in the other.) All of the tools and techniques you used to solicit feedback at the beginning of the service innovation process should be reapplied periodically to measure results and form the inputs to move forward along the road to service innovation.

Service Analysis

Once you’ve engaged the customer, evaluate current service practices across your industry and markets; in particular, your competitors’ service practices. Then, objectively assess your own company’s service practices. This goes beyond benchmarking, for you don’t want to merely compare your service practices with those of your competitors. The purpose here is to address design gaps and implement changes that no one else has, either within your company or your competitors’ companies.

Direct observation and detailed analysis of performance metrics and process information are the focus of this stage of service innovation. It is important to focus these efforts on capturing enough information to enable the design stage, which is data-driven. For example, listen to the IVR menu options and scripts for your competitors and your own company, then map and measure their effectiveness. Document the patterns of customer choices, as well as where and how they input their choices. This same analysis should be performed at every point of customer interaction—agent staff, web, sales, etc. Your current service delivery practices must be studied and analyzed in detail before the service design stage can begin.

Service Design

In the design phase, service innovations should be based on the hard data collected in the analysis phase, not on opinion or conjecture. Likewise, they should be based on your customers’ experience, not on internal agendas. Don’t let processes or organizational structures erect barriers to service.

Even more challenging than designing innovative services is implementing them. It takes a great deal of courage and high risk tolerance to introduce a concept that is totally novel and dramatically different from what your competitors are doing. Successful innovation not only requires management fortitude, but also support from the highest executive levels.

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Service innovation creates service leaders. It can also reduce costs and increases revenue. But, to be successful, service innovation must be customer-focused. It cannot be held hostage to a corporate agenda, as innovation can only occur when management trades the corporate agenda for the customer agenda.

There are no trade secrets when it comes to service innovation. Just one simple rule: Think like your customer.


Doug Tanoury is a management consultant at Major Oak Consulting, a company that specializes in optimizing and improving the customer experience. He has published a number of white papers and articles that focus on customer relationship management, ways to manage customer contact centers more effectively, and innovative ways to improve the customer experience. Doug is also a customer management expert, having held operations and management positions at AT&T, EDS, MCI, Technology Solutions Company, eLoyalty, and Siebel Systems.

Tag(s): customer service, people, process, business of support, practices and processes


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