Customer Satisfaction – Measuring Competitive Position
(Part 3 of 4 – Customer Satisfaction Series)
In our previous correspondence, we discussed the value in having increased knowledge of your current customer base by understanding two of the four dimensions of customer satisfaction. Knowing how well your products and services align with your customers current and future requirements helps focus a large portion of your growth strategy. The third dimension of meaningful customer satisfaction research, competitive position, provides a clear picture of your performance against competition.
Competitive position can be determined through the use of the “best alternate supplier” or “BAS”. Each respondent is asked to rate the performance of your company and are also asked to rate their best alternate supplier on the same attribute. BAS is defined as the one supplier that the respondent would choose if they did not buy from your company. This creates a best-in-class competitor that does not actually exist but defines the benchmark for the customer survey sample. Figure 1 shows a line graph comparison between your company and the BAS. By asking each customer to identify their choice of BAS (specific company), you can also develop competitor-specific ratings. Figure 2 shows the difference in performance (or performance gaps) of the BAS verses your company. Attributes where your company’s performance is behind competition are represented with red bars, while blue bars indicate performance ahead of competition.
GROWING MARKET SHARE
In general, the company offering a higher value will always win. In an open market with full information, customers will gravitate toward the highest value. There are of course some limitations to that axiom such as geographic or freight restrictions, trade tariffs and other import/export market controls, sole supplier restrictions and others. Any measurement of value must include competition – whether direct or indirect. Customers always make a trade-off trying to get the best deal. Usually the trade-off is between direct competitors. If a direct competitor is not available, the best alternate may be self-manufacture, a substitute product, or even a new source that the customer will develop. As such, trade-offs need to be incorporated into a value measurement program.
VALUE OF UNDERSTANDING YOU COMPETITIVE POSITION
Understanding relative strengths and weaknesses is an important aspect of competitive intelligence. Developing a solid understanding of which critical product and service attributes drive satisfaction and value in the market is the first step. This, coupled with the knowledge of your company’s performance as well as competitors’ performance on these critical attributes provides a clear picture of how well you compete on the key drivers of customer satisfaction and value. Developing this depth of competitive intelligence through proven customer satisfaction research can create an invaluable competitive advantage, providing unparalleled insight when making strategic decisions.