The Three Strategic Ways Businesses Compete
| Umberto Fedeli
You can't be everything to everyone. Competing in business, you choose an approach, so to speak. Do you offer the most value at the best price in the market? In other words, are you low cost? Or are you innovative and cutting edge? Is your customer service so superior you beat out competitors no matter the price because people enjoy doing business with you and/or you have such special relationships that being low cost isn’t the most important factor?
Regardless of the approach, smart businesses are always on the move, finding better ways to connect with people and to offer their products and services. During a mid-term state of the agency address to The Fedeli Group, I share the latest numbers and other key business information with associates. These meetings give us an opportunity to reflect on where we are strong and to identify where we can improve and move the needle for the remainder of the year. I quoted Warren Buffet, whose 50th anniversary report warned of the ABCs: Arrogance, Bureaucracy and Complacency. They destroy a business. And Charlie Munger has always said “Be careful of what destroys men; liquor, ladies and leverage”.
Warren Buffet’s ABCs apply to your personal life, too. If you are arrogant in business, you’ll have the same problems in life. Cheat in business and you’re cheating in life. Figure out who you are and where you want to go. What strategic way will you compete in the market? Play to your strengths. Focus on what you’re good at, and you then force competitors to play to your strengths rather than vice versa. You make them compete where you are strong, whether that is price/value, innovation, or customer service.
Best price, best value, low cost
Costco stores aim to provide customers with the best value and lowest cost in the market. It has won loyal business from people who seek just that. Costco isn’t trying to be trendy or innovative.
It knows its customer service must be up to par, but it’s not trying to be Nordstrom. The business angle is value; consumers become Costco members to access that value. Costco plays to its strength.
Apple customers pay more for Apple products than competing technology because of the company’s strategic edge as an innovator in the market. Apple is innovation.
Nordstrom’s premiere customer service gives every shopper a personal experience. It goes above and beyond for customers. Every customer is important—every shopper gets special touches that make buying at this retailer a pleasure. I was pleasantly surprised once when I was well over 300 lbs. and the sales associate in Nordstrom pointed me in the direction of what he called the “generous cut”. What a great example of outstanding customer service. Why offend someone you do business with when there is always a way to be kind, thoughtful, and polite.
Are there people who take advantage of Nordstrom’s accommodating customer service approach? Of course, but they will not stop doing what’s right for customers because of the 10 percent who do wrong. Nordstrom knows 90 percent of its shoppers really appreciate what the store offers and choose it over others because of the personal experience they get.