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experience economy (see Section 1.2.1.1 “From Products to Services to Experiences”) combine the
attributes of both content and container in novel ways to create new value chains.
1.2.1.3 Customer Relationships as a Strategy
Customer relationship strategy is emerging as one of the most important components of corpo-
rate strategy. A well-executed customer relationship strategy can result in a number of quantita-
tive benefits including greater ability to up-sell and cross sell, improved customer retention, and
reduced cost of service and support.
Customer relationship management has emerged as a corporate strategy driven by the follow-
ing factors:
Implosion of product life cycles : This has robbed companies from enjoying the sustained finan-
cial benefits of being product innovators for sustained periods. Competitors introduce alter-
native, substitute, and even improved products much more rapidly.
Explosion of new technologies : They are enabling even nascent players to compete effectively
with established players not only in terms of superior technology but in terms of flexibility,
reliability, maintainability, costs, and so on.
Explosion of new distribution channels : Companies need to effectively integrate interactions
through newer technology-driven channels like the Internet, wireless, telephone, mobile
sales, kiosks, and ATMs.
Explosion of competitors : The convergence of industries like computers, networking and data
communications, TV and print media, and publishing has radically redefined the tradi-
tional boundaries between industries resulting in an explosion of the number and kinds
of competitors (see Section 1.2.1.2 “Convergence: From Marketplaces to Market Spaces”).
Ongoing changes rule the marketplace. The only permanent factor is the customer, and abiding
relationships with the customer alone can buffer the impact of change. Thus, only those organi-
zations that nurture customer relationships can survive product obsolescence and overcome the
onslaught of superior competitors and still manage to maintain profitability.
Traditionally, competitive advantage came from strategies based on following value
determinants:
Cost
Ownership, use, training support, maintenance, and so on
Time
Cycle time, lead time, and so on
Response time
Lead time, number of hand-offs, number of queues, and so on
Flexibility
Customization, options, composition, and so on
Quality
Rework, rejects, yield, and so on
Innovation
New needs, interfaces, add-ons, and so on
Most enterprises have squeezed (and continue to do so) as much as they can from these value deter-
minants in the last few decades. Now, one of the sources for competitive strategy of substantial
value that remains to be exploited in a major way is from the enterprise relationships, especially
customer relationships, which are truly the real source of revenue.
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