If great customer service does create competitive advantage then we should see increased sales in those businesses rated highly for service excellence. We should also see improved profits, and in the case of public companies, a growing share price.
US-based retailer Nordstrom is arguably the most famous in the world for customer service. It’s the stuff of legend. But there has been at least one occasion when even Nordstrom could not make their fantastic customer service work.
According to marketer and author Jack Trout, Nordstrom’s service excellence did not save the legendary retailer from financial troubles. In “Differentiate or Die” Trout cites an article in Business Week published April 19th 1999. Entitled, “Great Service Wasn’t Enough,” the article points out that Nordstrom was experiencing, “weak sales growth,” disappointing profits” and a “volatile stock price” despite its legendary reputation for service.
It’s clear is that customer service on its own does not confer competitive advantage. Should you doubt it, ask yourself when you last heard someone say, “I’m going to the shops to get some service.”
This series of articles explores the role of customer service in competitive strategy.
