David vs Goliath: How to use amazing customer experiences to remain competitive when the BIG companies start stealing your customers

customer experience competitive strategy

Is your company losing customers to a bigger, more recognized competitor? With the likes of Amazon, IBM, Walmart and Starbucks always looking to steal market share, it is now harder than ever to remain competitive.

In one area of Chicago, the opening of one Walmart resulted in 26% of the local businesses to close. And it doesn’t end there. The same story is playing out with businesses around the world being affected by companies like Amazon and Starbucks. Heck, Amazon is even stealing customers from Walmart, so no one is immune!

But, fortunately for you there is a way you can remain competitive and ward off the big competitors.

How?

Being small gives you one big advantage. You can be agile and create personalized and useful customer experiences that keep your customers loyal.

In this blog post, I’ll explore three David vs. Goliath examples of how companies have been able to compete against the BIG BOYS by focusing on customer experience.

You’ll learn practical customer experience strategies that you can use today to remain competitive and establish a strong point of differentiation.

1. Grainger exploring digital technologies to compete against AmazonSupply

grainger mobile site

Grainger is exploring mobile technology to stay competitive.

Grainger is an industrial supply company that sells a range of products from motors to plumbing to safety supplies. The company generates the majority of its revenue from business to business sales rather than consumer sales.

For the last 80 years or so the company has dominated the US market, recording $9.4 billion annual revenue. But the good times have been threatened by Amazon’s aggressive AmazonSupply wholesale business venture.

By leveraging its world class e-commerce technology, hugely successful fulfilment and logistics capabilities and aggressive pricing strategy, Amazon has been able to steal a reasonable share of the lucrative wholesale and distribution market.

To combat this new entrant into the market, Grainger has been quietly working on ways it can remain competitive and establish a new advantage.

A spokesperson from Grainger had this to say about AmazonSupply:  “While we don’t comment specifically on other companies, it’s important to note that Grainger’s multichannel business model and our target customers differ significantly from how online-only retailers serve the market.”

Industry experts don’t buy Grainger’s cool approach. “They’re planning, and they don’t want Amazon to know what they’re thinking,” says Barry Lawrence, program director of industrial distribution at Texas A&M University. He expects the company will start using new technologies like mobile apps and loyalty programs for purchasing managers to make it easier for them to do business with Grainger. “Grainger’s going to build some firewalls up against Amazon,” he says.

Related: Amazon’s Wholesale Slaughter: Jeff Bezos’ $8 Trillion B2B Bet

And this is exactly what Grainger will need to do. By leveraging new digital technologies, they can extend the customer experience beyond the bare product they are offering. If they can make it easy for purchasing managers to deal with their company, they’ll go a long way to retaining customers.

Key takeaways for your company:

  • Keep a close eye on your competition and devise strategies to combat their moves into your market – be proactive, not reactive.
  • Leverage digital customer experiences to extend your offering. Think about using mobile apps to add convenience and websites to provide more information.
  • No company is immune to someone disrupting their market – always be looking ahead and thinking about ways you can create a competitive advantage.

2. Walmart focuses on distribution to compete against Amazon

Walmart Distribution Center

Walmart distribution center – it’s big!

Walmart is an American multinational that runs large discount department stores and warehouse stores. The company boasted $476 billion dollars in revenue in 2013, holding a significant market share in the US.

However, in recent times, Walmart has had to fend off stiff competition from online retailer, Amazon. With their low-cost model and aggressive growth strategy, Amazon has been able to snag a fair portion of the market – even if it meant losing money in the short run. Through leveraging a superior e-commerce platform, Amazon has won over customers by creating a seamless online buying experience.

You can order anything you want via Amazon and receive it within two days. And those delivery times are set to improve over the next few years with the announcement of Amazon revamping their delivery network and testing their new delivery vans Christmas holiday debacle.

So how can Walmart compete against a competitor like this? Remember, Walmart has been one of the leaders in retail for the past 50 years, sweeping through towns and opening up big discount stores – driving big growth in the process.

Well, it has been detailed by the Wall Street Journal, that the retail giant is attempting to step up the company’s online shopping footprint by increasing the number of online-only, dedicated distribution centers around the country. Walmart global e-commerce CEO Neil Ashe has said the company has recently opened a new distribution facility in Fort Worth, Texas and plans to open another one in Pennsylvania.

Mike Flacy, writer at DigitalTrends.com says that the facility is expected to add an additional 350 jobs to the Lehigh Valley area of Pennsylvania.  “Targeting specific regions of the country, this should allow Walmart to ship online orders more quickly to consumers in the Northeast and the Southwest,” he says.

If all goes to plan, Ashe says that Walmart will be able to compete with Amazon’s speedy delivery times within two years. This might be perceived as a slow reaction to a competitor stealing business, but in Walmart’s case, they had a pretty aggressive competitor in Amazon.

By focusing on creating a better delivery experience for Walmart customers, the company is trying to combat the strengths of Amazon and put themselves in a position to remain competitive and hold onto market share.

Key takeaways for your company:

  • Sometimes you’re competitors will use customer experience as a point of differentiation over your offering. You need to be agile and find a way to deliver the same experience and bring the status quo back to a level playing field.
  • Don’t be afraid to match your competitor’s strategies. If a competitor starts creating a better experience, find a way to match it or better it.
  • Fulfillment and distribution offers a great opportunity for all kinds of companies. As internet technologies merge with distribution technologies, there are lots of ways that you can create unique experiences that can make your customers go WOW. How could you take advantage of this?

Related: Walmart puts more focus on distribution to compete online with Amazon

3. Independent coffee shops use unique experiences to compete against Starbucks

PJs coffee - unique customer experience

A photo of PJ’s Coffee in New Orleans – a unique experience that  extends beyond a cup of coffee.

Independent coffee shops like PJ’s Coffee have been serving high quality, fresh coffee for years. When the big chains like Starbucks expanded aggressively in the 90’ and early 2000’s, these shops had to adapt or die.

Starbucks has an established brand and uses it well when they enter new markets. Customers know what they’re going to get at a Starbucks, and that works to their favor for the average coffee drinker. The company also does a great job of marketing and developing new products. Adriana Lopez, Forbes contributor, sums it up quite well: “[Large coffee chains] are depending on new ideas and concepts to keep them competing advantageously in the saturated market, by offering more food options, loyalty programs, and new drink recipes to keep their patrons coming back.”

This has worked pretty well in the past, but in recent years the independent coffee shops like PJ’s Coffee have adapted well to remain competitive. Lopez sums up PJ’s customer experience initiatives with these three points. Let’s break each of them up into more detail.

PJ’s focus on the basics, they create high-quality, fresh coffee.

“[PJ’s] are sticking to the basics of coffee consumption, and focusing solely on the simple act of infusing copious amounts of caffeine into the blood stream, with the goal of offering high quality products over quantity and variety,” says Lopez. This is a great example of how a business can use their agility to offer a superior product. For coffee drinkers, a superior product will keep them coming back time and time again.

PJ’s creates a niche reputation that extends beyond the basic cup of coffee.

“They have developed a niche reputation for their famous iced coffee that comes from applying their signature daily brewing process,” says Lopez. When you enter every interaction, you expect a specific experience. For Starbucks, it’s pretty standardized and consistent across the world. PJ’s jumped on the opportunity create an experience around their unique style of brewing. This makes them stand out against the large chains. Customers enter PJ’s and they know the coffee is the freshest in town because of how the company sources the beans and prepares the coffee.

PJ’s understand their customers want unique experiences tailored to them.

“They take great pride in making sure that PJ’s stays true to the New Orleans brand, even as they continue to expand outside the region,” says Lopez. In each of the stores you won’t find the same décor and the same photos. Franchisee owners are given flexibility in creating custom experiences at their locations. Helga Fair, PJ’s top franchise owner in New Orleans explains: “My shop is located in this beautiful, old building in the arts district, so I feel the need to have a different décor. We have photos of great jazz musicians from New Orleans…”

Key takeaways for your company:

  • Your customers want personalized experiences tailored to them – get to understand what they want and create an experience that sets you apart from competitors.
  • Don’t think you are limited to your product offering – brainstorm ways you can extend beyond your bare product and offer customers additional value.
  • Smaller companies have more flexibility to be agile with their customer experiences. PJ’s leveraged their New Orleans background, what can you do to innovate against your competitors?

Next step: Develop a customer experience strategy and win the battle against competitors

What are you waiting for?

Being small gives you one big advantage. You can be agile.

Use this advantage to create personalized, useful experiences that keep customers happy and coming back for more. This loyalty will help you ward of attempts from the big Goliath companies when they enter your market and steal your customers.

For some more reading, I recommend:

Tagged: Customer Experience

About Ross Beard

Ross Beard was on the marketing team at Client Heartbeat, the simple customer feedback tool. Learn how Client Heartbeat makes improving customer satisfaction easy.

  • http://www.fastpack.net Fastpack

    Great article, with great examples. Thanks so much!



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