“The customer is king” has long been proclaimed by businesses large and small the world over. But how many customers feel like royalty today? Ask people about their purchasing experiences and you will hear stories in which they were treated more like serfs than kings. One will tell you about the lights that failed in his newly designed kitchen; another will complain about her attempt to get service through a call center; a third will sigh about the time her wireless company gave her a cell phone to use overseas that did not work; and a fourth will describe how he had to return to his car dealer a second time so that the mechanics could fix their own mistake. These tales of woe are endless, and not even the best, most admired companies escape mention.
Fifty years after Peter Drucker first proposed the “marketing concept” — the idea that companies can make their shareholders rich by meeting customers’ needs — there is still a large gap between theory and practice. We lay much of the blame for this on companies’ obsession with uniqueness and differentiation. According to conventional wisdom, businesses must offer something unique in order to compete successfully; the rub is that this task is becoming more and more difficult as products and services become more and more similar. The only solutions, this line of thinking continues, are to differentiate your offerings through branding and the communication of emotional values or to completely change your industry’s rules.
While there is some truth in each of those assertions, we believe they have been overstated and overgeneralized and have, as an unfortunate result, distracted firms from listening to their customers and consistently delivering on the basics. Our analysis of a wide variety of companies leads us to conclude that what customers want is not more differentiation but products and services that are simply better at providing generic “category benefits” — those routine benefits customers expect to get when they make a purchase. In short, they want things to work as advertised.
A prime example of a company that meets basic needs at the highest level is Toyota, which has a market capitalization greater than that of General Motors, Ford and DaimlerChrysler combined and is the most admired carmaker in the world.