MIT Sloan Management Review

Many companies make incremental improvements to their service offerings, but few succeed in creating service innovations that generate new markets or reshape existing ones. To move in that direction, executives must understand the different types of market-creating service innovations as well as the nine factors that enable these innovations.

Using net promoter score, a metric that, in most industries, correlates well with a company's growth rate, managers can evaluate how investments aimed at improving the customer experience actually affect the bottom line.

Unlike static demographic and psychographic techniques, identity marketing taps into the multilayered and fluid nature of who customers are and who they want to be.

Early in our careers, when we worked for the General Electric Co. in Schenectady, New York, there was no road map for a young manager desperately trying to find ways to lead. One had to experiment, employing various mechanisms such as motivational sessions, inventory control, budgetary control and information management. But none of those, alone [...]

Even the best companies let their customers down sometimes, and many disappoint frequently. The authors lay much of the blame for this on companies’ obsession with uniqueness and differentiation. According to their analysis, companies are too quick to dismiss “category benefits” as a source of advantage. They explain why companies such as Toyota, Cemex, Orange, Medtronic and Sony are successful because they are simply better at offering what customers really want.

As consumers become more informed, companies must go beyond relationship marketing and help customers find the best products for their needs — even if those offerings are from competitors. The author discusses General Motors, General Electric, Qwest and others to illustrate the trend.

The authors provide a systematic framework for thinking through the opportunities and risks inherent in a strategy that seeks services-led growth. Drawing on the concept of customer-activity chains, they explain four paths that companies can follow to create new value for their customers. Prominent examples include Kodak, General Motors, UPS and Nike.

At a time when competitive factors have weakened the power of many storied brands, companies can regain an advantage by acquiring or developing a branded feature, service, program or ingredient. As examples, the author cites Westin Hotels, Krispy Kreme, UPS Supply Chain Solutions and many others.

Businesses are increasingly trying to enhance customers’ experiences, but that’s not easy when dealing with scenarios that are inherently routine. The authors relate how three companies — Jordan’s Furniture, Commerce Bank and Stew Leonard’s — have been successful at injecting fun into seemingly neutral environments.

Although customer satisfaction practices have garnered attention for decades, they are losing effectiveness for companies and their customers. Pointing to the case of Volvo Cars, the author argues that companies expend too much effort fixing what has “gone wrong”