Identifying your competitors is a more elusive quest than it once was, because comparing your organization with directly related businesses is no longer the whole story.
Exceptional customer experiences raise the bar every day, and we know the consumer makes little distinction between sectors, which is the basis of our thinking on Liquid Expectations, a framework that describes the changing face of competition when customer expectations are fluid across industries.
Each time customers see evidence of design and technology that makes their lives easier, they expect to find it everywhere. In a recent Accenture survey, 76 percent of CEOs agreed that they needed to be more proactive in disrupting their own industry. We’ve used our Liquid Expectations model to help hundreds of clients identify who and what they should really have their eye on—and this exercise becomes ever more important as the pace of change continues to accelerate.
Let’s take a moment to explore how we define competition, then we’ll look at what to do about it.
Through the customers’ eyes
We looked at the world as customers see it, categorizing competition into three tranches:
Direct competition, the traditional focus for marketers, are those traditional and emerging providers who sell similar products and services as you. For instance, Tesla is a relatively new direct competitor in the automobile industry.
Experiential competition means organizations which offer an experience that effectively makes your product or service redundant. For example, self-driving cars might make it unnecessary to have auto insurance. While not direct competitors, they could significantly impact a tangentially related industry.
Perceptual competitors, the most amorphous (and interesting) of the three, are those competing to shape experiences that set new expectations across sectors. And they pose a more acute competitive threat than many marketers have yet realized.
Today’s perceptual competitors
Previously, our research identified companies like Apple, Uber and Sonos as the top perceptual competitors, but our research now suggests we look at businesses like Netflix, Spotify and Amazon. Customers love them, and with good reason.
Amazon’s delivery windows (from two days to one hour) raise customers’ expectations for immediacy, but this is about more than delivery: it’s also surpassing communication standards. I’m texted five seconds after a package lands on my stoop—yes, five seconds.
Netflix has bridged devices, locations and connectivity to make its services accessible at all times. In so doing, Netflix has made itself dependable and its customers loyal (perhaps even dependent?).
Through Follow Friends, Discover Weekly and expert curation, Spotify’s users feel their service genuinely knows them. They don’t much care how; what they care about is a service that feels magical, constantly refreshing their sound world.
Flip the script
The key to raising our game lies in looking at perceptual competition not simply as a threat but as market insight for new opportunity. We use our Love Index to track how perceptual competitors push expectations—and the receptivity to the expectation boundaries—and we convert our learnings into market insight.
The best innovation opportunities are often borne out of a deep understanding of the expectation chasm between consumers’ collective expectations and what the best in your industry provides.
Let’s look at how this could work in the healthcare industry. What if a hospital could deliver personalized care that meets a patient’s holistic needs and the person’s human needs?
Our research revealed a common complaint: “I have to keep repeating myself every time I speak to someone different.” If we combined technology like the Disney MagicBands or the Carnival Medallion as the new hospital tag, we could surface profiles and preferences to improve bedside approaches, which would be a huge leap toward a more personal interaction.
The key to future differentiation is to look outside, bring what we learn in and let it inform our next move. What drives loyalty and changes in purchasing behavior? Our research points not to pricing or advertising, but to customer experience.
We’re all in pursuit of lasting differentiation, but, as things currently stand, too many organizations are taking the wrong route. The winning formula is not to pick a single initiative. Success demands commitment to continuously developing your experience at a rate commensurate with that of evolving customer expectations.
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