What’s at the heart of a good customer-centric business model? We believe that it has four significant components:
1. Ensure that the model is designed to address or mitigate customers’ moments of truth.
2. Ensure that you address those moments of truth with innovative
approaches that take full advantage of available technology.
3. Hone an efficient execution engine that: a) lets you make money
while you’re meeting customers’ moments of truth, and b) builds
barriers to entry through experience, scale, and distance traveled on
the learning curve.
4. Entice customers into contributing value to your business as they
reap the benefits from the products and services you provide
Back in 2003, we described Netflix
as a good example of a company that built its very successful business
by addressing moments of truth in the “I want to watch a movie at my
convenience” scenario.
Netflix’s innovation was to eliminate the guilt
and inconvenience associated with returning rental movies and the
affront of being charged late fees. The new Netflix customer scenario
was a big hit: Pay a monthly fee. Rent as many movies as you want each
month. Return them when you’re done with them and get a new one in the
mail within 2 days. No pain. No fuss. No bother. And a great database
of movies to choose from.
Now that digital
downloads are easy, NetFlix still continues to thrive, having built
customer loyalty by addressing the rental movie convenience issue and
by embracing digital downloads aggressively. Although I have lots of
other choices for digital downloads (on demand from my cable supplier,
Amazon, etc.), I still think of Netflix first when I want to watch a
movie or a television re-run.
Most NetFlix customers now enjoy both forms of movies—the ones they
receive in their physical mailboxes each week and the ones they
download on impulse. (The fact that Netflix is still thriving is
reinforced every time I go to my local U.S. Post Office, which has
three mail slots: Our Town, Out of Town, Netflix.)
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