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.)