Why some companies succeed without focusing on customers

Ben Wignall, when owner of the Tasmanian firm, Blue Banner Pickles, used to get a lot customer complaints. Each time Ben’s response would be the same – he put his prices up.

The complaints were from supermarkets that were not able to get enough stock of the famous (in Tasmania only) pickled onion brand. Ben figured that if he put up the price it would dampen down demand and the complaints would disappear. He was right – and very profitable. Blue Banner had 90% of the Tasmanian market for pickled onions – a virtual monopoly – and, like other monopolies, it could dictate the terms and not be too concerned about focusing on customers.

Ben was in for a shock when he expanded into other geographic markets in Australia where there was strong competition and his Tasmanian strategy would not work. He hadn’t realized that the remote island state of Tasmania acted as a market fortress where he could act as a monopolist – but not elsewhere. If you have a monopoly you can probably succeed without focusing on customers….

In fact where everyone in an industry provides a poor customer experience it is still possible to be profitable. Forrester’s Customer Experience Index shows this to be the case in the wireless services industry in which all competitors show similarly low scores. Customer experience is not a differentiator and other factors like market footprint and price dictate results in this growth industry. As my college marketing professor used to tell me:

“Even Donald Duck could run a company profitably in a rapid growth market!”

Dominant market leaders can survive offering poor customer experience for a time due to better distribution or a broad product range. Inertia carries these companies through. But a time comes when these factors are not enough to retain leadership. We have seen this with the successful emergence of online (only) banks and online retailers that have decimated competitors in those industries that could not provide a consistent high-level customer experience.

These are some of the reasons why companies can be successful while offering poor customer experience.