Service as Competitive Advantage – An example

Malcolm Gladwell is a fantastic author and I have been reading the Tipping Point where he discusses what creates a sudden and large change in people’s activities. One of the recommendations Gladwell offers is to create ‘stickiness’ where the provider creates a product or service which consumers perceive as preferable to an alternative (Gladwell illustrates this ‘stickiness’ using the example of the television success of Sesame Street and all the research that went into creating ‘stickiness’). Of course ‘stickiness’ is nothing new (think competitive advantage, ‘first mover advantage’ etc.) however its importance and the benefits thereof are significant and Gladwell does a good job of demonstrating the importance of it even although the relevant chapter of the book is a bit long-winded.

So where may we find an example of a company creating ‘stickiness’? In my view, price/cost may be an influencing factor on ‘stickiness’ however does not itself create the sticky factor (Michael Porter, the management guru, described that having a competitive advantage based on price/cost alone is extremely difficult to sustain as a price/cost advantage is relatively simple for a competitor to imitate and the switching costs for consumers remain low when based on price alone). ‘Stickiness’ therefore relates to quality or features. And this is where there is a company in Australia which is exceeding …

Provision of ADSL (Broadband) to homes is a very standard product, especially here is Australia where almost all ADSL uses common copper cables and some infrastructure managed by Telstra. Price and service are therefore two of the major sources of competitive advantage for ADSL providers. It has already been discussed that price/cost isn’t good in creating sustainable competitive advantage so service remains as the key to ‘stickiness’. The ADSL market is extremely crowded (a Google search for ‘ADSL provider sydney’ returns 1,140,000 results) so even average service from ADSL providers won’t suffice; excellence is therefore called for to gain and maintain a ‘stickiness’ where consumers have no desire to move to an alternate ADSL provider.

I believe I have found a company which is leading the way is creating ‘stickiness’ in the very competitive Broadband market. I have used Internode for a few years now and on the very few occasions I have needed to call them for support my expectations have been exceeded. To illustrate how this service excellence relates to sales consider that I was using Skype with Philips VOIP321 phones and needed new phones. Because of the continuous great service from Internode my first call for new phones was to Internode with whom I signed up for their NodePhone VOIP service and purchased two Siemens Gigaset C470 IP phones.

Unfortunately after installing the new phones (which Internode had configured for me before shipping them to me) I was getting the error message ‘Provider registration failed’ on the handset after making a call. I noticed, after a Google search, that other C470 IP phone users with various VOIP providers (including Internode) were getting the same error. I therefore called Internode support and this is where Internode absolutely exceeds:

A call back from Internode technical support resulted in the technician remotely connecting to my modem/router and changing various settings for me which resolved the VOIP problems. Now my Siemens phones and NodePhone VOIP work fine.

There are two aspects of this service which I believe create the ‘stickiness’ factor for Internode:

1. The problem wasn’t with Internode nor VOIP but rather my router/modem setup with which the technician assisted even although he had no obligation to assist.
2. The technician focused on the problem at hand and resolved the error as expediently as possible (whilst being totally professional).

There are many ADSL and VOIP providers and some are less costly than Internode. Internode however deserves even further success through its focus on service quality which creates a ‘stickiness’ which makes them the ADSL, VOIP and related product provider of choice.