To remain competitive today, a company needs to make and deliver a quality product or service, and it needs to understand and relate to the customer being sold to. We can call these two basic capabilities product competence and customer competence, and both are critical. If you are product competent, you deliver a reasonably good product or service, on time, in such a way that it doesn't need a lot of maintenance, repair, correction, or undue attention from the customer just to meet the need or solve the problem it is designed for. If you are customer competent you interact with customers efficiently in order to better understand each customer's individual needs, adjusting your product or service as necessary.
Product competence, of course, is not just about the physical product, but is fused with delivering service, as well. Fashioning the "offer" for a customer requires organizing the firm, procuring the resources, running a factory, scheduling jobs, managing and training people, keeping the books, evaluating investments, and deploying capital. There was a time, perhaps, when product quality varied so much among companies that simply delivering a quality product could often differentiate a business, and history is full of well-meaning companies that failed because of product incompetence.
Today, however, no business can persist for long without having relatively high-quality products-that is, products that do what the firm says they're going to do, and don't break or malfunction with normal use. There are varieties in terms of quality and pricing in most categories, but competition is a great leveler. Without pricing differences, it would be just as difficult to carve out a niche with higher-than-normal product quality as it would be to remain in business with lower-than-normal quality. Instead, a company has to have product and service quality that is generally on a par with its immediate competitive set, and this standard has increased enough over the past century that it's hard today to find truly substandard products in most developed economies. Subpar products just aren't around long enough to be an issue. If you don't have at least a basic level of product competence your business won't be operating for very long and, of course, no one is going to trust you either.
Instead, the sort of competence most often lacking in a business today has to do with knowledge of the customer-what the customer actually needs (as opposed to what he's buying), how he sees the world, and how he's different from other customers. When a customer decides to buy a product or service of any kind, it's not because he is enamored with the physical product or the elements of service. It's not because he loves your store or your website or even your friendly people. The basis of the customer's motivation is that he has some need to be met, some problem to be solved. Your product or service is simply his tool for accomplishing this task. As Harvard Business School Professor Clayton Christensen famously suggests, your customer is simply hiring your product to do a job. Customer competence requires you to truly understand what job the customer is trying to accomplish, from the customer's own perspective.
Before assembly lines and mass production, when virtually all commerce necessarily involved face-to-face interactions with merchants, the best merchants were those who maintained the strongest relationships with their customers, remembering their personal specifications and attending to their needs with care. Product competence was in the hands of the craftsman, and customer competence was in the personality of the business proprietor. This sort of personalized manufacturing and service passed out of existence because it was far too expensive to compete against industrialized production, but computer technology has once again made it possible. Today we might call it customer relationship management (CRM), or one-to-one marketing, or customer experience management, or customer centricity-but no matter what you call it, the fact is that to be competitive today a company must have some degree of customer competence, in addition to product competence. As with product competence, competitive success doesn't require a firm to be the very best at remembering and interacting with customers individually, but it does require that it not be significantly behind its competitors.
Having said that simply maintaining a par performance for product and customer competence should be good enough, it's still important to acknowledge that most firms could benefit substantially, in financial terms, simply by improving their performance in either area. Both types of competence are required in order to satisfy customers. And consumer research shows that while improvements in customer satisfaction do generate modest improvements in customer loyalty, what really generates greater loyalty is reducing or eliminating customer dissatisfaction. Rather than simply figuring out how to do a better and better job of "surprise and delight" for customers, in other words, most firms will be better off if they could simply eliminate the problems that undermine a customer's satisfaction-nuisances, redundancies, or extra work on the customer's part. Customer competence, for the most part, simply means making it easy to be a customer.