Benchmarking–the practice of comparing one’s performance against other firms in the same industry–is widely practiced. Typically, such measures provide an indication of how well a firm is doing, compared to its competitors.
Benchmarking across industries likewise can be quite useful, highlighting gaps or areas where one firm, or an industry, tends to excel.
But benchmarking also can be a barrier to disruptive performance. As logical as it is for Comcast to benchmark against Verizon or AT&T, that leaves all the contestants open to a disruptive attack by Google Fiber, which aims to fundamentally reset expectations about Internet access value and price.
Likewise, app providers are accustomed to the notion that competition “is a click away.”
Traditionally, Internet service providers, video entertainment services and now even in some cases the major social media apps have ranked poorly on measures of customer satisfaction or customer service.
A 2012 study suggested Internet service providers, video service suppliers and even mobile phone companies scored at the bottom of services customers would recommend to others, and is generally considered a measure of consumer loyalty.
In the application business, the notion that users are only a click away from choosing a competitor are true enough.
In the networking business, change rarely is so easy. And one might argue that service providers are not ambitious enough, where it comes to strategies for leaping over competitors, rather than staying ahead.
The reason, simply, is that video entertainment and communications suppliers tend to rank near, or at the bottom of cross-industry surveys of customer satisfaction. And, to be sure, an argument can be made that communications and video service providers lag most other industries for reasons the suppliers cannot entirely control.
An old adage in the cable TV business is that “we give customers a chance to think about canceling every 30 days, when we send the bill.” Intangible products always are hard to value, and it might simply be that consumers tend to value any service less favorably than tangible products they also buy. Think “iPhone” as compared to “Internet access” or “mobile service” without which the iPhone has little value.
Social Media Customer Satisfaction
At least some applications might be in the same situation.You might think consumer satisfaction with leading social media apps such as Twitter, Facebook and LinkedIn would be dramatically higher than for Internet service providers, cable TV companies or telcos.
At least according to ACSI rankings, consumers are less satisfied with at least some of the popular social media apps, than they are with at least some of the major Internet access providers and video suppliers.
In 2014, Twitter got a consumer satisfaction score of 69, Facebook earns a score of 67 and LinkedIn has a ranking of 67 as well. That is not much better than Time Warner Cable’s score of 60 in the video subscription service category, while Comcast scored 63. AT&T U-verse and DirecTV both scored a 69.
By way of comparison, the average industry score for satisfaction was 77. Even highly-popular mobile service got a satisfaction score of only 72.
The Danger in Benchmarking
In other words, at least according to ACSI surveys, consumers are as dissatisfied with Twitter and LinkedIn as they are with most ISPs and video suppliers, and in some cases, more unhappy with Facebook than they are with AT&T or DirecTV video service, among the services with lowest satisfaction ratings.
And there lies the danger. Eventually, product substitutes offering equivalent or similar value could arise. And then, to the extent dissatisfaction drives switching behavior, legacy suppliers could find their business models damaged.
The gap in scores between some cable firms and their satellite and telco video competitors, for example, does suggest growing consumer perception that there are workable alternatives.
Whether that will, in the future, be an issue for Facebook, LinkedIn and Twitter remains to be seen.
And that is where benchmarking can be a problem. It is true that dissatisfied consumers will continue to use products for which there is perceived to be little differentiation or alternatives.
Airlines are the best case in point. Airlines virtually always rank near the bottom of the ACSI rankings. And yet people still fly. But that leaves room for a disruptive attack by a contestant that performs much better than benchmarking would suggest is necessary.
So how much better could some contestants do, and what does it take for them to pull away from the competition?