Macy's Santa Claus sending customers to its largest competitor - impossible! But in the 1947 holiday movie, "Miracle on 34th Street," the fictitious Kris Kringle put the spirit of the holiday season first and sent parents to Gimbels whenever Macy's either didn't carry a toy, or Gimbels had it for less. When top management was alerted to Santa's new policy they were ready to fire the beloved Kris Kringle. But when R.H. Macy got wind of this unorthodox way of doing business, he thought it was one of the most brilliant customer-centric ideas ever. Macy realized that in a competitive marketplace, putting the customer first would set his store apart from Gimbels. His gamble paid off and while perplexed customers wondered why Macy's would send them to Gimbels, they also became more loyal to the company that put their needs first.
Now, more than 50 years after the release of "Miracle on 34th Street," life is imitating art. In a move designed to foster long-term customer loyalty, Ohio-based Progressive Insurance has taken a page from this holiday classic and is providing customers with its competitors' rates. The company also expanded this strategy to its website, where it now scrolls its own rates along with its competitors' rates, even if the competition is less expensive. This type of service innovation was one of the reasons Fast Company magazine recognized Progressive Insurance in its 2004 Customers First Awards.
In its award issue (October 2004), Fast Company noted that
it wanted to recognize companies that focused on "creating
a rich customer experience and excellent customer service" because many companies talk about focusing on the customer but fall short.
According to Arun Rai, James A. Harkins III Professor of Computer Information Systems at the J. Mack Robinson College of Business, having a customer-centric business model is necessary in today's changing marketplace. "Traditionally, customer service has been viewed strictly as a support function and cost center. However catalysts such as the Internet, deregulation, globalization and a free market system have caused a seismic shift in consumer focus from product to service."
This shift has spawned a recent trend in service innovation.
"Historically, the business model most companies followed was
to produce a product, sell that product and provide free customer service," says Richard J. Welke, professor and director of the Center for Process Innovation at Robinson. "Now, as things move from product to service, companies are looking for ways to
alter that model so that the service rather than the product is the profit generator."
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