“In competitive markets, it’s not just what you sell, but how customers experience it that defines your edge.” – Inspired by Michael E. Porter, Competitive Strategy (1980)
Reintroducing Porter’s Strategy Model
In his landmark book Competitive Strategy, Harvard professor Michael Porter introduced three ways companies can outperform competitors:
- Cost Leadership – becoming the lowest-cost producer in the industry.
- Differentiation – offering something uniquely valuable.
- Focus – targeting a niche market with either cost or differentiation advantage.
Porter emphasised the importance of choosing one path. Trying to do everything usually leads to strategic failure. His message was clear: to gain a sustainable edge, companies must choose how they compete, not just where.
Where Does Customer Experience (CX) Fit?
For years, CX was treated as a support or service concern—something downstream, after the product or sale. But in today’s market, that mindset no longer holds.
Customer Experience has become a strategic lever.
Let’s reframe CX through the lens of Porter’s three strategies:
1. CX in a Cost Leadership Strategy
Even in a cost-driven model, CX plays a critical role—not by adding luxury, but by driving efficiency.
Think of smart automation, self-service platforms, and digital onboarding journeys. These tools not only reduce cost-to-serve, they also improve customer satisfaction. Well-designed, low-friction experiences are good for the bottom line and the brand.
2. CX in a Differentiation Strategy
This is where CX shines most visibly.
When companies compete on differentiation, they win by delivering a uniquely valuable experience. CX becomes the strategy itself. A product can be copied—but how it feels to use it is much harder to replicate.
Consider how Apple, Nike, or Airbnb create emotional resonance through design, storytelling, and consistency. These companies have turned CX into a strategic moat—a durable competitive advantage that is hard to imitate and deeply valued by customers.
3. CX in Focus Strategies (Niche Markets)
Focus strategies involve targeting a narrow segment with specialised needs—whether through cost or differentiation.
In cost-focused niches (e.g. low-cost fintechs), CX enables lean loyalty: simple, functional journeys that keep costs low and engagement high.
In differentiation-focused niches (e.g. boutique fashion, luxury travel), CX becomes an intimacy tool—deep personalisation, cultural nuance, and tailored interactions that make the customer feel uniquely seen and served.
Rethinking Market Scope: Broad vs. Niche
Porter’s second axis is market scope: broad or narrow.
- Broad market strategies aim to reach everyone. CX must scale—creating consistency, reliability, and emotional relevance at volume.
- Niche or focus strategies go deep. CX here is more targeted—designing experiences for specific segments, cultures, or use cases.
In both cases, CX is not optional. It’s a strategic choice.
The Strategic Role of CX
Customer Experience is not a surface layer. It’s the how of your competitive strategy:
- It reduces churn.
- It increases willingness to pay.
- It builds trust, relevance, and loyalty.
In saturated markets, product features blur. Price races to the bottom. What remains is the experience.
That’s why experience-driven companies consistently outperform others—on revenue growth, brand equity, and long-term profitability.
Michael Porter taught us that strategy is about choosing how to win. In 2025 and beyond, Customer Experience is where strategy meets reality. It’s no longer a function. It’s your competitive advantage.
