Raising the Bar: Does Competition Really Promote Better Customer Service?

In the global business landscape, competition is often heralded as a catalyst for enhanced customer service. The underlying premise suggests that as businesses vie for consumer attention and loyalty, they are compelled to elevate their service standards. However, this Western-centric perspective may not universally apply, particularly within the African context. By fostering collaboration over competition, African businesses have the potential to circumvent common pitfalls associated with competitive markets and more effectively address customer needs.

The Western Paradigm: Competition and Customer Service

In Western economies, the free-market system thrives on competition. Businesses strive to outperform rivals by supposedly offering superior products, services, or pricing. This relentless pursuit should lead to innovation and improved customer experiences, as widely discussed in free-market theory and competitive strategy literature (see Porter’s Competitive Strategy). However, it also harbors potential drawbacks, including market saturation, diminished profit margins, and a propensity to prioritize short-term gains over sustainable growth.

Market Saturation

When multiple businesses continuously introduce new products and services in an attempt to outdo each other, markets can become saturated. This saturation means that there are more products available than the market demand can support. Consumers may have an overwhelming number of choices, leading to decision fatigue and potentially decreasing overall sales, a phenomenon widely explored in consumer behavior research such as The Paradox of Choice by Barry Schwartz (learn more). In saturated markets, businesses may struggle to stand out, and innovation can plateau as companies focus on minor improvements rather than groundbreaking advancements.

Diminished Profit Margins

The push to offer competitive pricing often results in reduced profit margins. In highly competitive industries, businesses may engage in price wars, where each company lowers its prices to attract customers, sometimes at the expense of profitability. While lower prices can benefit consumers in the short term, the long-term effect can be detrimental to businesses, particularly smaller ones that cannot sustain reduced margins. This dynamic is frequently observed in highly competitive retail and airline markets (industry analysis). This situation can lead to decreased investments in research and development, staff, and quality improvements, ultimately affecting customer service and product quality.

Short-Term Gains Over Sustainable Growth

In the quest to stay ahead of competitors, businesses may prioritize short-term gains over long-term sustainability. This focus can manifest in various ways, such as cutting corners in product development, reducing investment in employee training, or engaging in environmentally harmful practices to reduce costs. While these actions might boost immediate profits or market share, they can lead to long-term consequences, including brand damage, regulatory penalties, and a loss of consumer trust—issues increasingly highlighted in ESG and sustainability discourse (read more).

The African Context: A Collaborative Approach

Africa’s diverse economic landscape is characterized by varying levels of development, infrastructure, and market conditions. This diversity presents a unique opportunity for businesses to adopt collaborative strategies that can help them navigate the complexities of the African market, as highlighted by organizations such as the African Development Bank.

By emphasizing partnerships and collective efforts, companies can pool their resources, share knowledge, and co-create solutions that are tailored to local markets. This approach has several benefits:

By embracing collaborative strategies, businesses can reap numerous benefits that drive growth, innovation, and prosperity. One of the primary advantages is improved customer service, as collaborative approaches enable businesses to gain a deeper understanding of local customer needs and preferences. This, in turn, leads to more effective and targeted customer service, fostering loyalty and driving business success.

Moreover, partnerships and collaborations facilitate the sharing of ideas, expertise, and resources, giving rise to innovative solutions that address local challenges. This increased innovation enables businesses to stay ahead of the curve, adapting to changing market conditions and capitalizing on new opportunities.

Collaborative strategies also contribute to enhanced community development, as businesses work together to support local economic growth, create jobs, and improve living standards. By engaging with local communities and understanding their needs, businesses can develop tailored solutions that drive positive social impact, aligning with inclusive growth models promoted by institutions such as the UN Global Compact.

In addition, fostering partnerships and collaborations helps businesses build resilience in the face of economic uncertainty. By sharing risks and opportunities with other stakeholders, businesses can navigate challenges more effectively, ensuring their long-term sustainability.

Furthermore, collaborative strategies provide businesses with access to new markets, customers, and revenue streams. This, in turn, enables them to expand their operations, increase their competitiveness, and drive growth.

To leverage these benefits, businesses can adopt various collaborative approaches. Partnering with local businesses, for instance, allows companies to gain a deeper understanding of the market, access new customers, and develop tailored solutions. Engaging with communities is another effective strategy, as it enables businesses to identify local needs and develop solutions that drive positive social impact.

Joining industry associations and networking groups also provides businesses with opportunities to connect with other stakeholders, share knowledge, and stay informed about market trends and developments. Developing strategic partnerships with other businesses, governments, or organizations can further provide access to new markets, technologies, or expertise.

Finally, fostering innovation ecosystems, including incubators, accelerators, and innovation hubs, can help businesses drive entrepreneurship, innovation, and collaboration. By supporting the development of these ecosystems, businesses can tap into a vibrant community of innovators and entrepreneurs, driving growth and prosperity across the continent.

Case Studies: Collaboration in Action

In both the airline and music industries, emphasizing partnerships and collective efforts has proven to be an effective strategy for driving growth, innovation, and customer satisfaction.

In the airline industry, strategic alliances and codeshare agreements have been instrumental in facilitating collaboration. Major airline alliances, such as Star Alliance, SkyTeam, and Oneworld, have enabled member airlines to share resources, including routes, airport lounges, and customer service systems. Codeshare agreements have also enabled airlines to expand their network without incurring additional costs, providing consumers with more flight options and smoother travel experiences.

A notable example of successful collaboration in Africa is the partnership between Ethiopian Airlines and other African carriers under the African Airlines Association (AFRAA). By pooling their resources, these airlines have been able to improve route efficiency and offer better service to passengers, enhancing intra-African connectivity.

In the music industry, collaborative platforms and artist partnerships have been key drivers of innovation and growth. Streaming services such as Spotify and Apple Music have partnered with local music labels and artists to offer region-specific content, providing local artists with global exposure.

Artist partnerships have also been instrumental in creating innovative music that appeals to a broader audience. Collaborations between artists from different genres or regions have allowed them to share their fan bases and creative ideas. A notable example is Nigerian artist Burna Boy’s collaborations with international artists like Ed Sheeran and Sam Smith, which have helped propel Afrobeat to a global audience (artist profile).

Ultimately, both the airline and music industries demonstrate that by tailoring solutions to local markets through partnerships and collaborations, companies can drive growth, innovation, and customer satisfaction while promoting economic development and cultural exchange.

Cultural Foundations of Collaboration

Historically, African societies have embraced communal and cooperative practices. Traditional systems such as the Ubuntu philosophy in Southern Africa emphasize collective well-being and shared success (“I am because we are”), a concept widely discussed in African philosophy and leadership studies (learn more).

While competition has its merits, the African business environment stands to gain significantly from embracing collaboration. By leveraging collective strengths and fostering partnerships, businesses can enhance customer service, drive innovation, and contribute to sustainable economic development. This collaborative ethos, deeply rooted in African traditions, offers a pathway to not only meet but exceed customer expectations in a manner that is culturally aligned and economically advantageous.

The author Jules Nartey-Tokoli is Founder and Group CEO at Groupe Soleil Vision, comprising Soleil Consults, LLC, NubianBiz dot Com and Soleil Publications. He has lived and worked in both Ghana and the United States, having extensive experience in Strategy, Management, Entrepreneurship, Premium Audit Advisory and Web consulting. He has also published several articles on Strategy and Management among others.