UNTIL a few years ago, Asian companies have relied on their manufacturing capabilities and, later on, their research and development (R&D) and innovation as well, to enjoy high growth.

This was a natural tendency that grew out of a number of historical and other factors specific to Asia, says Insead InnovAsia, a research unit of Insead focusing on innovative business developments in Asia.

"The region offers a vast, cost-competitive manufacturing capacity; physical product specifications can be easily communicated to buyers in target markets overseas; and finally, the strong tradition of state ownership in Asia's largest markets, including China and India, has created a business culture that is product-centric rather than customer-centric," said InnoAsia.

But the research unit's survey shows that Asian high-growth companies and entrepreneurs are now coming to realise the need and value of the customer experience as a source of competitive advantage.

Said Niraj Dawar, visiting professor of marketing at Insead Singapore and professor of marketing at Richard Ivey School of Business in Canada, who led the InnovAsia research and survey: "Most of these companies continue to invest heavily in R&D and to build exciting new products.

"But as competition within the region heats up and customers find many suppliers offering similar products, Asian companies are also building a competitive advantage from how they sell."

Key finding

The key finding from the InnovAsia survey is that Asian companies continue to invest in a lot of new products, but they feel that competitors quickly imitate new products.

The survey found that there are two main groups of Asian companies: those that are more product-focused and those that are more customer-focused.

About 65 per cent of product-focused companies derive the bulk (60 per cent or more) of their revenues from products launched in the last three years, while only 40 per cent of customer-focused ones depend heavily on new products.

"This indicates that companies focused on customer experience have found some respite from the new products treadmill and the need from constant innovation," noted Prof Dawar.

About 45 per cent of the respondents singled out service, trust and relationships as the most important reasons that customers buy from them.

Singapore-based mobile and wireless solutions provider iWOW Technology Pte Ltd, for example, feels that its customer service is the reason why its customers keep coming back to them.

Said Raymond Bo, co-founder and managing director of iWOW: "In our business we have to keep innovating and churning out new products to keep customers happy.

"However, we realised very early in our business that customers have a choice in selecting competing products and they choose to bring their business to us because of their positive experience in working with us."

That is why iWOW feels that building an excellent technical support system (which includes people, documents, tools and training) is just as important as innovation to its business.

"In my opinion, customers give us recurring business primarily because they have had a good experience with us. Many times, I hear customers comment that our good technical support is the reason why they choose us," said Mr Bo.

Indeed, respondents in InnovAsia's survey agreed that products by themselves have limited power to hold competitors at bay.

A significant majority felt that companies constantly need to devise new products in order to stay in the game. However, the same majority also conceded that competitors tend to imitate products very fast.

For furniture retailer Air Division, which also designs its own range of furniture, offering superior customer service is how it manages to stay ahead of competitors which copy its designs and offer the products at cheaper prices.

Nathan Yong, Air Division's co-founder and managing director, said that there is not much to be done about copycats. But the company tries to maintain its competitive edge not only through superior quality but also through customer experience.

"I believe that customers are loyal to us because we have a strong product brand that customers can identify strongly with. This is supported by our team of passionate after-sales professionals. In fact, we get a lot of new customers through recommendations by existing customers."

High-growth companies can choose to compete on the strength of how well they are organised to deliver value to the customer. Discussion of trust and the quality of customer relationship can be confusing because they take place on the basis of intangible, hard-to-measure attributes, said InnovAsia.

The good news, it said, is that the ultimate drivers of customer choice tend to fall logically into two categories: cost and risk.

"Cost-oriented factors include convenience, ease of doing business and product support. Risk-oriented factors involve trust, confidence and the strength of relationships," said InnovAsia.

And while customer knowledge as a discipline has a long way to develop in many of Asia's industry sectors, many Asian companies are catching on to it quickly.

For example, FarEastFlora.com, a gifts and flower shop, places a high emphasis not on pricing but on offering customers a convenient one-stop shop which they can trust with all their gifting needs, said managing director Ray Chioh.

Priority

While product innovation is a must in order to be a one-stop shop with a wide range of products and services, making sure the customer has a positive experience in ordering from FarEastFlora.com is also a priority.

"One thing that we try to constantly remind ourselves is how to manage the customer experience better. For example, we now send out SMS confirmations upon delivery, so that our customers can know that their product has been successfully delivered to their friends or family.

"In addition, we started operating on Sundays a year ago as a way to cater to the needs of busy customers. This has been welcomed by our customers," said Mr Chioh.

Similarly for Asiatravel.com Holdings, customer experience is the most important factor in competing in the online space, said executive chairman Boh Tuang Poh.

He said that the online travel reservation company constantly expands its portfolio of destinations, hotels and airlines in order to be a one-stop shop for customers' travel and last-minute reservation needs.

"That is why we are striving to offer Instant Confirmation Anytime Anywhere. In addition, we recognise that customers on the net are very proactive, that's why we have many sections and links on our website that makes it very convenient for customers to send or email us their feedback," said Mr Boh.

Companies here are also realising that enhancing customer experience need not mean offering new products all the time. Sometime, new features or modifications to existing products can go a long way too.

For example, Cerebos has maintained its formula for its core product Brand's Essence of Chicken for decades.

"But this does not mean that we never did anything with it. Over the last few years we have introduced more safety features and recently introduced the new triple-lock cap to our bottles to make it more convenient for our consumers," said Cerebos executive vice-president Lackana Leelayouthayotin.

However, this does not mean that companies which emphasise these customer experience are behind more product-focused companies in areas such as product development and R&D spending.

Said InnovAsia: "According to the survey responses, even when compared with the product-driven group of respondents, those survey participants which emphasise service, trust and relationships and other 'soft factors' at play in retaining their customers nonetheless reported spending quite heavily on R&D themselves."

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