• by Gavin O'Malley  @mp_gavin, June 6, 2011

Manufacturing, distribution and information expertise once set one company apart from another. No longer, insists Forrester, which now insists that the only differentiator that really matters is consumer loyalty.

In its new report "Competitive Strategy In The Age Of The Customer," Forrester asserts that companies must be more than customer-focused -- they must be customer-obsessed, according to Forrester analyst and report author Josh Bernoff.

What does that mean? Specifically, a customer-obsessed company "focuses its strategy, its energy and its budget on processes that enhance knowledge of an engagement with customers, and prioritizes these over maintaining traditional competitive barriers," according to Bernoff.

For his report, Bernoff looked at Michael Porter's five forces as a framework for analyzing competition. "There is no longer any barrier to potential entrants or substitutes -- in a digital world, competition can come from anywhere," Bernoff noted in a blog post on Monday. "Customers have real-time information about pricing, product features and competitors; they hold all the advantages."

As such, brands should spend less on surveys whose results arrive too late to act on; instead, they should invest in real-time listening to social media.

Also, brands should change their service unit. "You invest in a comprehensive cross-channel customer-experience program -- and stop treating your call-center workers as slaves," Bernoff explained.

In the area of sales, brands should stop encouraging their sales force to cram channels and concentrate on connecting directly with end-consumers.

Furthermore, Bernoff suggested that brands take cash from their email and ad blasts and spend it on interactive content and mobile apps that create what he calls "real connections."

"This is a corporatewide shift in thinking," Bernoff added. "The companies that master it -- companies like IBM, Best Buy and Amazon -- thrive in a world of constant disruption, because their customers know and trust them, and they make investments in those customers."

Conversely, the companies that keep riding their current model and attempt to lock in customers are doomed. "They're dead men walking," Bernoff believes. "They just don't know it yet."