In today’s era of uncertainty and disruption, staffing firms across every vertical must ask themselves: What strategy should we use to compete in this volatile market? To guide our discussion, let’s borrow the framework used in the staffing-focused book Breaking Through, by Mike Cleland and Barry Asin, which cites to three contrasting strategic approaches. These include operational excellence (competing on price), product leadership (competing on cutting edge technology) and customer intimacy (competing on customer focus). Now, more than a decade after Marc Andresen proclaimed that “software is eating the world” and in a new era where he has claimed that AI might save it, this article explores whether it is folly to embrace a strategy that is not explicitly tech dominated.
Before we proceed, I want to dispel two common myths about customer-centered strategies. First, customer intimacy is not incompatible with the use of technology. In fact, in today’s staffing industry, the most successful customer intimacy firms require a functional tech stack that serves the pursuit of an excellent customer experience. The critical distinction lies in the primacy given to technology. Namely, is it a tool or is it the strategy?
Second and relatedly, there is a critical distinction between pursuing customer intimacy as a tactic versus a strategy. The latter requires a much larger commitment than simply training your team to be polite, warm and responsive. To be a bona fide strategy, firms must instead radically commit to making the customer the long-term focal point for decisions, initiatives and workflows.
A survey of the present industry suggests that product leadership is indeed the predominant strategy. Many of the most successful companies have embraced this strategy to great effect by leveraging staffing platforms, automation and AI. For these firms, the aim is to compete by continually developing and implementing state-of-the-art technology. For instance, Aya Healthcare, a firm in the healthcare vertical that heavily incorporates technology, saw nearly sixfold growth in a two-year period after introducing a staffing platform model in 2020. Thanks to the visible success of technology-centered strategies, it is tempting to think that the staffing industry requires a technology-first strategy.
PREMIUM CONTENT: Largest IT Staffing Firms in the US: 2023 Update
Despite the prevailing trend toward technology-focused strategy, let’s explore two dynamics that make customer intimacy a viable strategic option.
First, as more and more staffing companies obsess over becoming more frictionless and automated, the trust and reassurance offered by human-led interactions will become more critical than ever. While automation may help to reduce pain points and improve efficiencies, one of the fundamental elements of our industry is trust. If the industry tilts toward a more transactional, tech-based model, this may create an even higher premium on trust for many candidates and companies. This will be especially true in niche and specialty markets, which require a higher degree of customer understanding.
Second, as large swathes of the staffing industry embrace a technology-first strategy, customer intimacy will serve as powerful competitive differentiator. This contrast will likely become sharper as technology becomes more important in the staffing world. In a hyper-automated era, a thoughtful human interaction can be immensely powerful. As a simple example, consider the tradeoffs between an e-card and a handwritten note. At first blush, the e-card should win every measure of efficacy. It is adaptable, cost effective, scalable and feature rich. Despite this, there is no escaping that it is much more meaningful to receive a handwritten note. Similarly, reflect on your more frustrating chatbot and phone menu experiences. Again, customer-focused firms cannot ignore technology altogether; however, they may be able to create a powerful differentiator by focusing on the customer’s wants and needs and delivering value accordingly.
Predicting the future can be a fraught exercise, but we can be assured that staffing firms will need to carefully weigh and consider the optimal strategic pathways during this ongoing era of technological disruption. No firm can succeed in all three domains, however, so tough decisions will be required. Even though product leadership strategies are enjoying considerable popularity and acclaim today, it would be a mistake to discount the value of a customer-focused strategy. If anything, the second and third order effects of technological advancements and disruptions may create an even more valuable lane for firms that employ a strategy based on customer intimacy.