it's the service stupid!

Filed in archive Entrepreneurship on July 5, 2004

Fast Company has a good inside into the virtues rackspace.com an ISP that turned superior service into critical mission. Lesson - if work in a market with small margins or are in danger to get commoditized make service your mission , but have an eye on the cost and it can still create as substantial enough USP.

Bryce was hired to convert Rackspace--born at the height of the tech boom out of the dorm rooms of three college students --into an organization motivated by service, not just by technology. "We knew what great service looked like, but we didn't know how to build it," says managing director and cochairman Morris Miller. After spending a few weeks observing customers and employees alike, Bryce figured that he did. "In the dictionary, under 'fanatic,' it says 'overly zealous or obsessed with,' " says Bryce, who had impressed Miller with the superb service organization he created at a startup cleaning company called USA EnviroClean. "I wanted that to be us, so providing fanatical support became our internal mantra. I held a meeting and said, 'This is going to be our focus from now on.' "

"Fanaticism has its rewards for Rackspace, too. The e-tastrophe of the past few years has decimated the ranks of dotcoms and driven once-powerful rivals such as Exodus Communications into bankruptcy. Yet privately held Rackspace has posted net profits since 2002; its revenue grew 50% in 2003, to $58.6 million; and it has 5,500 customers, up from 56 in 1999. Fanatical customer service may be mildly nuts, but there's clearly a method to Rackspace's madness."

Another good example for this kind of differentiation is Commerce Bank.