Process-driven approaches focus on optimizing the setup of the organization and its processes regarding the relationship to the customer. Such differentiation is often favored by companies with more mature technologies of which larger parts are affected by the threat of commoditization. Examples include telecommunication service providers (e.g. Deutsche Telekom, Swisscom) and other players that can build on strong relationships to their customers such as retailers (e.g. Amazon.com). The Customer Relationship Management community has begun detailing such approaches as Customer Experience Management and propagates proactive optimization of customer touch points throughout the whole product life cycle. The underlying differentiation strategy is fundamentally that customers will be willing to pay a premium price for a superior experience in interacting with the company. For example, Jeff Bezos, founder and CEO of Amazon.com early on defined Amazon’s vision to become “earth’s most customer-centric company”. Amazon is acclaimed for the effort with which they study customer behavior. It has been a pioneer in high investment in community managers, the policy of allowing negative customer reviews about products on its website to support customers’ purchasing decisions, and implementing no-questions-asked return policies in online shopping. Its unmatched focus on continuously improving customer service was cited as a key reason in achieving the top spot in the recent Business Week “customer service champs” awards (2009).

Technology-driven differentiation is characterized by constantly enhancing the user experience through better or new products and services. Such approaches are typically favored by companies which have their strengths in innovative or superior customer-facing offerings that differentiate them from their competitors. Examples include established Internet giants (e.g. Google, Microsoft, Apple) and emerging Internet players (e.g. Facebook, Twitter). Such players aim to convince their users through continuous innovation of their offerings and enhancements in usability. Amazon is also found in this camp as it has pioneered numerous technological enhancements towards new and easier ways to buy online, including 1-click buying to speed up check out, DRM-free music to increase interoperability of downloadable music, the Kindle for digital books with an e-ink screen particularly well-suited for reading, supplemented by an ongoing heavy investment in continuous improvement of the usability of its website – Amazon’s principal customer-interface. To further accelerate innovation of their services, advanced Internet players are transforming themselves into platforms that integrate applications of external developers to leverage third-party innovation power. Facebook opened up its application interfaces in 2007 and has recently exceeded 500,000 applications on its platform such as games, mobile- and location-based services, social media, or real-time messaging services. Apple subsequently applied the third-party platform concept to its iPhone to create its app store in 2008, and went on to revolutionize the mobile applications market.