Investors simply don't appreciate the competitive advantage of Apple's superior customer service experience, according to a new research note from Wells Fargo analyst Maynard Um. He told his clients that Apple' customer service is, "a key differentiator & value driver for the company" that investors don't properly understand.
"The ability to turn unhappy customers into happy ones is as strong a marketing tool as Apple's logo and commercials," the analyst wrote. "While innovation is a critical element to a product's success, CS, in our opinion, is critical to driving customer retention, lifetime value, and new customer acquisition."
He argued that new products and innovation are important, but that customer service, "will continue to play a critical role in Apple's repeat success & is vastly underappreciated."
He said that Apple's decision to keep support in the U.S., as well as its fleet of Genius Bars in the Apple Stores, gives Apple a significant edge over competitors in the U.S. He believes that is part of why Apple's customer satisfaction ratings are always head and shoulders above the competition's.
He said that his research has found that, "those unhappy with Apple's competitors note intentions to move to Apple more often than the reverse," and that, "the positive nature and tone of Apple customers far exceeded that of non-Apple customers."
The point of all this is that these factors will help Apple bring more customers to its ecosystem in a way that $AAPL investors don't properly value or understand.
Mr. Um reiterated his "Outperform" rating on $AAPL, and a price target (he calls it a "valuation") of US$710-$730.
Shares of $AAPL closed lower on Thursday, ending the day at $521.73, down $4.58 (-0.87 percent), on light volume of 17.2 million shares trading hands.
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*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.