Tech Vendors Are Treating Customers Worse Than Before
Despite all the information pointing to the importance of customer loyalty to a company's bottom line, many of the largest technology vendors in the U.S. have been doing a poor job of satisfying their customers, and the trend appears to be worsening. Of 54 companies considered, VMware was the only one to earn an "excellent" rating in a recent survey by the Temkin Group; 17 were rated "very poor."
07/26/13 5:00 AM PT
Businesses depend on their customers, and it would make sense that good customer service would translate into loyal customers and more sales, but high-tech vendors don't seem to have gotten the message.
The average customer experience rating for tech vendors fell from 58 percent to 52 percent since last year, in on a survey of 800 IT professionals on their customer experiences with 54 large high-tech vendors.
Respondents to the poll, which was conducted by the Temkin Group, worked at North American organizations with at least US$500 million in annual revenue.
VMware was the only vendor to earn an "excellent" rating; 17 were rated "very poor."
The largest decline was in the functional component, meaning whether customers can achieve what they set out to do.
The ratings do not identify the reason for the fall-off in customer service satisfaction, Bruce Temkin, managing partner at the Temkin Group said, but "I think that many technology vendors have not fully embraced the importance of customer experience, especially in cloud-based applications."
Customer satisfaction is critical, Rob Enderle, principal analyst at the Enderle Group, told CRM Buyer.
"EMC discovered that if they increased customer loyalty by 1 point, they'd gain 3 points in market share," he noted.
What the Temkin Group Learned
The Temkin Experience Ratings for Tech Vendors evaluated three areas of customer experience: functional; accessible, meaning how easy it is for customers to do what they want to; and emotional, meaning how customers feel about their interaction.
VMware and SAP analytics, which topped the ratings, led in all three areas. They were followed by three Microsoft units -- servers, business applications and desktop software. Companies that landed at the bottom of the ratings were Trend Micro, Tata Consulting Services and Hitachi.
Temkin also analyzed the relationship between customer experience and customer loyalty. It found essentially that customers who had a good experience would buy more from the vendors -- providing purchase momentum -- and would be more willing to try the vendors' new products and services, giving them innovation equity.
Oracle's outsourcing services stood out for highest purchasing momentum, followed by VMware, NetApp and SAP Analytics. Pitney Bowes, Trend Micro and Deloitte Consulting were at the bottom of the list.
VMware had the highest innovation equity, followed by SAP Analytics, IBM SPSS and Apple. Six tech vendors had innovation equity scores below 30 percent -- Accenture Consulting, Intuit, Deloitte Consulting, Alcatel-Lucent, Pitney Bowes and Infosys IT Services.
Aggressive sales tactics and innovation alone may not serve a vendor well.
"Companies like Oracle, which seem to have higher sales momentum than their customer experience ratings would suggest, are likely attracting customers through some other manner -- such as low prices, compelling features or aggressive selling," Temkin told CRM Buyer.
"Customer experience absolutely affects the bottom line of tech vendors," Temkin continued. "In previous research, we found that customer experience was an even more important factor than product features when it came to loyalty in this large IT department market."
Spreading the Love
Tech vendors need to interact well with every department they deal with in a customer's organization, Enderle said. "They increasingly know in large companies how well the vendor is performing across the different purchasing organizations, so vendors that treat them well in aggregate will get more orders."
The growth of online peer communities gives customers easy opportunities to make or break a vendor, but it also gives companies the opportunity to engage and build loyalty.
"New customers tend to be the hardest to satisfy because they have not learned how to interact with a tech vendor," Temkin said. "I like to say that new customers want to love you, but they are willing to hate you."