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Keeping It Simple

By Denis Pombriant
Feb 22, 2018 3:07 PM PT
customer-loyalty

Disruptive innovations change our lives for the better. They expose longstanding needs and signal that there's a solution at hand. Moreover, the solution involved usually is less expensive than the status quo. The lower-cost aspect makes adoption inevitable and therefore disruptive.

Document management is like that. Decades ago, many enterprises found that the cost of capturing documents as electronic images vastly improved on the cost of managing file cabinets. Labor and printing costs still make up a significant cost for some organizations, but in general, as document management becomes ubiquitous, businesses save a lot of money.

Disruptions don't remain disruptive, though. They commoditize and become mainstream, and on the way they become less costly and even more ubiquitous than their inventors had expected.

Really successful disruptions follow this path to ubiquity without skipping a beat, but other times vendors try too hard to extract value from their old disruptions. This still works when customers are deeply invested or it's hard to convert to the competition. The term "walled garden" was coined to describe such situations.

Walled Gardens Can Fail

In a walled garden, you might expect a vendor to monitor license use tightly, and to oppose commodity licensing options like site or corporate licenses. Some vendors have gone so far as to audit use within a client enterprise and to charge back for uses assumed but not necessarily verified.

These policies might work when a disruption is fresh and a vendor wants to penetrate an organization. Later, though, both the customer and the vendor have an interest in making the solution ubiquitous, because all -- or nearly all -- people in an organization can benefit from the solution. Those who can't benefit won't use the solution, and for them a full license doesn't make a lot of sense.

Walled gardens can fail, especially when conversion isn't as hard as the disruptive vendor might think. Further, as time goes on, the principal attribute that a vendor displays has much less to do with whiz-bang technology, because the competition has caught up. The reason dominant vendors remain so is because they've managed to engage with customers, and engagement drives loyalty.

Whole Product Engagement

In my experience, which includes writing books on the subject, keeping customers for the long term begins with engaging them on all levels with your whole product, a term from a few decades ago that's still valuable.

Whole product includes not only the core product, but also all of the policies, procedures, service interactions and more that tell customers you care about their success.

In "Stop Trying to Delight Your Customers," a 2010 article in the Harvard Business Review, the authors note that "loyalty has a lot more to do with how well companies deliver on their basic, even plain-vanilla promises than on how dazzling the service experience might be."

The essence of that delivery is simplicity, which includes the user experience as well as the experience with the vendor's policies and procedures. In multiple situations, we see the opposite of simplicity today, which some customers view as hostility. The best example of this is the software audit.

Whether it's database companies or document management companies, auditing customer use of a product, along with hefty chargebacks, has become a bone of contention between customers and vendors. No doubt vendors think audits are necessary, but as a customer engagement strategy auditing lacks a lot.

My Two Cents

At some point in the commoditization process, the driving force of the vendor-customer relationship transitions from the awesomeness of a product to how easy a vendor is to work with, and that's the whole product wrapped up with a bow.

The user experience, the buyer's experience, technical features and pricing all have a role to play in the whole product description. Vendors who forget this may find that after many years customer attrition becomes a problem, and at that point it might be too late.


Denis Pombriant is a well-known CRM industry researcher, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.


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