CUSTOMER EXPERIENCE RISES TO A NEW LEVEL OF IMPORTANCE IN THE ENTERPRISE SOFTWARE INDUSTRY

Bain & Company research finds that changing IT business models have made a superior customer experience is increasingly important in driving market share and customer value

New York – May 3, 2016 – For years, enterprise technology companies got along fine with low customer service ratings—just about the lowest of any other industry.  In Bain & Company's 2015 survey of more than 1,200 enterprise customers, the average Net Promoter Score© (NPS) – a ratio that precisely measures customer loyalty by comparing a company's promoters to its detractors – of enterprise hardware vendors was just 14; for IT and business process services, it was 13 and for enterprise software, a surprising negative three.  Compare that to other industries such as department stores, with an NPS of 62.  The industry has, up until now, been able to sneak by with minimal customer advocacy, but that is changing as subscription models and SaaS shine a spotlight on the need for an enhanced customer experience (CX).

According to a new Bain report, The Strategic Need to Improve Customer Experience Now in Enterprise IT, the enterprise tech industry has traditionally relied on a model that targeted sales efforts to a limited set of buyers—in most cases the CIO and senior IT executives—rather than focusing on end users and their needs.  Once software or hardware systems were installed and running, companies were reluctant to go through the expense and hassle of changing vendors, even if the technology wasn't delivering a superior experience.  However, the industry is now undergoing a shift due to cloud computing subscription sales that are reshaping the relationship between the vendor and customer, ultimately bringing more business customers into the decision-making process.

"The introduction of the cloud has forced enterprise IT companies to rethink how they work with customers," said Chris Brahm, a partner in Bain's Global Technology Practice, who co-authored the report. "They can no longer get by with customer service that is just so-so.  Delivering a top-notch experience is now a key component for future business success."

Many enterprise IT companies have heeded the wake-up call and turned their attention to improving CX.  Nearly 90 percent of survey respondents said it was the top priority or a top-five priority, but all have a long road ahead.  Even leaders in the industry are starting from a very low point when it comes to customer advocacy, hampered by several key challenges, including value realization, creating a CX-oriented culture, and balancing CX with other considerations.

Based on its work with more than 2,000 companies designing customer experience systems, Bain determined that best-in-class leaders achieve superior levels of advocacy through five pillars:

1. Proprietary insight on customer value – Technology companies should be looking beyond IT to understand how end users value their products, as well as what irritates them. 
2. Development that delivers on critical needs – Insights into outages or what features are used most often can help shape a roadmap detailing when and how to enhance and upgrade products, based on available technology and commercial needs. Companies should take a "design thinking everywhere" approach, with nothing off-limits. 
3. End-to-end experience execution – Sometimes customers have to change their processes to get the full value of new technology.  A customer success manager (CSM) can work closely with customers to help them learn how to get the most out of their investments, to build long-term relationships and to encourage contract renewal. 
4. Relentless feedback and learning – Leading IT companies go well beyond listening continually to customers for delights and frustrations.  They build internal IT and communication systems to consistently take action at the front line and in the corporate center. 
5. CX-oriented culture – Leading IT companies understand it takes time and patience to develop an organization focused around the customer experience. This includes integrating awareness of customer centricity into their hiring process, training and creating incentives for customer advocacy.

"Improving the customer experience requires significant effort, but a clear and proven approach exists," said James Dixon, a partner in Bain's Global Technology Practice and the report's co-author.  "Companies can move beyond just measuring satisfaction and gathering anecdotes and build a true advocacy system to fundamentally change the way they operate.  They now have the key capabilities to meet ever-increasing customer expectations."
Editor's Note: For a copy of the report or to schedule an interview with Mr. Brahm and Mr. Dixon, contact: Dan Pinkney at dan.pinkney@bain.com or +1 646 562 8102

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