Survey reveals waning customer devotion for vendors

SAN FRANCISCO, USA: ServiceSource's "2013 Customer Loyalty Survey" reveals the IT decision-makers' relationship with their top IT vendor is far from the "'til death do us part" notion.

Fewer than 18 percent described their relationship as "married." More than half were open to playing the field, with 66 percent defining their relationship with their top IT vendor as either "single," "open" or "it's complicated."

Most IT departments feel neglected and ignored, with 57 percent of respondents only hearing from their vendors at renewal time, if at all. It's hard not to see why these decision-makers flirt with other suitors. 

52 percent of respondents received calls or emails from their vendors' competitors at least once per month. 42 percent take sales calls from their vendors' competitors at least once per quarter; 20 percent take them at least once per month.

Over 25 percent of respondents participate in competitor webcasts every quarter, with 69 percent at least once a year. Nearly half of respondents (49 percent) have used competitive intelligence from a sales meeting to renegotiate a current contract.

Sixty five percent of on-premise software respondents view SaaS as a potential suitor to replace existing systems. Of those with a preference, respondents were twice as satisfied with their hardware vendors as their software vendors, indicating that loyalty is harder to maintain as you move up the technology stack.

"Our survey highlights that customer relationships and loyalties are constantly being undermined by outside forces. Sadly, most businesses have no idea," said Christine Heckart, executive VP of Marketing, Strategy, People and Systems at ServiceSource.

"It's no wonder that customer churn is top of mind for every company. As businesses focus more and more on recurring revenue, they can't afford to win customers just once and expect fidelity for life. They need to win them over and over again."

These findings come at a time when recurring revenue management is more important to a company's bottom line than ever before. Recurring revenue from software and hardware maintenance and support and SaaS subscriptions account for between 30 to 40 percent of a company's revenues and up to 50 percent of profits.

In August, ServiceSource released the findings of its first annual Global Recurring Revenue Index. That study found that engaging customers on a consistent basis improved a company's renewal rates by up to 14 percentage points. For Global 1000 technology companies, this value collectively represents billions of dollars in additional revenue.

"Gone are the days when a company's chief concern was winning new customers," Heckart continued. "This outdated approach results in businesses leaving significant revenue on the table. In fact, most companies make the majority of profits from the customers they've already won. This is a major mindset shift and requires new thinking, tools, and focus."