Flirting with relationships

Having worked on both sides of the fence, I am always interested in how software vendors connect with their customers, and how customers view software vendors. In theory, there should be an intimate connection: vendors need customers, not just for revenue but for references to help gain more customers, and so you would expect them to keep good track of how well customer implementations of their software were going. At the very least you would expect software vendors to regularly survey customers on how happy they are. The reality may surprise you.

I recently conducted research in which I asked software vendors to supply customer references to which a short satisfaction survey would be sent. You might think that this would not give very much insight, since the vendors themselves nominate the customers to be used as references, and how hard can it be for a vendor to find a chosen set of happy customers? It is rather like putting personal referees on your resumé: you should be able to find at least two people to say something polite about you.

In fact, the exercise proved surprisingly revealing. For a start, given that each vendor had agreed to contact the customers beforehand to check they were happy to participate in the survey, you might expect that the references provided would at least be current. In fact, a considerable percentage of the reference emails bounced. Vendors seem not to have been smart in selecting only happy customers either, as there were a surprising number of moderate scores, and some distinctly less than complimentary comments from buyers.

This little exercise highlights what I believe is a major systemic problem in the enterprise software industry. Vendors are driven by their investors to hit their sales targets, and the compensation structures used for sales forces drive them to complete the next big sale. At this point, often after a lengthy competitive evaluation process, the vendor sends an invoice, the software is shipped, and the attention of the vendor moves to the next sale. Sure, there will be some ongoing contact from the professional services organisation of the vendor, who will probably deliver some training and perhaps help to implement the first project using the software. However, the attention of the vendor is likely to fall off after that, coming back into focus around the time that the customer is due to pay their annual maintenance fee.

The larger the company, the more disconnected it is likely to become from its customers. A market research firm called Nucleus had some fun in the late 1990s by looking up the public customer references of some large software vendors on their websites, then contacting those companies and asking them to take a customer satisfaction survey. One survey of ERP customers found that not one vendor could manage a score of even 50 per cent in answer to the question: "Would you recommend this software?", which is a pretty basic level of customer satisfaction for what were supposed to be public reference customers.

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