July 1, 2013
By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Enterprise Software Retools Customer Experiences

The balance of power in the enterprise software industry has shifted to business users, according to a recent PricewaterhouseCoopers (PwC) report. Growth of nontraditional vendors offering cloud services, new online business models, and lower margins due to vertical integrations are aiding this shift, according to the report "Experience Radar 2013: Lessons from the U.S. Software Industry."

In this environment, businesses have an unprecedented amount of power in how they buy, use, and pay for technology, the research found.

"Responses to our survey suggest that the days of large-scale sales and implementations are behind us, and as a result, software vendors in this demand-driven environment are no longer able to mandate terms," Patrick Pugh, PwC's U.S. software and Internet leader, wrote in the report. "Today's software customers have options and expect next-generation sales to be uniquely tailored to their needs and able to move at the pace with which they do business."

Among the greatest changes, sales conversations that once revolved around product features now center on issues of ease of use, trust, data security, privacy, and integrations. "Customization is less attractive than the ability to have issues fixed quickly and being more reliable," Pugh tells CRM magazine.

Shaivali Shah, PwC's customer experience specialist and Experience Radar solutions leader, agrees. "Performance is critical. If you don't have performance reliability, customers will churn," she says.

"Customers are requiring a lot more support," she continues. "Eighty-five percent want their issues with the software fixed within twenty-four hours, and thirty percent want to be proactively notified about bugs."

In this changing environment, "software providers need to take on much more of a customer focus than they have in the past," Pugh adds, noting that software businesses can benefit from the same customer service transformation taking place across industries and verticals.

Among these, the Experience Radar report identifies several behaviors that software vendors can adopt to make themselves more responsive to customers. They include the following:

Delivering what matters most: Typically, only half of software features are widely used, meaning most enterprise software is much more complex than the user needs. Prioritize performance over bells and whistles to deliver the most customer value.
Infusing the human touch: While new technologies give customers a multitude of channels, human communication is still critical to delivering top-notch experiences. Focus on building long-term relationships by providing personalized support when issues arise.
Turning advocacy into action: Customers are more likely to purchase from highly regarded companies, and 84 percent will recommend a vendor after a great experience, according to the survey findings. Software vendors should identify key influencers to serve as brand advocates and build communities among customers.

It's not just about marketing but sharing an experience," Shah says. "Customers want to see other customers and discuss their implementations."

Businesses looking to buy or upgrade their software should consider vendors whose products can be adopted and used by "functional groups outside the IT department," Pugh advises.

Another consideration should be the vendors' social media presence, giving special attention to what their customers are saying about them and how they respond, he adds.

It also helps to consider the platforms and devices that the vendors' products support. According to PwC's research, 78 percent of companies now embrace a "bring-your-own-device" policy, meaning that software needs to be agile and capable of supporting multiple device types and platforms.

The research also found a growing exodus from traditional IT infrastructures to a flexible hybrid model that supports both on-premises and cloud computing. Software will need to support those models as well.

Forrester Research concurs, having recently found that while chief information officers are expected to cut spending on computer and communications equipment, they will increase their investments in software, especially for software-as-a-service, analytics, and mobile apps. The research firm expects tech spending to increase by 6.2 percent this year and 6.8 percent next year.

Once a sale is made, it is important for software vendors to find the "hidden sources of value" to regularly drive exceptional, differentiated customer experiences, according to Pugh.

"Some of the top drivers of great customer experience for the software industry—smooth installation, prompt support, and personalized attention—serve as powerful guides for other industries to follow in determining how to create meaningful experiences to drive long-term customer loyalty," Paul D'Alessandro, PwC's U.S. customer impact leader, concluded in the report.