Hot, and rare, tech commodity: customer loyalty
Do they have leavin' on their minds?
With nary an apology to Patsy Cline, that question is now being posed by businesses about their customers. And if a survey of information technology customers is any indication, the answer can't be very reassuring to technology hardware and software vendors.
The ''truly loyal" customers appear to be an endangered species, at least in corporate data centers, making up only 53 percent of technology buyers in the United States, and just 41 percent in Europe, according to the 2005 Walker Loyalty Report released last month.
Fully a quarter of customers on both continents feel ''trapped," meaning their commitment to their technology vendors is weak though they expect to continue doing business with them. And nearly 20 percent of those surveyed are at ''high risk" of abandoning their current vendors.
Walker Information Inc., an Indianapolis research and consulting firm specializing in customer loyalty and retention, received about 11,000 responses to its survey in the United States and 7,000 in Europe. This year's loyalty survey, Walker's third, is more detailed than the previous two, drilling down into customer reponses for four sectors of the hardware industry and another four sectors of the software industry.
Among its findings: The ''loyalty leaders" among vendors have operating profit margins of 13 percent on average, while the ''loyalty laggards" have margins of just 2 percent. Failing at customer retention, the laggards ''are leaving money off their shareholders' table," suggested Phil Bounsall, executive vice president for Walker Information.
Hardware companies trail their software counterparts in earning customer loyalty, as continued commoditization of products makes it tougher for vendors to differentiate themselves. By focusing on applications that help businesses address specific tasks or target specific markets, software makers can more easily burnish their brands and forge ongoing relationships with their enterprise customers.
Those customers have become more sophisticated buyers and users of software over the past few years, noted Kathy Quirk, the research manager for Nucleus Research in Wellesley, who served as a sounding board for the Walker researchers on the loyalty survey.
''They're doing a better job at paying attention as to whether the customers are happy," Quirk said of the software makers. ''Before that, they could just throw it out of the window as they drove by."
Walker defined truly loyal customers as those that have positive attitudes about their vendors and intend to continue doing business with them. The loyalty leaders among information technology vendors are Adobe, Apple, Cisco, Dell, EMC, Hewlett-Packard, IBM, Microsoft, Oracle, SAP, Sun Microsystems, and Symantec.
Noting that nearly all of those loyalty leaders are also market leaders, even though many of their hardware and software products are more expensive, Bounsall said, ''A lot of it boils down to choosing the safest option. At a time of consolidation, companies will consolidate with the leaders." Walker didn't identify the loyalty laggards in its report.
EMC, which inspired loyalty in Walker's networked storage category, this year kicked off a ''total customer experience" program to improve its performance at a range of ''touch points" where the company interacts with its customers. Among those touch points are billing, sales calls, reliability, post-sales support, and even e-services.
Cynthia J. Curtis, senior director of services marketing for EMC in Hopkinton, said the new focus of the data storage company is on building customer loyalty rather than merely satisfaction.
''Loyalty is the next level," Curtis said. ''Satisfaction tends to be a rear-view mirror viewpoint. Loyalty is more of a predictor of future behavior. The customers are more savvy today. They're looking for solutions to their problems, and they're looking for opportunities to switch vendors. So we need to address their business challenges."
Robert Weisman can be reached at weisman@globe.com. 
