| “Keep
the customer satisfied”
is a standard business mantra, and we’ve all heard the estimates
of how much more expensive it is to gain a new customer than to
retain one.
So how satisfied are CAD/CAM users with their suppliers?
How loyal do they feel?
We spoke to 300 end-users to gain a snapshot of
current attitudes - and to several French and German end-users for
their views.
Overall,
CAD/CAM users felt that they get a good deal from their suppliers.
Nearly half reported
that they are receiving an excellent or very good level of
service.
Three fifths of end-users also rated the technical
knowledge of their suppliers to be in these top categories, with
similar satisfaction levels indicated for the ability of suppliers
to understand their needs.
Only a tiny proportion thought they were receiving a poor
all round service.
However, just under half feel that they receive only a
‘quite good’ level of service from their supplier, which
offers a chink of hope for suppliers looking to wrench business
away from competitors.
The
vast majority of the survey sample, indeed nine out of ten CAD/CAM
users, are so satisfied with their suppliers that they are not
considering changing them.
Our researchers queried the reason for their apparent
loyalty.
It is interesting that only one in five mentioned price as a factor, compared to half who
cited a good overall standard of service.
One third mentioned good relationships, or the fact that
the supplier takes an interest in them, or just ‘we’ve always
used them’ as a reason for staying loyal.
These are important personal factors not to be overlooked
by suppliers hoping to acquire and maintain new business via the
Internet.
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Methodology
Telephone interviews were conducted
during August and September 2000 with 301 UK based CAD/CAM users
representing a range of industry sectors and company sizes. A
smaller number of in-depth interviews were conducted with French
and German CAD users. The term 'supplier' was defined as the
company that provides goods/services and after sales support to
the end user. |
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Did
you know?
Almost
three fifths of end-users make CAD/CAM purchases from only one
vendor, and a further third purchase from between two and three
vendors. Less than
one in ten shop around and make purchases from four or more
resellers.
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 However,
one French architect’s comments remind us that current
satisfaction with a supplier should not necessarily be confused
with loyalty: “We are
not really loyal as such.
Our reseller has answered our needs so far, but we will
change quickly if necessary." |
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Overall
less than one in ten respondents said they were considering
changing their supplier - with the fact that their current
supplier did not sell what they needed most often cited as the
reason.
The survey backs up the view that SMEs are more likely than
larger companies to want to get as close as they can to trusted
suppliers and stick to them - only 4% of our sample with less than
50 employees are considering changing their supplier, compared to
14% of those with more than 50 employees. The latter figure hints
at the potential for reward for those suppliers willing to invest
in gathering market intelligence and effective direct marketing. |
Considering
Changing Supplier
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| One
small French architectural firm our researchers spoke to provides
an example of an SME with no qualms about changing its supplier.
The MD told us: “We
are now trying to buy as much as possible direct from the
developer.
The resellers we have tried do not know the products they
are selling, and supply very little technical support.
As for the quality of their telephone support, I can’t
comment - we could never get through.” |
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| We
see an interesting split between CAD users who are not currently
considering changing their supplier.
A fairly impressive two fifths feel that their supplier is
the best available - clearly there are high levels of value added
services and effective customer retention strategies reflected
here.
However, nearly half
of those who are not considering a change are not convinced
they have the best supplier available, but do not feel it is worth
the effort seeking a better one. |
Not Considering
Changing Supplier
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There
are two strong messages here.
Firstly, there is a lot more that many suppliers should be
doing to convince their customers that they are irreplaceable.
Improving
or extending extra services might both improve loyalty and
increase revenue from current customers.
Secondly, there is scope for suppliers seeking to acquire
new business from their competitors to achieve it by tackling the
inertia among the many CAD users who are unable or unwilling to
seek out better suppliers. |
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 One
German Facilities Management company with 3,000 staff, is sticking
with the 2-3 resellers it uses despite being able to identify
clear areas where it would like their services improved: “We
feel they could offer free training for new applications, a
senior manager told us, “and also provide better access to
information for solving small problems without their help.” |
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There
is further evidence that there is a large body of CAD users
prepared to consider alternative suppliers if the right approach
is made.
Of the companies in our sample who are not considering changing
their supplier, about a third said they might try a supplier
approaching them with a better all round service.
However, as we have already seen, overall satisfaction with
suppliers is high, so in the vast majority of cases it will need
to be an extremely impressive all round package of products and
services to win business from this group.
Knowledge of rival suppliers’ marketing activity and
levels of service provision, combined with a precisely targeted
direct marketing campaign, will be powerful tools to make this
possible.
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Conclusions
- In
a market where the differentiation between rival
manufacturers/suppliers is based on levels of service rather
than product features, the majority of end users are satisfied
with their supplier(s).
Suppliers seeking to increase market share must make
themselves aware of these end user perceptions and target
their marketing to overcome them.
- There
is significant inertia about finding new suppliers among the
end users who are currently satisfied with their suppliers.
Our survey found that a third of these end users feel
there are better suppliers around, but are not prepared to
seek them out.
Suppliers who have key customers in this category
should guard against complacency.
They should identify them and ‘raise their game’ as
appropriate - or risk losing them.
- A
significant proportion of end users who are not actively
looking for a new supplier will consider a switch if the right
approach is made.
The attitude of this group suggests that active,
targeted marketing is required to bring alternative
services/products to their attention.
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In
the next
issue of CAD
SPAGHETTI
we
will look at one possible method for suppliers to persuade end
users to try a different product/service - trialling.
We will also look at another potential test of end users'
loyalty -
the impact of the
Internet on purchasing habits. |
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Would
you like to know what YOUR customers think of YOUR
services?
(Click: Customer
Satisfaction Research)
Would
you like to understand why your competitors are successful?
(Click: Competitor
Analysis Research)
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