What Price Loyalty?

Every two years, we undertake the vendor perception study. In fact, we just released the last one. Personally, I find the result fascinating in many ways as there is so much to be gleaned about brand, perceptions and user behavior. Yesterday, I took some time to look at something we did not include in the report and that was how many respondents who have an installed vendor solution named their solution as the overall market leader. The result was interesting – around 30% did. Just in case you are not following, for those respondents that use a particular vendor solution as their CTRM, only around 1/3rd thought that system was provided by the market leader. What does this tell us?

Well, the first thing we must remember is that the respondent probably played no role in the selection of the CTRM they use and likely feel no overt ownership of the decision to use it. Some will have swapped jobs a few times and experienced several different incumbent systems thus having a frame of reference to judge between them. Many will also feel that the solution their firm uses is suboptimal in the way that it supports them as that solution was probably not picked by the accountants or schedulers or risk folk but by a cross-departmental team. In the end, the selection may well be suboptimal for some departments and very  effective for others. Then, there is just human nature – the grass is always greener……

We know that many of the vendors work to get their customers to respond to the surveys. Some are effective and some not as effective. Is their bias in this approach? Actually, the answer to that question is no. Firstly, when looking at market leadership perceptions, we remove the responses of the users for the system that they use everyday. i.e. when looking at vendor xzy’s market leadership perception, we count all responses saying xzy is the leader and then subtract from that all users of xzy that said xzy. We therefore remove the bias of a particular vendor’s success at getting responses to a large degree. Secondly, we know that only around 1/3rd of the vendors respondents name their incumbent system anyway! What price loyalty?

The fact of the matter is that respondents may be encouraged by their vendor to respond but once they open the survey, it’s a secret ballot and they can say what they want. Vendors like OpenLink, Allegro, Triple Point, FIS and Brady have good results because they are widely known not because their users respond. Smaller vendors get lower results because their brand isn’t widely known outside of a particular market or industry niche. This is why I find the results interesting. There is a lot that can be surmised about brand strength from the study results and also about the maturity of the sector as a whole. In the last study, I was amazed at how many vendors got at least one mention amongst respondents that were true end users. Remember, it is a backward looking study as well since it represents views at the time the survey was performed.

For me, the results show some minor changes in vendor perceptions that mirror the rise (and fall) of different vendors. The sheer breadth of responses shows a more savvy buying environment as well. The rank of the vendors also broadly follows their relatives sizes and revenues. It is a useful tool – not just for us but for buyers as well…. it is the most downloaded report we do.

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