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In a Nut Shell
As competition in the North American Vendor Management System (VMS) market intensifies, a leading VMS provider knew it had to get serious about not only meeting the needs of its customers, but exceeding them in order to stay competitive.
While this firm has always been focused on providing customers with sound solutions and ongoing support, the company decided to put a formal Customer Experience (CX) program in place with Primary Intelligence to capture customer feedback directly from buyers on a consistent, ongoing basis.
“Customer retention is going to be extremely important for us because there are less and less brand spanking new deals where people have never had a VMS before,” says the firm’s Senior Customer Experience Manager.
As company managers began gathering customer insights, they realized the importance of not only customer retention, but other pillars of customer value as well—revenue retention, revenue expansion, and revenue leakage—the three “Rs” of customer experience. In essence, while retaining customers is important, firms must also focus on retaining and expanding revenue and avoiding revenue leakage.
Of the improvements were critically significant
MATURING MARKET CAUSING INCREASED COMPETITION
While the VMS industry is still growing in Asia; Latin America; and Europe, the Middle East, and Africa (EMEA), VMS opportunities are shrinking in North America as the market matures. Indications that the market has slowed include vendor consolidation, lower sales volumes for North American customers, and reduced expansion opportunities in a highly saturated market.
In this environment, not only meeting customer needs, but exceeding them, is critical. “We know that our market is going to get more and more competitive. We know our competitors are marketing heavily to our clients. If we just do what’s expected of us, eventually someone will come along, ‘wow’ our customers, and take them away from us,” says the company’s Customer Experience expert.
“In North America, the green field is shrinking. We anticipate there’s going to be a fight between the big players over some clients.” – Senior Customer Experience Manager at leading VMS provider
IMPLEMENT CUSTOMER EXPERIENCE ANALYSIS
In order to succeed at ‘wowing’ its customers, this provider knew it needed a formal Customer Experience program—a way to capture customer feedback about its performance, including the robustness of its offering, the effectiveness of its services and support teams, and areas for strategic and tactical improvements.
“Before, we might pick up a bit of information here, pick up a bit of information there. The Customer Experience program gave us a way to consolidate the information, as well as look at where in the life cycle we should also be listening in a less formal way and try to structure that,” according to the Senior Customer Experience Manager.
Retention, Expansion, Leakage
Focus on revenue retention
The company’s Senior Customer Experience Manager and her team recognized that while retaining customers is important, it’s not enough. A spotlight must also be put on revenue. “Our revenue either needs to stay the same or grow. We don’t want it to shrink,” says the manager, who notes that stabilizing existing revenue is a key goal for her firm. “Although revenue by customer fluctuates, our goal is to improve revenue year over year through a combination of new business and upselling and expanding within existing accounts.”
Primary Intelligence emphasized the benefits of focusing on customer revenue, stating, “Customer Experience programs are a golden opportunity for vendors to lay the groundwork for ongoing success and future revenue expansion with their customers. Formal programs also detect any shift in the strength of the partnership by giving companies enough time to repair any blemishes before their customers even think of other vendors.”
Explore revenue expansion opportunities
When the company engages in upselling, cross-selling, and other revenue expansion initiatives, it adopts a partnership philosophy to ensure it’s meeting the needs of its clients. According to the firm’s Customer Experience expert, “We’re very much trying to be partners with the companies with whom we work. It’s just our culture and very much a partnership attitude.”
The Senior Customer Experience Manager admits that, like any organization, her firm needs to make money so that it can continue providing solutions to the market, including innovating for the future. However, expansion of client accounts entails “looking at the needs of our clients” first and foremost.
Plug holes in revenue leakage
Addressing revenue leakage is also critical for success. To avoid customers spending less money than anticipated, the company pro-actively looked for ways it could improve its customers’ experiences, such as:
- Improving technology to make solutions “clean, straightforward, and efficient”
- Identifying service gaps that may be negatively affecting customer success
- Investing in corrective actions for issues highlighted by multiple clients
According to the firm’s Senior Customer Experience Manager, “We felt like, if we did those things it was going to make our customers more likely to recommend us and more likely to buy from us again.”
Although some experts believe that controlling revenue leakage is sometimes outside of firms’ control due to changing market and competitive conditions or changing customer requirements, the Senior Customer Experience Manager sees the process as largely controllable—if companies are willing to listen to the voices of their customers. She notes, “I think this is why really listening to your customer is extremely important and why understanding how they feel, and what motivates them, and the different phases of their journey, are really key. Those little things can fester if you’re not paying attention and they can impact your relationship with customers.”
Analyze, Share, Act
Gathering and analyzing data
One of the company’s first steps in launching its Customer Experience program was to utilize Primary Intelligence to capture, analyze, and share insights about its customers’ experiences, and outreach was initiated with the organization’s key customers. Primary Intelligence sought and captured rich customer data, including both quantitative feedback about the company’s solution, support, and overall benefits, as well as qualitative comments that provided context and detail to customer sentiment.
Using filtering and widgets from analytics tools, Primary Intelligence created segmented results based on customer age, type of provider, support tier, maturity level, and respondent role, with NPS comparisons broken out by each segment. The results? Customers were uniform in what they say are the most important solution benefits, regardless of segment. Importantly, however, the data revealed that support needs vary by segment.
The customer outreach was done as part of a two-step process. After conducting an initial set of interviews and using that customer feedback as a baseline, a second series of quantitative surveys and qualitative discussions took place, allowing Primary Intelligence and the provider to see significant improvements that had taken place in just three months. “The results were incredible, especially given the short time period in which this client made such tremendous progress,” stated the Primary Intelligence program consultant.
After collecting Customer Experience feedback, the company’s Senior Customer Experience Manager shared the program findings throughout her organization, highlighting key strengths in the company’s relationships with customers, as well as areas for improvement. “I told each team, ‘Here’s how your group can directly impact specific areas, such as Net Promotor Score.’ I also gave our teams encouragement that we’re not far off from our targets,” according to the company’s Customer Experience expert.
The provider has also been generous when sharing information with employees about the company’s Customer Experience initiatives as a way of motivating employees to remain customer focused. According to Senior Customer Experience Manager, “I’ve shared higher level cross-functional initiatives that we’re undertaking to move the needle. Getting organizational alignment, along with insights on the role each person plays in the CX process, has been key.”
Turning insights into action
Along with sharing Customer Experience results, the company initiated internal awards programs for its employees, as well as specialty phrases, such as “Be unbelievable!” and “Be surprising!” to encourage employees to go above and beyond when meeting customer needs. The firm also offers continuing education that encourages employees to learn more about the Customer Experience process.
This provider ultimately hopes its Customer Experience program will help turn customers into advocates. “Identifying promoters is key to revenue expansion and increased profitability,” states the firm’s Senior Customer Experience Manager.
“There’s an influence promoters play on new deals. There’s also an increase in the number of renewals and new products purchased by advocates.” – Senior Customer Experience Manager at leading VMS provider
The journey this company has undertaken with its Customer Experience program has led to an increased focus and attention on customer initiatives aimed at improving Customer Experience. According to the Senior Customer Experience Manager, “It got organizational focus on this topic.” The firm’s CX program also resulted in increased budget for customer initiatives to maintain a strong focus in this area.
As a result, this provider has seen an increase in ROI and in its Net Promoter Score. General customer sentiment has also improved. Between the first outreach and the second outreach, the organization saw improvements in 12 of 27 criteria customers used to judge effectiveness, including solution, support, and benefits criteria. In four of the 12 areas of improvement, positive customer sentiment increased by 10 percent or more.
Simply asking customers for their feedback is evidence of the organization’s ongoing commitment to a customer-centric approach. The firm’s Customer Experience expert notes that, “The fact that we gathered a lot of feedback, our clients definitely saw that as a positive.” Adds Primary Intelligence Program Consultant Lisa Allen, “This client is to be commended for embarking on such a thorough Customer Experience program. It adhered to recommended best practices that included occasionally difficult conversations.”
- Customer feedback showed a 44% improvement in the categories customers use most often to judge the company’s effectiveness.
- One-third of the improvements were significant, representing a 10% increase in favorable customer sentiment.
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