Peter Drucker on customer retention…

01.4 / Is there a better measure than customer satisfaction to compare / select Procurement applications?

by Bertrand Maltaverne

To close the series of post on customer satisfaction, a question: if, as highlighted in the previous articles, a measure of customer satisfaction is difficult and biased, especially in the domain of Procurement applications, then: is there a better way to compare applications & providers?

Well, obviously there is better!

But before going to that point, I am not rejecting the concept of customer satisfaction, I just state that it can mean many things and can be difficult to interpret. So, to answer the question, I propose a change of perspective and use the notion of “leading” & “lagging” indicator.

If we consider the question: “is a provider / solution better than another one”, you can look at it through the prism of leading / lagging indicator (cause / effect).

  • Leading indicator (cause): are customers satisfied?
  • Lagging indicator (effect): are customers staying with the solution / provider?

The benefit of looking at the lagging indicator (the effect) is that it is easy to read and apprehend by comparison to the customer satisfaction question. Obviously, there is a correlation between the 2!

So, I would recommend to look at the “effect” first and foremost. Call it whatever you want: customer loyalty, customer retention, churn rate… the idea is the same.

The provider’s side of things…

Well, we all know that acquiring customers is costly. But this is especially true when looking at B2B and Procurement. To win a customer, most of the time, a lot of effort is required due to the decision processes of companies; the bigger, the more complex and lengthy! You have to

  • Talk to / convince various stakeholders: CPO, CIO, CFO…
  • Go through an implementation project…

This is an investment that you want to offset by keeping the customer and its revenue as long as possible; simple ROI maths!

The only way to keep customers is to offer a 1st class experience. On all interactions: from sales, to project, to run…

This is called “customer experience” and be it for providers or for Procurement organizations, this is a key competitive advantage!

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