Competition remains fierce among enterprise software vendors. Venerable companies are offering multifaceted suites and standalone tools — all priced, packaged, and marketed differently to entice new customers. Migration services and support have become more prevalent, too, promoting the idea that shifting platforms can be done easily and quickly, all with minimal interruption to everyday work.
Despite intensifying competition, vendors haven't changed their approach to customer retention in a meaningful way over the last few decades. Companies continue to push opaque, long-term licenses, poor third-party system integration, and high price tags for products with tiered functionality to discourage their customers from leaving.
There is a difference between a loyal (or "sticky") customer and one that is stuck. Here's what we've found at Zoho:
- loyal customers are the businesses that have experimented using different tools before committing to one
- they base software decisions on feedback from active daily users within the organization
- they have teams that enjoy using the software, and are excited about integrating it into their daily workflow.
The following are a few reasons why businesses become sticky customers, and how decision-makers can ensure more of their employees are satisfied with the software they use.
Customers don't know what they don't know, and the ability to poke around a new piece of software before making a long-term commitment can enable them to better understand the lasting potential of a solution. Product demos and sessions with sales engineers can help, but purchasing software without thorough vetting poses financial and operational risk.
One popular method vendors use to encourage new business is offering free versions of their products, but with limited capabilities and restrictions on users and data storage. On the one hand, this provides businesses with some flexibility to try new tools without licensing them — ultimately a good thing provided those users have the time, or interest, to experiment. The problem with the 'freemium model' is that customers can't truly try before they buy; the limitations on most freemium products don't allow users to imagine or experience how those tools would impact their work if adopted at full strength.
Another way that customers can experiment is by licensing more comprehensive suites, rather than one-off products. This avails users with more applications and allows businesses to get a bigger picture of how several of one vendor's products look, feel, and integrate with one another. The downside here is that while end-to-end or multi-product suites and platforms are less expensive than licensing tools piecemeal, and afford businesses a broader range of tools to try, they're not free.
Most potential software customers are looking to replace one or a handful of tools in their ecosystem, not everything. A complete overhaul is expensive and too much of a logistical lift for many businesses right out of the gate. In addition, companies struggle to project what they'll need five or ten years down the road.
Flexible licensing matters. For example, by licensing a select number of seats for a platform with a broad ecosystem of apps and services, businesses can keep costs down while allowing those users to experience an array of tools (a model we've bet on as a vendor with Zoho One). As their understanding of these tools grows, the business can increase adoption at its own pace, adding new licenses if, and when, they want.
Of course, not every business is going to see flexibility as their primary software concern, but offering a flexible plan or platform will help vendors drive better experience and more loyalty from a percentage of their customers by exposing more of the organization to different vendors and tools.
Hearing from business users
For lasting change to occur, adaptations to software must be paired with organizational clarity, and enterprise software that encourages this line of thinking is likely to stick around.
One of the biggest obstacles blocking positive and sustained customer experience is the procedure most businesses adhere to when making software decisions, particularly upmarket. In the enterprise, it's largely CTOs and top executives who decide what tools their company will be using, with careful consideration on price, scalability, and interoperability with existing systems. While there might be some input from IT — the people responsible for customizing, maintaining, and developing systems — rarely do end business users get a say on their solutions. Members of sales, marketing, human resources, and accounting teams are just some of people who would be using a tool or system regularly, which is why unilateral technology decisions made by top executives often fail to meet the needs or expectations of end users. On the flip side, deciding to license a CRM by committee, at an organization with thousands of customer-facing employees, is not practical, either.
I believe deep customer loyalty comes from the bottom up, so by giving business users the space to experiment with different tools, organization-wide enthusiasm for their preferred vendor or product grows. Businesses require agency in deciding what software makes the most sense to meet their goals, and that agency is what drives stickiness.
Ideally, by the time a business is ready to commit to a product or vendor for their software, a diverse set of teams has had the space to experience multiple offerings and their feedback has helped steer the purchasing decision. This, as we know, is not always the case. Little by little, leaders can include more of their organization in deciding on the software that impacts everybody, which will speed up internal adoption and overall satisfaction and experience using the tools will improve.
However it's packaged and priced, businesses stick to technology they enjoy using across a wide variety of daily activities. In particular, customers favor solutions that can scale with them, but not if that process adds unnecessary complexity that results in more work for IT teams, business leaders, or end users. Technology should not only improve a business's productivity, efficiency, and bottom line, it should encourage new and better applications that grow the company.
Despite how it's advertised or explained by vendors, migrating data and operations from one system to another is time consuming, difficult to master without creating siloes, and can be extremely cost prohibitive — not to mention dull. Vendors that avail their customers of the tools, support, and services to enable smooth migration will develop longer, more positive relationships with customers. Managing this process properly, and with careful regard to the customer's specifications and timeline, can make all the difference in extending the lifecycle and business potential of customers.
Deep application and service integration, either with first-party or third-party tools, ensures the learning curve remains low for users by automating and streamlining business functions and data flow. Rather than having customers hold accounts with various services — one for CRM and another for finances, for example — tightly integrated and thereby more unified solutions promote increased adoption and better outcomes for businesses through more powerful and enjoyable software.
Without unified products and suites, businesses can't access the right data with the proper context to collaborate efficiently, and silos, incompatibility, complexity, and poor functionality all discourage customer loyalty. But more than anything, poorly implemented or under-performing software takes the joy out of using it.
The sticky factor
Businesses are faced with a dizzying array of software options today, and migration, adoption, and success are not guaranteed. Similarly, the requirements of every business are unique, and only members of those organizations can properly articulate those needs. This is why vendors must have close relationships with their customers, offering solutions tailored to each business's distinct goals. Customer loyalty can only happen when vendors and businesses put in the work to explore multiple tools, through a variety of plans, and with input from the people whose work and life those tools will impact the most. Stickiness will closely follow.