Good customer experiences would lead to consumers being ready to pay more, according to new research released by RightNow on the eve of its European Summit in Wales.
According to the research – conducted by Harris Interactive – some 84% of customers would be prepared to pay 5% over the standard rate for a superior customer experience, 62% would pay 10% more, 25% would pay 15% more and 11% would pay 25% more.
"The customer experience imperative is essential," argued RightNow CEO Greg Gianforte. "In the US we found that almost all consumers had stopped doing business with a company because of a bad experience. Take all profit and loss lines for US airline industry, they have never made any money. This year they will lose about $2 billion. If they decided that their customers were important to them they could generate an incremental $10 billion in revenue.
"CRM is four letter word," he joked. "Everyone has had a failed CRM project. If you just apply traditional CRM all you're going to do is speed up your internal processes and annoy your customers more quickly. Everyone associates CRM with sales automation. If you go into a company and say you do CRM, then the business manager will say 'oh, we tried that, it didn't work'. But when we talk about customer experience and how we help customers to improve that experience, then the VP of customer care says we need to talk to his manager. Customer experience subsumes CRM."
Bad customer experience
Bad customer experience has become something personal in the Gianforte household of late. "My son shipped home his computer from college for the summer, but by the time it arrived we were on vacation," he explained. "So it was returned to the college of course and he wasn't there. It was also damaged. My wife took this up as a challenge and called every week to find out about this. Every week they didn't know who she was or what the call was about. There is no excuse for not having continuity of conversations."
On a happier note, the Gianfortes came across an unexpected piece of good customer experience as they passed through Heathrow this week. "We had a beautiful experience with people who were selling Heathrow Express tickets in the arrival hall. They swiped my card and in five seconds I had my tickets and didn't have to queue up. I could get on an earlier train. That's a good experience. I would have paid more for that ticket because of the good experience."
Gianforte is keen to see changes in the way the software industry itself works and cites the example of RightNow's Cloud Services Agreement as an example. This was unveiled earlier this year as a push to update and standardise the way that Cloud Computing contracts are managed. "As an industry, we have brought the worst aspects of enterprise software along with us, especially in relation to licences," he said. "The CSA takes risk away from customers. We've seen customers make commitments faster as a result."
But there are still laggards out there. "We've thrown down the gauntlet to the rest of the industry. I proposed to the Software and Information Industry Association (SIIA) that they should look at the CSA as a standard," said Gianforte. "Some of the smaller vendors were interested, but we had SAP and Accenture and Oracle on the panel and they weren't so sure it was good for them."
Gianforte has had his own run-ins with Oracle recently. "Let me tell you about Oracle," says Gianforte. "We needed a new accounting system. The one we had was at end of life so we set out to procure a new one. There are really not that many options out there. That German company that makes accounting systems was probably too big for us, so we had a shortlist of Oracle and NetSuite. Now I didn't trust Oracle as far as I could throw a stick! We try to keep our data centres an Oracle-free environment."
In fact, RightNow had purchased some Oracle software the previous year, he recalled, but found that in order to scale it it was necessary to put it onto 30 servers. That resulted in a visit from Oracle's compliance people clutching a multi-million dollar bill. In the end RightNow settled for a lower rate of $250,000, but winning price certainty was a pre-requisite for this new accounting system.
"I said I wanted price certainty and I wanted the ability to cancel annually and to be run in the Cloud," recalled Gianforte. "Oracle said here's third party to run it for you, now here's a bill for a perpetual licence. I said I wanted price certainty. They said 'oh, you want to pay over time? So you want to lease the software!'. That's the way they work. For everything that Oracle says, they are not a Software as a Service company. So we went with NetSuite who gave us 7.5 years of price certainty."