After writing the Tesla vs. Jaguar piece last week, where I connected the vastly higher customer loyalty Tesla has to its use of analytics, it occurred to me that an emerging primary selection criteria for any vendor should be its analytics usage. And I don’t just mean IT vendors. I think this could apply to anyone you buy from personally or professionally. But since we focus on IT here, I’ll focus on IT vendors.
I’ve come up with five reasons to focus more on how a vendor uses analytics rather than their analytics offerings as reasons to choose that vendor.
1. The vendor has higher customer satisfaction.
Vendors that use analytics to measure and manage customer loyalty will put more resources toward keeping you happy. These vendors also give incentives to the customers who are so happy with their products that they will advocate for them. Most companies in any market focus primarily on revenue and profit, which means their resources are used to sell you stuff and then cut the costs out of what they sold you. That isn’t a very customer friendly set of priorities.
But firms that measure their success based on how many customers they have that are so pleased with the product or service that these customers advocate for them are instead focused on making their customers happy. This measure of success should be far more attractive to you than ensuring the vendor’s top or bottom line.
2. The vendor listens.
If the vendor is using analytics to find out about you, it is building products that are designed to address your real problems, not those imagined by engineers. If you look underneath the covers of most companies, you’ll see product road maps created and driven by engineers that have, for the most part, never actually consumed these products and rarely if ever even talk to customers. It is no wonder that we often sit through meeting after meeting of vendor presentations where the representatives claim to offer what “users want,” but those things have nothing to do with what users really want. Because of their focus on cost containment and a tendency to focus only on the most connected customers, most of these vendors’ customers go unheard, which is why the industry has so much churn.
Vendors that don’t listen are defined by lock-in programs; vendors that do listen are defined by their interoperability efforts because they know they will gain more than they lose. The vendors rely on analytics to know about your business. They also know you’ll be loyal and that interoperability will help grease the path to them.
3. The vendor is more competitive.
If the vendor uses analytics to understand the competition, it will build more competitive products where it counts. This vendor will have better prices, perform better where you need the performance, and create products that exceed the other choices you may have. Like you wouldn’t bet on slow horses in a horse race, why bet on vendors that don’t understand and can’t therefore step up to the competition. They may not always be best of class, but they are likely to be more consistently at the top than vendors that are simply guessing at what their competitors are doing.
4. The vendor understands how to use the analytics products it sells.
One of the big problems with deploying analytics products is the shortage of real experts. If the firm is aggressively using its own analytics products, it knows how to deploy the offerings successfully and you can learn from its experiences, not just the vendor’s theories. More importantly, vendors that use their own products aggressively are more likely to discover problems before you see them and are thus more likely to get problems fixed once they occur.
5. The company will be better run.
It is no fun to tie yourself to a failing company—particularly when it comes to large deployments or mission-critical projects. The company using analytics successfully is operating on facts, which means its executives are making better decisions, and better decisions should lead to a far lower probability of a catastrophic mistake. This means that you are less likely to be left explaining why you bought an expensive technology solution from a company that couldn’t figure out how to use technology to keep itself alive. With the collapse of Sun, Novell, Netscape and a few other companies in the last decade or so, and the likely collapse of more as we transition to a cloud-based, virtualized world largely run on analytics, buying from the weakest in the herd of vendors probably won’t look good on your resume. So the vendor that can demonstrate that it is using analytics to make critical business decisions is likely the best vendor in which to invest.
Wrapping Up: The Tesla Lesson
In the end, I’m taken by the Tesla lesson that a company that is run and that uses analytics aggressively will be the best vendor from which to buy products. They’ll take care of you better, they’ll sell better products, they’ll provide better deals, they’ll listen to you and address your unique concerns and problems, they’ll know how to best use their products, and they’ll be around to take care of you long term. If the vendor sells analytics, I’d avoid using it if it doesn’t also aggressively use what it sells. But a vendor, or any company, that isn’t able to rapidly ramp up to using analytics in all of the critical areas—from product creation to customer care—will be a dinosaur in an analytics-run world and we know what happened to them.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+