Survey: Tech CEOs Big on Better Customer Enagement

Technology and service provider (TSP) CEOs are putting their innovation investments towards better customer engagement instead of new products and services, according to a recent survey.

The survey by Gartner Inc. was conducted with 501 CEOs from North America and Western Europe at TSPs with annual revenue from $10 million to more than $1 billion.

"Gartner has long believed that the best product doesn't always win and that many other factors contribute to success, especially a positive customer experience," said Todd Berkowitz, research vice president at Gartner. "Customer engagement received the highest investment from an innovation standpoint with 42% of TSP CEOs listing it as one of the top two priorities, ahead of new products and services and significantly ahead of internally focused activities."

Gartner said that some innovation spending was still being directed toward new products and services, but more often it was being aimed at finding new ways of engaging customers, which included sales, marketing and customer success management efforts.

"With only 5% of technology vendors very or extremely effective at differentiating themselves, differentiation continues to be a major issue for TSPs, and it's even harder when the differentiation is tied to product features and capabilities," said Berkowitz. "Superior customer engagement, which leads to a superior customer experience, can be a powerful source of differentiation, although only when based on real proof, versus simple claims."

The survey also found that when compared to other end-user CEOs, those from TSPs were more likely to believe that their digital transformations would play a major role in allowing them to enter new markets and industries rather than just driving down costs and pushing more business through digital channels.

The TSP CEOs said they were using digital business to create revenue/customer value (43% in top three expected outcomes) and cross-industry boundaries (40%) rather than reduce costs (33%), and drive more business through digital channels (30%).

While TSPs in the survey viewed improved customer experience as the single biggest factor towards winning more deals, they said improving sales and marketing effectiveness was more important in regards to hitting future growth goals. TSPs are investing more heavily in sales and marketing than anywhere else, including customer experience or product development.

In the Gartner survey, 62% of the respondents placed sales in their top three areas for investment while 51% had marketing in their top three, compared with only 37% for product development.

— Mike Robuck, Editor, Telco Transformation