IT companies put to the loyalty test

A recent report identifies Cisco, IBM, Microsoft and SAP as companies with some of the most loyal customers in IT. The results show a correlation between loyalty and the bottom line, according to the authors.

Cisco, IBM, Microsoft and SAP have the most loyal customers in IT, according to a report released today.

The fact that they are some of the biggest, most successful IT vendors in the world is no coincidence, said Phillip Bounsall, executive vice president for Indianapolis-based Walker Information Inc., a customer loyalty research firm.

Disseminated through e-mail survey responses, the Walker Loyalty Report was based on 13,100 brand evaluations from IT decision makers, influencers and staff.

"People tend to measure customer satisfaction," Bounsall said. "We don't believe in satisfaction -- 84% of respondents said they are satisfied or very satisfied [with their IT vendor], yet only 44% said they were truly loyal."

The report shows that truly loyal customers want and intend to do business with a company and will recommend it to others.

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The Walker report scored 51 brands based on a proprietary system that it would not define. The IT market was broken down into computer software, IT services, networking equipment, storage systems, servers and workstations. Loyalty scores were driven by a customer's image of the company, whether a company was an industry leader, trust in the company and the company's level of innovation. Brand, quality and whether an organization was customer focused were the most important attributes, while cost and total cost of ownership seemed to matter little, Bounsall said.

Walker identified the following as loyalty leaders: Cisco Systems Inc., Dell Inc., EMC Corp., Hewlett-Packard Co. (in IT services), IBM (in all categories with the exception of computer services), Microsoft, Network Appliance Inc., Oracle Corp. and SAP AG. These companies demonstrated a 12% average profit margin over a three-year period, while companies at the other end of the scale recorded a negative 11% average profit margin. Walker did not publicly break out the companies who had poor loyalty scores.

"There's no relation between satisfaction and loyalty, but there's a correlation between loyalty and profitability," Bounsall said.

Organizations making strategic business decisions should base those decisions on profitability and loyalty concerns, he said.

"By focusing on customer loyalty you're making a commitment to a long-term strategy for growth," Bounsall said.

Organizations should also break down their customers by profitability, Bounsall warned. While the most loyal customers tend to be the most profitable, that is not always the case. For example, companies trapped with a vendor because of strategic or platform decisions may continue to spend out of necessity. However, the study showed that firms with "truly loyal" customers tend to spend more over time than those who are not.

Loyalty scores in IT are generally down overall since Walker conducted its last survey two years ago, Bounsall said.

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