Canada is a country of small businesses. In a nation of a 33 million people, Info-Tech Research Group estimates that 97.8 per cent of total businesses in Canada have 99 employees or less. Collectively, these organizations account for 41.2 per cent of total IT expenditures, or $35.7 million. This group accounts for a substantial piece of the IT pie.
To understand the market dynamics of this segment, and trying to further quantify how and why businesses purchase IT products, we looked at the motivation for remaining with current suppliers.
What we discovered was that more than 50 per cent of panel respondents were happy to stay with their incumbent supplier. They weren’t looking to switch IT suppliers. Yet, they did. So, why did they switch?
Instead of actively searching for a competitive product, we found that the organizations were ripe for poaching because of dissatisfaction with their current supplier. To highlight, 30 per cent were motivated to switch because of poor service levels. Twenty-two per cent considered a new supplier due to a similar product at a reduced price. Almost 20 per cent of respondents deliberated a new supplier due to a simpler, less complex, product offering.
Of those survey respondents who switched, they were swayed by a similar product with a lower price, or a disruptive product with better features, or a lower priced product. We have seen that playing the lower price game can be extremely challenging, and ultimately harmful and destructive, to economies of scale. Finding and introducing a disruptive product can be challenging – challenging to find and then challenging to introduce – especially since market education is often required.
The number one way of increasing business is through your existing customers. Providing effective service is a surefire way to retain them. It is also an effective way to strengthen your relationship, which will enable additional opportunities to be sourced, uncovered, discovered and provided. Without having a strong customer relationship, the likelihood that opportunities will go undiscovered increases.
With close to 98 per cent of Canadian businesses having less than 99 employees, and 30 per cent of them ranking poor service as the number one reason for not sticking with the incumbent supplier, it is paramount that you take care of your customers. Learn them, know them, respect them, and listen to them. It is critical to your business success.