Where Software and Hardware Companies Diverge: Who’s Ahead and Who’s Behind
2018 Ovum High Tech research report.
There’s a lot of talk these days about the sky-high and rising expectations of customers. No matter what your business, industry, or audience, those in the know say customers expect experiences that are frictionless across channels, intuitive and engaging, entertaining and educational, and highly personalized without coming across as intrusive.
It appears most high-tech companies are feeling good about how they’re meeting these lofty expectations. In a new report from Ovum commissioned by Adobe, “High-Tech Digital Investments Lead to Customer Experience Gains,” 87 percent of high-tech marketers said they’re confident in their ability to meet rising customer expectations. That’s a whopping 10 percent more than the already high confidence they reported in 2017.
And if you look specifically at the software companies and technology manufacturers in the high-tech industry mix, you see that they’re even more confident than the average, with 88 percent of both saying they’re able to keep pace. But that’s where the similarity ends. When you dig into the specifics, you discover that the software and technology manufacturing subsectors are responding to customer expectations in very different ways.
Different subsectors, divergent approaches
When asked to prioritize strategic responses in the face of rising competition and customer expectations, technology manufacturer respondents emphasized new product and service introduction — and by nearly double any other option. For them, it’s largely about making new things that customers want.
But when it comes to beating competitors and meeting customer expectations, those from software companies prioritized experience. Yes, new product and service development is important for them too, but more critical is investing in improvements to the customer experience and having a greater focus on customer engagement. It’s a different mindset from the tech manufacturers, one where the customer’s experience is as important, or perhaps even more important, than the products they buy.
There are other ways these two subsectors diverge. For example, around digital capabilities, it appears the software subsector is more keen on using data. Fifty percent of software company respondents pointed to “using data to inform marketing planning and decision-making” as their top priority in 2018, compared to only 28 percent of the technology manufacturers. In addition, 40 percent of tech manufacturers aren’t engaging customers using contextual and relevant online advertising — and, more importantly, have no plans to do so. Software companies, on the other hand, are much more likely to be doing it already, or are at least planning to.
Software’s head start is the future for all high tech
Because of the nature of their business and the intense competition they face, many software companies have ended up ahead on digital transformation. Across all of high tech, only 16 percent of respondents reported they had completed enterprise-wide digital transformation. But 37 percent of those in software reported they’d completed their digital transformation — with another 15 percent reporting that they’re “well advanced” in the process.
The intense competition and customer demands facing most software companies have also led to early adoption of customer experience best practices — with more data-driven marketing and decisions, a greater emphasis in customer-centric approaches, such as contextually relevant advertising, and, most importantly, a larger focus on the customer experience itself.
This adds up to a head start that can inform how other high-tech subsectors move forward. High-tech companies in general, even those focused on B2B audiences, will increasingly find they need to focus on improving the customer experience in order to meet customer expectations. And this will require embracing data, digital transformation, and a customer experience-centric approach for marketing and beyond. In return, that high level of confidence in meeting customer expectations can continue — even as those expectations grow.
Find out more about High Tech Ovum Research here.