Closing the Loop on Internet Technology

HP has recently announced a new deal to its channel partners (computer dealers/resellers): a softer, warmer, more caring HP than the one that used to strangle its partners with its right hand while bludgeoning them to sell more with its left. A defensive play in light of Dell starting to compete in the Channel space. Meanwhile Apple continues its stampede into the hearts and minds of the consumer, and SOHO (small office/ home office) market.

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Between these competing vendors it is not “What is different”, but “What is the same”. Information Technology is becoming more and more a universal currency, with silos of innovation as little as 3 month ahead of catch-up competitors. In Big IT, the consulting firms that manage complex tenders are skilled at sizing, costing and implementing infrastructure resources, but the underpinning technology is becoming harder to differentiate. So what used to be non-core, value-added services have become core factors in the decision-making process. In both markets, comfort and convenience are equal in value to performance and functionality. IT has become a customer-centric market, which compels the developers to find common ground in their solutions to enable the customer to embrace a wider selection of similar products. In the macro view of the market one sign of this is the reduction in number of manufacturers, as a result of M&A activity.

There are still some corners of Information Technology where wars of attrition are still being fought, but the warriors are hurting themselves more than anyone else e.g. AMD vs. Intel.

The governing trend is the criss-cross/cover the bases strategy, rather than get left behind. This approach has caused HP to go direct, Dell to go channel, Sun to go x86, and Apple to go Intel. Which begs the question: what is the glue that will bind customers to one vendor or another down the road?

Answer: The focus on the customer relationship, in which technology form and function are the price of entry and the value-adds are the causes of attraction and retention. It’s not there yet, but the manufacturers are being pulled inexorably to this state, and are not sounding too happy about it. For HP to soften on the channel is a clear insight to the fact that resellers own the relationship with their customers, not the HP brand.

How to Map Relationships and Close the Loop

In order to tap into the values of the customer it takes more than mining historical data points. It seems awesome that Google can profile a customer based on all its search preferences and advertising clicks, but it can only predict what a person will do, based only the choices that were/are available. That leaves a manufacturer’s soft underbelly exposed to the unknowable future, that constant precipice that is only a few weeks away from the present.

To understand customer’s values is to form a relationship based on their expectations. It sounds so simple, yet it is the most underwhelmed component of CRM – to get the customer to start talking.

Online communities and social networking are becoming powerful forums for customers communicating their values. Some vendors have incorporated such tools into their customer relationship dynamic and hold themselves accountable to the voice of the customer. But the strategy has not yet reached a tipping point where the customer is taking the lead in defining where the vendor should go next. It will come though, and the first to master this customer relationship dynamic will own the customer only as far as it is willing to support its customer’s mandate.

To close the IT loop with their customer, manufacturers need to invest more into the values of their customers, to fill in the cracks in their value-added programs by applying what their customers are telling them. Customer values should be the biggest innovation driver in product and service development. Most IT Manufacturers prefer to bask in the glow of their intellectual property, which is the fastest track to redundant technology.