In last month’s column, we covered the latest results from our annual study of global wholesale provider performance with their customers. We also discussed an emerging satisfaction gap by customer size. As wholesale providers focus on growth verticals, large customer satisfaction with overall operations is increasing and satisfaction among small and midsize customers is stagnant (or slightly declining). This month, we look at how this trend is playing out in satisfaction with brand and network performance.
Among companies spending more than $25 million annually in global wholesale services, brand ratings improved by 6 percent this year compared to 2013. With smaller-spend customers, these ratings increased by only 1.8 percent. Similarly, the year-over-year change in brand ratings was more exaggerated for larger companies when we sized buyers by numbers of employees. Among companies with 100,000 or more employees, brand ratings surged 7.9 percent this year. At the same time, companies with 10,000 to 100,000 employees rated brand 5.6 percent higher and those with fewer than 10,000 employees rate it just 1.5 percent higher.
Certainly, this trend line is positive in all cases, but the disproportionate increase in satisfaction among larger customers suggests that ongoing targeting of high-opportunity segments by global wholesalers is driving greater satisfaction among the most promising customers in terms of future opportunity. A spot-check of brand satisfaction by vertical supports this hypothesis. Brand satisfaction in the wireless and emerging markets verticals jumped 5.7 percent and 4.6 percent this year, respectively. (The emerging-markets vertical consists of the cable/content/ISP verticals, resellers/systems integrators and data center/hosting/cloud providers.) In contrast, the wireline vertical rated brand higher as well, but by just 1.9 percent year-over-year.
Pivoting toward network performance (an always vital driver of purchase), ratings in this category reversed a slight decline from 2012 to 2013, resulting in a 2.1 percent year-over-year increase in 2014. And again we see a significant gap between large customers and their smaller counterparts. Among customers spending more than $25 million in annual spend, satisfaction jumped 5.4 percent higher this year while customers south of the $25M mark rated network performance 1.1 percent higher.
The same dynamics apply when we break customers down by numbers of employees. Among those with 100,000 employees or more, satisfaction with network performance jumped by 6.1 percent this year. Customers with 10,000 to 100,000 employees rated this category 3.5 percent higher, and buyers from companies with fewer than 10,000 employees rated it just 2 percent higher.
Pulling all of this together, several conclusions become apparent. First, the relatively lower satisfaction of smaller wholesale customers signals a potential market opportunity. Throughout our long history of measuring wholesale customer satisfaction, we have witnessed wholesalers successfully pivot to fill voids.
Additionally, even though we are discussing wholesale customers, the risks/rewards of revenue concentration and diversity apply. When it comes to large customers, their potential impact on revenues and network economics works in both directions (read: big gains or big losses). Serving pools of smaller customers mitigates the pain associated with customer loss here and there, but allowing large satisfaction gaps to emerge exposes carriers to constant shopping and the risk of subsidizing customers they don’t truly own. All in all, wholesalers need to take a balanced approach to customer recruitment and retention with strategies built around customer diversity. In other words, the pursuit of low-hanging fruit is smart business, but by itself is not an optimal long-term strategy.
This analysis orginally appeared at the ATLANTIC-ACM blog at B/OSS Magazine.