Sage - A deep customer focus

Sage - A deep customer focus

Summary: Sage's analyst briefing last week had one interesting insight: the company's major focus on customer intimacy. It's a rare thing to hear of such a focus from an ERP firm.

SHARE:
TOPICS: Tech Industry
16

Sage had a number of industry analysts out to Boston last week for a one-day event. This was the first analyst event they’ve had in North America in almost a decade.

While Sage has at times seemed to me to be a company that changes slowly, apparently there were a number of changes underfoot for the last few years. Customer intimacy is the biggest change.

Management gurus Michael Treacy and Fred Wiersma opined that great companies excel in one of three disciplines: Product Innovation, Process Excellence or Customer Intimacy. In the hundreds of software companies I have evaluated over the decades, 90+% of them try to be product innovators. I have rarely encountered a customer intimate software vendor. In fact, I can only recall two.

Sage is now the third. The company’s third presentation last week focused on this subject. The company has some 150+ million customer touch points/month. Their goals are to:

- Do basics really well - Seek out opportunities to go above and beyond - Create experiences that customers will share with others - Create a memory, a lasting impression, that leaves customers feeling fantastic

I spoke with a number of Sage’s top executives at this event. I spent time with the current North American CEO, the incoming North American CEO and the new Sage Group CEO. I pressed for details and insights into this cultural change. I wanted to see whether it transcended borders. I wanted to see if it was a sincere change driven from the top down.

In all of those interactions, I collected several data points that suggested the change was real. In one of those exchanges with the Sage Group CEO, I asked if Sage had moved out any personnel who weren’t 100% focused on delighting customers. I got an enthusiastic response to that question. When I pressed further to see if they’ve culled any channel partners for not being particularly customer focused, I was told that channel partner metrics were coming and, yes, they will only want customer focused channel partners.

Sage is heavily vested in net promoter scores. Wikipedia has this nice, succinct definition of these scores:

“The Net Promoter Score is obtained by asking customers a single question on a 0 to 10 rating scale: "How likely is it that you would recommend our company to a friend or colleague?" Based on their responses, customers are categorized into one of three groups: Promoters (9–10 rating), Passives (7–8 rating), and Detractors (0–6 rating). The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter score (NPS).”

Sage’s net promoter scores are improving on average across the 22 products they measure. This focus is resulting in rising renewal rates and revenue per customer. (Both of these statistics are also rising as Sage is selling a number of cloud-based add-on applications (e.g., PCI compliant credit card processing) that are generating significant increases in customer revenue and are actually creating greater customer lock-in.)

Sage’s cloud strategy is still a work in process. The company has a few add-on cloud applications that work with several of its key product lines. Many more of these are being planned . Will the company re-work its legacy applications to become true, multi-tenant SaaS solutions? Not really. Some solutions will be offered on a hosted basis. A few will be cloud-based. Most will remain on-premise solutions with cloud-app attachments.

Topic: Tech Industry

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

16 comments
Log in or register to join the discussion
  • Buyer Beware

    From a strategic point of view, a business owner must consider not only what they are buying but who they are buying. Sage is not a software company who competes with the likes of Microsoft, Intuit, etc. Sage is a holding company. They acquire companies in the software industry and their internal accounting practice is cost based (R&D and product innovation is starved of financial resources and the majority of their budget is focused on sales and marketing). For the most part, Sage only maintains what they have acquired from the companies who originally were the innovators and developers of those products that are still enjoyed today. Sooner or later, their portfolio will be for sale and the customer?s investment will be faced with continuous change as those product lines are sold, and then sold again. From my personal experience, Sage has marginalized the original quality and effectiveness of those companies they have acquired. Industry experts have been fired; once professional support departments are reduced to kids reading knowledge base articles; and product development and QA resources have been consolidated to the point of impotence. Again, they market a good image but the substance of this company is what lurks behind the curtain. Having worked for a company who was acquired by Sage, we were appalled at the severe cost cutting measures of customer service departments and outsourcing of other vital departments.

    `mark
    marcked
  • RE: Sage - A deep customer focus

    They may claim to be customer focussed, but as a person heavily involved with one of their products, I can't say that I can see this.

    I would be nice to see reporters actually provide some investigative journalism or in depth analysis, rather than regurgitating a press release
    GLComputing
  • Shouldn't an analyst day have included analysis?

    Where's the analysis? Anyone surprised that at an analyst day event Sage enthusiastically told you they were customer focussed?

    Will Sage be hiring another Chief Customer Office to replace Doug Meyer who recently departed? What particular areas at Sage were singled out for improvement?

    What specific changes might the new incoming Sage North America President (who I understand had podium time at the event) have to offer?
    anerpvar
  • RE: Sage - A deep customer focus

    I am involved as a partner with the ACT! product line which Sage, upon the acquisition, immediately forced into an annual release cycle in an effort to generate recurring revenue. This results in a product with an emphasis on shiny new features over defect fixing that is released before it's been adequately tested due to the unrealistically short development cycle. Critical (liability) defects are corrected in a continuous stream of Hot Fixes and Service Packs which put you in a continuous cycle of installing/applying (with ACT!, you must patch ALL users simultaneously), yet, in turn, break more functionality. Meanwhile, a growing pile of 'annoyance' defects never get resolved, despite vague reassurances from Sage to 'buy the next version' for corrective relief. Lately, Sage has seemed to benefit from Microsoft Office and OS releases by not offering patches to maintain compatibility - instead requiring you to (of course) buy the next version. Unlike the 90's when ACT! was dominant, there is a tremendous range of choices for Contact Management & CRM these days, if users get tired of the declining quality and the never-ending cycle of updates, they have more alternatives than ever before, including so many SaaS solutions which eliminate the frustration of patches and hot fixes and releases and updates.
    kchieff
    • RE: Sage - A deep customer focus

      I love ACT! I have been using it since version 2, but never got past ACT! 2000 (aka version 5); it does everything I want, so no need. The only thing it doesn't do is run on a Mac (at least not without Windows running through VMWare or Parallels or whatever). I would really really like Sage to produce ACT4Mac. There used to be an Mac version back in the days of OS9, so I would have thought it's not too much trouble to bring it up to modern day standards. With Macs increasing in popularity, there is undoubtedly a market for it, if only they took the trouble to look.
      pianoman1962
    • RE: Sage - A deep customer focus

      @kchieff Quite right, Kevin. In addition, since the departure of David van Toor, no-one from Sage's senior management has dared face or respond to any ACT! user or partner.
      GLComputing
      • Dvt

        @GLComputing Following DvT's departure, Sam Hunter briefly was the GM for ACT! or maybe ACT! was shifted to his 'Value' group - I don't remember which, but his observations on the state of ACT! were refreshingly honest and accurate. Alas, his association with ACT! didn't last long.
        kchieff
    • RE: Sage - A deep customer focus

      @kchieff Actually DvT corrected me about ACT! being in the Value Group in a comment on my blog here:
      http://blog.glcomputing.com.au/2008/12/sage-repositions-act-moves-from-crm.html
      Yes, I did get to speak to Sam and thought he "get" the ACT! user base. But, as you say, he didn't stay there long
      GLComputing
  • RE: Sage - A deep customer focus

    I'll just say that of the several people I know that work / have worked at Sage, they'd have a different opinion of management's emphasis on Customer Intimacy. Let's give the CEO the benefit of the doubt and say that the CEO's message is not getting through line management to the floor.

    The real message from the CEO is all about personnel ratings and compensation. If employees are rated based on some form of customer service scale and compensated that way, the CEO is truly pushing for customer service. If not, the CEO can jump up and down, scream all s/he wants, but customer service will not be a priority by the troops.

    Years ago I worked at a place that wanted the sales guys to produce a bunch of weekly reports. The top sales guy would provide a few sentence weekly status report, but refused to do more. After a few arguments with the sales VP, he finally told the guy to shut the F up. He told him to pay him for the status reports or leave him the F alone - he was compensated 100% on sales. The sales guy finally left and still makes more money now than he did at that place. The VP didn't have a clue.
    Regulator1956
  • RE: Sage - A deep customer focus

    When I first saw the headline I thought I might be in for some delicious satire, only to find that the author seems to actually believe it (what do they put in the punch at these analyst events???). I've been doing small business tech support for over 30 years and I'm hard-pressed to remember a company that to me seems less customer focused than Sage (maybe Symantec in the late nineties / early aughts). The ACT! and Master Builder small business clients I support continue to use Sage products NOT because of their support NOR because of the quality of their products but ONLY because after years of using the applications they believe the change would be too painful and disruptive to operations. EXAMPLE (one of MANY) - the 6 user client I recently upgraded from XP / ACT 2005 Premium for Workgroups to Win 7 / ACT! 2011 Pro on new PCs. When their existing database refused to convert by normal means, the first three calls to tech support and the one to a "certified ACT! consultant" resulted in several useless exercises outlined in the "knowledge base", 4 - 6 hours of wasted time (and client's money), only to find, on the fourth call to support, that a higher level support "engineer" actually has an internal-use-only tool that, through a remote connection, converted the database perfectly in mere minutes. So if by "customer focus" you mean let's focus on our customers as they jump through lots of hoops and eventually we'll deliver what they need.....
    Go out and talk to a bunch of customers and former employees and publish something a bit more reality-based.
    marv@...
  • incoming new intimacy?

    "I spoke with a number of Sage?s top executives at this event. I spent time with the current North American CEO, the incoming North American CEO and the new Sage Group CEO"...

    Apparently their CEOs change a lot yet somehow they manage to maintain the intimacy. Or is it incoming new intimacy that's not there yet?

    Trembling with anticipation,
    Alex Gerulaitis
  • The Sage Customer Focus

    As one of the Sage executives who briefed Brian on our customer experience focus, I'd like to add a few comments. Sage is certainly not perfect, but we are committed in all areas of the business to improving the customer experience and are very actively on a path of change that encompasses our people, products, and processes. We have engaged all of our nearly 4000 employees in a common approach; we have extended this training to our partner channel and added recognition and reward centered on their customers' experience; we are investing broadly in common infrastructure to ensure a common experience; and we are focused on product quality and are spending a similar percentage of revenue on R&D as our competitors. And, as Brian noted, we are seeing the benefits in areas like improved retention and higher Net Promoter scores. We recognize that we're on a journey, and we are committed to making the Sage Experience a positive difference. Dennis Frahmann, EVP of Marketing, Sage North America
    dennisfrahmann
    • RE: Sage - A deep customer focus

      @dennisfrahmann If what you and this article says is true, why is then, that your DacEasy division stopped taking calls for the majority of January 2011? Not just technical support, but even the customer service, which was needed to purchase the newest release of the DacEasy also that month. This product couldn't even be purchased from your website. Oh, and did I mention, the release prior to that was in October 2010. A three month release cycle. Yes, very customer focused. When clients ask me now, should I upgrade my product, I suggest to them to please consider another product entirely.
      giscoobe
  • Encouraging Moves from Sage

    With each new management regime, there is always the potential for change (hopefully for the better). I won't deny it - I'm a big fan of most of the current leaders at Sage North America.

    I choose to remain hopefully optimistic with the understanding that it takes a long time to right a ship the size of Sage. I would love to see more $$ in R&D for most of the products I work with - I'm sure others are the same with their product sets.

    I have seen some really great things coming from the marketing side of the house lately and that's very encouraging. I think Sage is getting better at getting the message out to the channel and the customers.

    On the flip side, I come from the Accpac / Accpac CRM (now SageCRM) side which is a relatively new acquisition so I can see how individuals that have been around a lot longer than I may have the "seen it, heard it" attitude. Hopefully we will all be pleasantly surprised in the years to come.

    PS. I'm a partner AND a customer - we use Sage software in-house to run our growing concern.
    Azamba
  • Sage

    I think, Sage is going right at its side. other than looking at customer needs, they have to look at their business as well. On the other hand, there are many software vendors, for example, <a href="http://www.globalkap.com," target="_blank" rel="nofollow"><a href="http://www.globalkap.com," target="_blank" rel="nofollow"><a href="http://www.globalkap.com," target="_blank" rel="nofollow">http://www.globalkap.com,</a></a></a> providing exceptional, high quality software to customers around the world. Other than being innovators, they are known as customer intimate vendors as well.
    Cameron Nabeel
  • RE: Sage - A deep customer focus

    Every billion dollar company is going to have a few disgruntled employees, partners, and customers who flame a positive report. Too bad. <br><br>I have a long history as an ACT! partner and from my perspective there are many positive outcomes since Sage management has emphasized the customer experience and I'm glad you're reporting on it!<br><br>I first read about Sage adopting Net Promoter Score (NPS) in Answering the Ultimate Question How Net Promoter Can Transform Your Business written by the creators of NPS who have implemented it in hundreds of organizations across multiple industries with great success. It's an inspiring book citing many case studies of success in client-centric businesses.<br><br>I see the transformation. Sage's partner program has improved substantially but more importantly my clients satisfaction ranking of ACT! has doubled in the last year (a metric I measure). Not a surprise given their focus on the customer.
    stevestroz