In my last post, I talked about the danger of taking a data point from a diverse sample and just accepting it at face value. This week, we'll look at a data point that basically does work that way--with a few exceptions.
At Gartner, we have a method of categorizing tech purchases that we call a High Quality Deal. A high quality deal could be driven by low regret--the customer's expectations are being met and they did not settle for something less than they had hope for. Or it could be expectations met and purchasing a premium solution from the vendor. In either of those cases, it can generally be assumed that both the customer and the vendor are happy--a win-win.
When we studied purchases in mid-size or larger organizations (we focused on the largest purchase the respondent was involved in). We discovered that only 27% of them were high quality. Barely over a quarter. When breaking that down by size of companies, mid-sized orgs were at 27%, large, 26%, and x-large were at 28%. When looking at things by the size of the deal, spend of less than $1m had 27% HQD (note: the percentage of HQDs was a little higher for spend between 25K-250K), 1M-5M was 27%, and 5M+ was 27%.
Basically, three quarters of purchases of technology don't meet the simple criteria for a high quality deal. That is sad--for customers and vendors. It indicates either that customer expectations are way out of line or that the technology just doesn't deliver. It indicates that buying teams still struggle to build realistic plans and vendors aren't helping them.
It is a huge opportunity for improvement--on both sides.
And guess what, this is not just a mid-sized company and larger problem. My colleagues in our digital markets group---the folks that run software review sites like Capterra, GetApp, and Software Advice that connect smaller businesses with vendors--just completed their own HQD study. Their sample was primarily made up of small businesses---from 1M in revenue up to the smaller end of mid-sized (250M). Guess what the HQD percentage was? Yep, 27%. All of their revenue buckets hovered around there. From a spend perspective, we did see a little more variance. The buckets of up to 1000 and 5K to 10K spend were at 30-32%. And the more than 1M bucket was really bad for these respondents 18%).
But generally, it is not about size. Not size of the company. Not size of the deal.
Of all the ways we look at this data, there is one way that shows variance. It's when we look at Enterprise Psychographics. For our larger companies, that is Enterprise Technology Adoption profiles (where the HQD spread by segment goes from 50% at the top to 12% at the bottom). For the digital markets team, they are working on a similar model were we do expect to have good separation.
Fundamentally, the message is the more you understand how your customers think and feel about technology, the better equipped you will be to both predict the outcome of opportunities and focus your efforts to drive the best possible chances of success. I'm excited to see what the Digital Markets team has in store for technology customers and vendors to help the community work together more effectively to drive mutual success. This could make for a positive element in what we know will be an interesting 2021 year.