At SAP’s SME Executive Roundtable, the company unveiled a new study that found that the unspoken relationships in SME-vendor relationships are the key to keeping the customer long-term.
NEW YORK CITY – An unwritten psychological contract between the customer and both the vendor and channel partner is the key element in successful long-term business relationships. That’s a key conclusion of the SAP Business Partnership Study, new research which was presented on Thursday at SAP’s SME Executive Roundtable at their New York offices here.
SME has held this event, under different names, ten times in the last six years, with a very clear message they want to articulate to the market.
“SME is one of our best kept secrets,” said Hernan Marino, COO Marketing Head of Global Channels and General Business Marketing, at SAP. “We have almost 300,000 SME customers, over 80 per cent of our customers.”
SAP defines this segment by revenue – organizations with revenues up to $1 billion a year, with some variations for local markets. They also refer to it as their General Business segment.
“Companies with a billion dollars in revenues don’t like being called SMEs,” said Rodolpho Cardenuto, president, Global Channels & General Business at SAP.
Cardenuto noted that this segment – not SAP’s traditional market – has been a priority for the last ten years. It is a partner-led segment for them, with over 80 per cent of customers coming through partners globally, including 9 of 10 net-new ones.
Marino indicated SAP has a three-pronged strategy to broaden awareness of SAP in the SME market.
“One is that we are trying to evolve digitally as fast as we can,” he said. “Earlier this year, we launched the Growth Matters Network, an online forum for SMEs. It’s a one stop community to find out about business in your industry.” It curates sources from many different sources, not just internally from SAP.
The second strategy is to attempt to make their partners more effective.
“We help them to build their marketing arms,” he said. “They represent SAP in the SME space, so they are an always-on priority that we have.”
Broadcasting customer references in a third component of the strategy.
“We realized that we have almost 300,000 customers globally, so we put together an online video tool to get the word out,” Marino said.
The study, crafted and presented by Dr. Avan Jassawalla, professor of management, State University of New York at Geneseo, is part of this effort to spread the word.
“The psychological contract refers to what the customer expects from the IT vendor beyond what is in the written contract – the unspoken expectations,” Jassawalla said. “The more the vendor can take the extra step to meet those, the more the customer will feel a sense of psychological bonding, and commit to a long-term relationship.”
300 SMEs were surveyed in the United States, and 300 in Germany. One of the key findings was that 80 per cent agree that trust and cultural fit are significantly more important than lowest cost in a long-term partnership. Another was that 78 per cent agreed that vendor relationships are now defined as partnerships rather than outsourced support.
“I think trust is the glue,” Jassawalla said. “The customer is constantly thinking in terms of how you can help them solve their problems. And it’s not just how you can help them today, it’s how you can help them tomorrow or years from now, and how you can help them to adapt to change then in order to be successful.”
Ozgur Tohumcu, the CEO of Tantalum Corporation, said these findings resonated with him.
“I had a lot of worries about being a smallish fish in the pond with SAP,” he said. “The psychological contract element is so true. It required building a common understanding of what this means for us. It took a while, but I think we are there now.”