October 2014: The Brutal ‘Logic’ of Consumer Behavior
One of my favorite topics when speaking to technology vendors and the capital markets firms that consume their services is what it was about a vendor’s presentation that struck a chord, leading to the awarding of a contract. Over the years, these conversations have revealed a number of reasons for the selection of one provider over other hopefuls: time to market, price, functionality, an existing relationship, and the flexibility of the service or technology in terms of its ability to slot in alongside legacy and proprietary applications. Then there is reliability, although not in an area where most people would expect. More than a handful of CIOs and CTOs from both buy-side and sell-side firms have explained to me that unreliable sales people have scuppered their chances of landing potentially lucrative deals simply because of their tardiness when it comes to observing deadlines and their poor preparation it terms of delivering the all-important pitch.
Waters has published numerous stories over the years focusing on the pressure CIOs and CTOs feel when it comes to selecting service providers. Often the level of success during their tenure is directly influenced by the judiciousness of these decisions, which, when it comes to bulge-bracket firms, can run well into the thousands. Maintaining these relationships and managing what is colloquially known as “vendor risk” is often cited as one of the primary reasons for CIO and CTOs losing sleep.
“Often, just showing up on time, not looking as though I had slept in a bush, and ensuring that my pitch focused on the needs and challenges of the client as stipulated in the brief, was sufficient for us to make the shortlist, and in certain instances, enough to win the contract outright,” explained the head of sales for a global third-party technology vendor when he and I discussed the ins and outs of the vendor selection process some time ago. I don’t doubt the veracity of his claims, given his firm’s peerless track record of consistently landing new business over a decade-long period, and, more crucially, consistently retaining those clients.
Consumer behavior is a fascinating subject and one that many third-party technology vendors serving the capital markets could learn a lot from. We all know why consumers should act in a particular fashion when exercising their choice, but how they should act and how they do act are seldom the same thing, invariably determined by hard-to-measure qualities like reliability and amenability, as opposed to functionality and price. Frequently this behavior defies logic, but as this column has posited on numerous occasions over the years, consumers’ perceptions are their realities.
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