You Want…Maybe They Got It

by Chris Sandlund

Face it. You’re a shrewd judge of quality service. Every day you recognize when the kid getting you a hamburger is pleasant and quick. You appreciate when the cashier at the copy shop slides your job ahead of others because she knows you’re in a hurry.

You make these observations because you go out of your way to please your customers. Your business depends on it. You expect others to act the same way to win your nickel.

So when we wanted to pick the best suppliers of services to small business, we turned to the experts: you. We tapped into that special wisdom you’ve accumulated by running your business. With the help of market research firm IDC, we surveyed small business owners about the services they use.

Each entrepreneur graded nine different services based on 17 criteria. We asked them to tell us the relative importance of each criterion in their choice of services, as well as how satisfied they were with their provider. When is lowest price the most important consideration? How much of a difference does personal service make in your choice?

Not surprisingly, price ­ although important ­ isn’t the most important criterion for any service. You judge a service more on whether something gets done on time, and you give bonuses to firms that exceed your expectations.

Many familiar names top our lists. After all, they became big by providing a great service. But you’ll also find some unsung heroes trailing not far behind the usual suspects. These up-and-comers have won the admiration of your peers by providing outstanding service in the areas that you judged most important.

From the companies that best handle your cell calls to the best at servicing your PCs, we’ve identified the firms that will leave a smile on your face as they serve your business.

Overnight Delivery Service
A few major suppliers dominate the overnight delivery market. FedEx, United Parcel Service, Airborne Express, and the U.S. Postal Service all regularly pick up your packages. But heavy competition among these leading suppliers seems to produce general satisfaction among small business owners.

The rising star of overnight delivery is the U.S. Postal Service. By offering aggressive pricing and improving on-time delivery, the post office is winning an increasing share of your business. The USPS’s relatively recent next-day offering wins the overnight delivery business of almost as many small firms as long-time provider Airborne Express.

One reason that the USPS’s fortunes have risen is the memory of the strike at UPS. With that shut down, small businesses learned to rely on more than one source for getting their goods and documents out. The USPS won a substantial portion of that business.

Naturally, on-time delivery is the most important criteria in judging overnight delivery ­ but you’re not necessarily getting it. Timeliness is rated most important in judging any service by 80 percent of the people we polled, but only 60 percent of entrepreneurs are satisfied that the delivery person got their packages where they were going the next day.

Another area where a potential competitor might win your business is with superior knowledge of the needs specific to your business. Ray Boggs, the vice president of IDC who oversaw the study, notes that a shipper that specializes in antiques, for instance, might woo the business of an antique dealer.

That may be part of the reason that regional firms like Lone Star Overnight win high praise among the few small businesses that use them. As the Internet causes small firms to ship more material directly to customers and to focus their businesses on ever more defined niches, look for specialty firms to win more overnight deliveries in the future.

Local Telephone Service
Basic phone service is your lifeline to the world, so it’s no surprise that long-established companies that are perceived as industry leaders win credit just by being there. Small businesses overwhelmingly turn to the Baby Bells to supply their local phone service. The most preferred local telephone service is Bell Atlantic, mainly due to the large number of small business owners in its service area.

But changes are on the way. Long distance companies are already offering local service in some markets, and many digital subscriber line companies say they want to support voice over their high-speed lines. Your general dissatisfaction with the local phone companies indicates that you’ll be open to these offers. Next year may see big changes in who supplies this service.

Why might you switch? Price is a major reason. Almost 60 percent of small businesses consider competitive pricing an important gauge of their local phone provider. Yet fewer than 30 percent of entrepreneurs are satisfied that they’re seeing price competition. Chalk that up as a sure sign of a continuing monopoly by the Baby Bells.

While high prices provide an opening, competing phone companies would do well to home in on the Baby Bells’ Achilles heel: poor service. Customers consistently are not getting the service they expect, and it’s not available when they need it. If a new competitor is able to show up on time for the installation and knowledgeably answer questions, it may land your business.

Almost as important is the ability to meet all of a business’ communications needs. Although 63.2 percent of small business owners rate this an important factor in the local phone company they prefer to use, only 37.1 percent are satisfied that their needs are met.

Long Distance Telephone Service
Unlike local phone service providers, long distance companies compete on a nationwide basis. But beyond AT&T, which still hogs the lion’s share of the market due to its legacy as the country’s one-time monopoly, no firm is cited as the best by more than 10 percent of small businesses surveyed. Sure, the big names top the list: AT&T, MCI, and Sprint. But small businesses are also willing to try out the small-fry long distance company ­ and are frequently quite happy with the results.

Long distance is an extremely price-sensitive market. You rate the importance of prices high and are very tough on services that don’t fulfill your expectations. Though 50 percent of small business owners say that having the lowest price is an important criterion, fewer than 25 percent are satisfied that they are getting it.

Maybe that’s because you know that there are scores of companies out there willing to slice another cent off your per-minute rate. The problem is that not every firm can cut costs without reducing support. Access to customer service rates very high as a criteria, yet infrequently satisfies you.

Among the smaller firms that have managed to do both well ­ and there are several ­ are such outfits as Excell, CGI, Total America, and NTS. Each of these long distance companies rates higher than the Big Three in overall customer satisfaction. You may not have heard of these companies before, but they’re worth seeking out.

If you like all this competition, expect more of it. Last year, the Federal Communications Commission allowed local phone company Bell Atlantic to begin offering long distance service within New York state. The ensuing competition immediately cut rates for in-state long distance calls. Other Baby Bells are pawing at the FCC’s door, begging to do the same in their regions. They should be let in soon. Expect 2000 to be a year of even more competition for your long distance dollar.

Cellular Telephone Service
The cellular service market falls somewhere between local and long distance. More so than even long distance, cell phone service is price-competitive. But unlike long distance, these are not yet national services. Sure, just about every cell company will let you place and receive calls throughout the country. But coverage can still be spotty and you end up choosing to go with the company that best serves your home market.

Many regions of the U.S. are seeing what Boggs calls a “duopoly.” In other words, two suppliers dominate individual markets. One of those companies tends to be a company with near-national supremacy such as AT&T, which 18 percent of small businesses favor, or Sprint, with 11 percent of your mobile phone business.

The other duopolist in your region is usually a Baby Bell that’s added a cell phone service. In the Northeast, for example, Bell Atlantic Mobile has become a major supplier of cell service. The Baby Bells’ cell services are not limited to the same geography as their local phone wires, but efficiencies of scale in their marketing campaign dictate that they frequently overlap.

However, some regions have several strong suppliers in their market. Among the unsung heroes of the cellular universe are Airtouch, Cellular 2000, and Nextel. Two-thirds of their customers rate them as providing high quality service in the eight most-important criteria for choosing a cell service. The average for all companies in these categories never exceeds 50 percent.

Another area where competitors may attack entrenched suppliers is in product differentiation. Although entrepreneurs want their cell phone service to provide different products to meet their growing needs, only one third of business owners feel that their current service has what they will need in the future.

New entrants may take advantage of that, but expect price to be the main battlefield: You rate it as highly important, and you don’t like the deals you’re getting.

Provider of Internet Service
With the exception of credit cards, no service provider more consistently falls short of your expectations than the company that ties you to the Internet. Across all categories for all ISPs, entrepreneurs are satisfied with performance no more than 35 percent of the time. No wonder this remains such a wide-open environment.

The most frequently cited ISP is consumer favorite America Online. But beyond that, small businesses seem interested in such national powerhouses as AT&T’s Worldnet service or Mindspring, and in such regional suppliers as Erols in the Mid-Atlantic, as well as Baby Bells Ameritech and Bell South.

Despite overall poor satisfaction, some regional niche players and second-tier national ISPs shine. Hydrosoft, EV1, and Compuserve continue to win high praise from their customers.

Crucially, many entrepreneurs are dissatisfied with the service they’re receiving and the prices that they’re paying. These factors erode customer loyalty. ISPs should expect their customers to skip elsewhere ­ especially if they don’t expand their product offerings. A major rift exists between the products that an ISP offers (and, here, you really need to consider the service to be the product) and those that a business wants available for future growth. As small businesses increasingly rely on e-commerce and other Internet activities to fuel new streams of business, their reliance on ISPs will only increase, notes Boggs.

Price may be the determining factor. Although low flat-rate pricing for consumer dial-up access makes ISP access look cheap, businesses that are adding domain hosting and LAN access face a bewildering number of charges that are often difficult to compare. That leaves entrepreneurs feeling dissatisfied. They don’t think that they’re paying the lowest ­ or even competitive ­ rates for their ISP. However, ISPs can be happy with the online account information that they provide. But that’s cold consolation considering you should expect an ISP to provide almost everything on line.

Hardware Service and Support
Brand names matter in hardware support ­ as long as you bought a brand name product. But more entrepreneurs are willing to try smaller companies and frequently love the results. The growing number of PC suppliers is almost directly related to the ability of these regional specialists to send a technician to your office in less than an hour.

But don’t count the big companies out of this game. IBM, Hewlett Packard, Compaq, Gateway, and Dell continue to be the names people turn to regularly to service and support their hardware ­ just as they command the top spots in sales.

Regional specialists PowerSpec, Reynolds & Reynolds, and Northwest Computer aren’t concerned. They manage to top the satisfaction ratings ahead of IBM, HP, and Compaq. Perhaps these giants should expand their build-direct businesses: Dell’s and Gateway’s customized boxes helped them secure satisfaction ratings on par with the local wonders.

As with software, entrepreneurs consistently find few criteria to be highly important. Primarily, they want the service on time and want access to knowledgeable customer support. That should sound familiar to anyone who’s spent precious minutes on hold waiting for a technician to help get a computer back in working order.

The loyalty of customers to local support specialists shows that the neighborhood computer technician has found an important market. With margins dwindling on the sale of computers, the major PC manufacturers are stepping up their efforts to convince you that their support (even if a local guy eventually supplies it) is superior and worth your investment.

To Boggs, it’s the beginning of the next competitive playing field for PC manufacturers. If that means no more listening to tinny classical music or light jazz while you hold for a technician, small business owners will be only too glad to see more choices.

Software Service and Support
Service and support mainly depends on which applications you’re running. An overwhelming number of firms cite Microsoft as their top supplier of service, with IBM, Symantec, and Lotus (a division of IBM) following behind.

Microsoft’s top spot doesn’t rely on its quality service, however. Although infrequently used, such heavy weights as Apple, Novell, and Peachtree rate better at customer service than the Redmond giant. Several smaller competitors are also winning kudos from business owners for their hands-on service.

Overall, however, software service remains abysmal. Small firms feel they can’t get through to customer service when they need it. Worse, once they do, the technicians aren’t that knowledgeable.

Even more troubling is the high cost that software firms (and third parties) charge for service. Only 10 percent of business owners feel that the service and support of their software is competitively priced. Fewer than 20 percent feel that they are receiving the lowest price.

Boggs notes a disconcerting trend in software service. Frequently, big companies like Microsoft are foisting small businesses off on local resellers. They price their direct support high enough to force the small business owner to turn to the reseller for support. It’s a strategy that hardware manufacturers are using, too. But software firms consistently rate lower than their hardware cousins in service. That’s a clear indication that the local reseller is not getting the job done.

One solution, suggest Boggs, might be an increase in Internet-based support options. He cites it as a low-cost way for software vendors to support their existing customers. Given customers relative satisfaction with these vendors’ innovations, they might be receptive to new techniques that solve their problems. With software service held in such mean estate, anything has to be better.Banking Services
Stability and consistency are two traditional measures of a bank. In the face of rapid consolidation of the nation’s banking sector, most banks appear to be upholding the standard. Of all the areas of service judged in this survey, the banking industry most consistently meets the high demands that you set for it.

The big names in banking also rank high in the choices of small business. Bank of America, Wells Fargo, First Union, Chase Manhattan, and Fleet take top honors. Among the smaller banks that entrepreneurs rate highly are AM South, Union Bank, and Citizens Bank. Regardless of size, the quality of service is almost uniformly high. It’s as if Garrison Keillor’s comment about Lake Wobegon applies here: Everyone is above average.

There are a few chinks in the armor, however. Small businesses are not completely satisfied with the information that banks include on their bills. They also feel that they aren’t getting the lowest price available ­ or that there’s not enough competition for their banking services.

Currently, business owners rate online account information as the least important criteria for their bank. Boggs thinks that may change. He predicts that technology will play an increasingly important role in the delivery of financial services. If so, some entrepreneurs may opt for online banks that offer a plethora of information at very affordable prices.

But bank choices have always tended toward very conservative decisions. Knowledgeable bank staffs that understand your business continue to win your praises. With the traditional banker-customer role in flux, customers will seek out someone who can identify the right services to meet their needs. Only time will tell if that means someone sending you an e-mail or someone you sit down with when you deposit checks in your account.

Watch carefully, however. Regulatory changes are creating more consolidation among banks. Having more regional and national players can be a big plus, but only if your current bank doesn’t lose sight of your business needs in all the mergers.

Credit Card Service
Trouble Funk, a Washington, D.C. go-go band, used to sing “Visa, Master Card, American Express. Ain’t got nothing ‘gainst no credit cards, but the cash is the best.” That line would probably get a big “Amen” from small business owners.

Credit card services ­ whether cards you acquire for business expenses or payment services you use to bill customers ­ have the largest consistent gap between importance and satisfaction across all categories in this survey.

Mark much of the discontent down to lack of competition. American Express, Visa, and MasterCard dominate the field ­ with Discover a distant fourth. Sadly, the only areas where these names come close to satisfying small business owners is in their brand names. No wonder officials in the Clinton Administration have been considering anti-trust charges against the major players.

Small business owners are only satisfied with credit card services more than 20 percent of the time in one category. Fewer than 15 percent are satisfied in 12 of 17 categories of service ­ this despite deeming six of the categories important to their choice of credit card.

When charging their business expenses, Boggs says that entrepreneurs are concerned about the cost that they’re paying for their cards. That’s what’s driving them to shop around for better rates. Unfortunately, the number of credit cards available for business isn’t as great as are those for consumers. Often, the entrepreneur turns to his or her local bank for a credit card.

The real problem is on the payment side, however. Strong support from a credit card company plays a crucial role in the success of a small business’ e-commerce effort. Too bad you can’t get cash via your ISP. Fortunately, there are several payment initiatives underway to smooth the payment system. Small business traders on eBay, for example, will soon be able to accept credit cards. Here’s hoping other alliances begin to solve some of the ongoing dilemmas that small businesses face when choosing between credit card services.

Small Business Computing Staff
Small Business Computing Staff
Small Business Computing addresses the technology needs of small businesses, which are defined as businesses with fewer than 500 employees and/or less than $7 million in annual sales.

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