Cisco: high prices cost SMEs customers

Better deal: Customers are now more likely to switch supplier

End users are increasingly turning their backs on SMEs that fail to deliver on price, according to Cisco’s 2010 Customer Kings report.

Thirty-one per cent of respondents to the study said customers are more likely now to change suppliers in return for a better deal than they were in the past. In last year’s poll, just 23 per cent of SMEs said they expected customers to walk away in response to a competitor undercutting them.

To counteract this, 61 per cent of the 1,000 SMEs who took part in the study said they had introduced new measures in the past 12 months to help retain their customer base.

David Critchley, director for UK commercial and SMEs at Cisco, said: “One of the interesting trends from the survey is the fact that social media is becoming more widely embraced by SMEs when it comes to managing customer relationships.”

The study showed that 40 per cent of SMEs use social networking sites to engage with customers, with 44 per cent claiming it helped them understand their clients’ needs better.

The number of firms using email to engage with customers has also risen by 12 percentage points to 52 per cent over the past year.

Bob Tarzey, service director at analyst Quocirca, said: “A lot of SMEs and enterprises are taking a serious look at how to utilise social networking sites to take the place of services they may have paid for in the past, but the impact can be limited.”

Kathy Stiff, managing direc­tor of consultancy Supporting Customer Care, warned that customers are also well versed in using social networking sites to air grievances about poor service.

She said: “A lot of larger enterprises have systems in place to protect their reputations in the face of these things, but SMEs often do not have the time or the resources to moderate what is being said about them.”