Are Older Software Users Impacting Customer Satisfaction?
The proper assessment of a customer base's strength is obviously critical for any business. Providers of software and technology-enabled services need to understand satisfaction levels. This is often accomplished, in large part, via customer experience (Voice of Customer) surveys. However, these efforts can often produce contradictory results. Low Net Promoter Scores (NPS) or “Key Performance Indicators” (KPIs)—even when compared to other software businesses—do not always correlate with low customer churn or with feedback that reflects a generally satisfied customer base. What could explain this discrepancy?
At Bantry Partners, we have conducted hundreds of engagements evaluating a wide range of technology-enabled services and software markets for our PE clients and their portcos. We have seen these types of puzzling results in many of these markets. Often, what appears to be a generally satisfied customer base (with limited implied churn) provides low NPS and/or KPIs when compared to both industry averages and a composite benchmarks from prior Bantry efforts.
However, through deeper analysis, a common theme began to emerge that largely explains the incongruity. Specifically, many of these software/technology markets have customer bases that are at least somewhat older than the overall US workforce—including insurance brokers and agents, CPAs / tax professionals, real estate agents, home inspection professionals and appraisers, truck drivers and repair shops, field services (e.g., HVAC repair, etc.), among others. According to US Census numbers and Bantry’s primary research data, the average age of workers in these end markets is 54.1 years compared to only 39.8 years for the overall US workforce.
Bantry Meta Analysis: Age-Driven Bias In Software NPS & KPI Ratings
The analysis of dozens of software cases compiled by Bantry Partners drives home that a difference does indeed exist when evaluating customer satisfaction for these “older” customer bases compared to other end user populations. Across 114 software engagements, Bantry identified 31 engagements in verticals with older customer bases. The NPS and KPIs differed markedly across these cases. The NPS for older end users averages 25 points lower than the NPS of other customer bases and KPIs tend to be more than 10% lower across all performance criteria.
In many cases, the lower NPS and KPIs caused some consternation among management teams. Performance and service levels were often questioned. But, were there truly shortcomings? After evaluating all other factors that could be impacting the differential, the Bantry Partners team corroborated that the age of the end user base was the one common variable driving lower scores across most of these engagements—i.e., older end users tend to be more difficult to satisfy than other customer bases. When tenure or age was included as part of the data collection process, a clear difference in customer satisfaction was evident, with younger end users typically viewing the software vendor more favorably. So then the question becomes what is driving these lower levels of satisfaction and perceptions of a software’s performance among older end users? And what can be done to improve satisfaction for this cohort?
Unsurprisingly, older customers are often less tech-savvy than their younger counterparts. As a result, they tend to prefer a simple-to-use, clear and concise UI. For many, the addition of new functionality, customization capabilities and other features only “muddied the waters” and drives lower customer satisfaction as many find it challenging to utilize the software platform fully (i.e., feature fatigue).
One long-tenured customer, in a recent Bantry engagement, noted that “I can’t even figure out how to use the core functionality. How to make it do what I need it to do. But they keep adding more functions that I won’t even use. It’s all too complicated for me.” As a result of the cognitive overload, not only are customers such as these often dissatisfied with their software’s performance and services, but they are also unlikely to want to purchase additional modules or functionalities.
Additionally, many of these users become frustrated by a perceived lack of availability of online tutorials and/or limited live customer support. When asked about what is important to them to have in a software solution, many of these older customers name “ease of use,” “service responsiveness,” and “training programs” as their top concerns.
The good news is that mitigating the concerns of an aging customer base can be relatively straightforward with three key steps:
Evaluate Training Programs: Do end users find the training programs and materials to be effective? Do they focus on the most critical topics for customers? Are training programs readily available and easily accessible? If feasible, are there live trainings for end users?
Simplify UI / UX : As mentioned previously, a common complaint from many older customers is that “the software is too hard to use.” Can the user interface be simplified? Are the steps to conduct the most crucial functionality of the software easy to follow?
Improve CS: Is customer support readily available to customers? Can a customer easily speak with a live customer support agent? Is support/service viewed as effective (are most issues resolved) and knowledgeable?
Ensuring that these key questions are addressed can lead to quick and incremental improvements in customer satisfaction. Bantry Partners has assisted dozens of management teams at software companies in identifying both customer perceptions of their performance and usage of the software platform to develop strategies to drive both customer satisfaction and upselling opportunities.
Case Example: Software for Tax Professionals
For a portfolio company of a private equity client, our team evaluated the market for online tax software for tax professionals as part of a growth strategy initiative. As part of this effort, our team assessed the company's competitive positioning, including an evaluation of the strength of the customer base. The NPS and KPIs for the company were considerably lower than those of the client’s consumer online tax software offering (which has a younger end-user cohort). However, the implied churn of customers and feedback on strengths and areas for improvement did not reflect the lower NPS or KPIs - most customers appeared to be generally satisfied with the company’s performance
After a thorough analysis, our team noticed that longer-tenured customers, primarily CPAs, were most frequently identified as detractors, who also reported somewhat lower KPIs. When coupled with the older age of the entire end-user base (CPAs in the U.S. have an average age of ~53 years according to the AICPA), it was evident that the discrepancy in customer satisfaction ratings was likely due to a “harder-to-please” older population that is not always as comfortable utilizing technology.
This adjusted our client’s views on the strength of the customer base and potential churn, but also highlighted the need for increased customer service touchpoints, enhanced training / tutorials, and the development of a more streamlined user interface to improve satisfaction and drive purchases of additional modules / services.