One of the most coveted feathers a company can have in its competitive bonnet is the willingness of customers to recommend its products and services to others. Not only are fulsome testimonials cost efficient and effective forms of promotion, they are also indications of customers’ inclinations to remain loyal over time.
Yet, despite the clear benefits, many of today’s oilfield suppliers fall short in generating any kind of palpable enthusiasm toward their products and services on the part of clientèle, in part because suppliers fail to understand the ingredients needed to engender real customer devotion. EnergyPoint Research's data consistently show that performance in the area of service and professionalism — generally defined in our surveys as the flexibility, responsiveness, and accountability a supplier shows toward its customers — typically trumps such factors as technological prowess and geographic reach in determining whether customers stick with suppliers.
The connection between the level of service and professionalism exhibited by a supplier and customers’ willingness to recommend its products and services to others can be seen in the long-term ratings and ratings trends of the industry’s three largest global service providers – Baker Hughes (NYSE:BHI), Halliburton (NYSE:HAL) and Schlumberger (NYSE:SLB).
In EnergyPoint’s 2004 and 2006 drilling and wellsite services surveys, Baker Hughes led this pack of three in both sets of metrics. However, Baker Hughes’ scores have since deteriorated significantly as the company has embarked on a (seemingly) disruptive strategy to both deepen and broaden its capabilities and global footprint. And if part of its objective is to look and behave more like Schlumberger, our data suggest the company might be succeeding.
However, we doubt the lower service and professionalism marks Baker Hughes is now recording in our surveys, especially in the areas of flexibility and responsiveness to customers’ needs, was ever part of the master plan. We are certain it is not what customers are demanding these days as respondents continue to voice concerns on the issue.
Alternatively, the most compelling story among the big three remains that of Halliburton, whose ability to effectively maintain its service and professionalism ratings during periods of record activity and demand has contributed to a notable rise in the willingness of survey respondents to tout its products and services to others. The impacts of service and professionalism as well as overall customer satisfaction trends can also be seen in respondents’ expressed intentions to reuse a specific vendor within the next year. On a 10-pt scale, 66.7% of Halliburton’s and 64.1% of Schlumberger’s 2008 evaluators indicated the probability of respective reuse of each supplier within the next 12 months as “highly likely” (i.e., a “9” or “10” rating on a 10-pt scale).
Conversely, only 48.7% of Baker Hughes’ evaluators indicated they were highly likely to reuse its services. Differences in contractual obligations and size could have influenced these results to some degree, but we doubt they explain a significant portion of the gap.