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Blog & ResearchAll Content2024 U.S. Tech Trends Report: 58% of Businesses Regret
a Recent Software Purchase



2024 U.S. TECH TRENDS REPORT: 58% OF BUSINESSES REGRET A RECENT SOFTWARE
PURCHASE

Written by:
Brian Westfall


BRIAN WESTFALL

Author
Brian Westfall is an associate principal analyst at Capterra, covering human
resources, with a focus on recruiting, talent management, and employee
engagemen...
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Published November 7, 2023
9 min read


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TO AVOID MAKING DAMAGING PURCHASE DECISIONS, COMPANIES SHOULD RETHINK HOW THEY
FIND & EVALUATE VENDORS.

Simply put, most U.S. businesses buy the wrong software.

That’s according to Capterra’s 2024 Tech Trends Survey*, in which 58% of U.S.
buyers say they regret at least one software purchase made in the past 12 to 18
months.

The problems start with the initial list of vendors—something that nearly all
buyers (98%) make when buying software. Ninety-one percent of these buyers go on
to purchase from their initial list “almost always” or “most of the time,” then
regret their purchase decision 60% of the time. More than anything, buyers need
better methods for creating a stronger initial list in order to increase their
odds of success.

But the issues don’t stop there. If you’re looking to buy new software, our data
reveals a number of areas—from the makeup of your purchasing team to how long
you take to make a decision—where improvements can be made to improve your
likelihood of purchase satisfaction.


/ KEY FINDINGS

 * A majority of buyers that have experienced software purchase regret (56%)
   describe the financial impact of their decision as “significant” or
   “monumental”—impacting their long-term performance or risking real and
   immediate harm to their business.  

 * Vendor social media posts (77%) and Google Search (67%) are the information
   sources used to make initial vendor lists that produce the highest amount of
   purchase regret. 

 * Buyers who use a mix of IT and non-IT staff to evaluate and purchase software
   have lower purchase regret (54%) than those who only use IT staff (61%) or
   only use non-IT staff (67%).

 * Companies take five months, on average, to evaluate software options and make
   a purchase decision, but they can minimize purchase regret if they do it in
   three months or less.




A SINGLE BAD SOFTWARE PURCHASE CAN DEVASTATE A BUSINESS

Companies across sizes and industries need software today to operate and grow,
and vendors have met the moment to give buyers more options than ever.

Sadly, more options haven't led to better purchase decisions. Not only have a
majority of U.S. buyers (58%) made at least one software purchase in the past 12
to 18 months that they’re not happy with, but nearly a quarter (23%) have made
multiple regretful purchases during that timespan.

Complicating matters further, there isn’t one primary cause for all this regret
that we can hone in on and remedy. When it comes to the product itself, at least
a third of U.S. buyers with purchase regret cite the software being more
expensive than expected (35%), or having difficulty onboarding and training new
users (34%). Vendor-related issues, like a problematic handoff between sales and
implementation teams (48%) or poorly managed expectations (39%), also lead to
regret.

Buyers are running into all sorts of obstacles leading them to feel like they
picked the wrong software—and the consequences couldn’t be greater. Our
respondents tell us that regretful software purchases have drained their IT
budgets, hampered employee productivity, and even made their company less
competitive in their industry.



How quickly a business can recover from these setbacks is essentially a
coin-flip. While 44% of buyers say the financial impact of their poor purchase
decision was minimal and easy to overcome, slightly more (56%) say the impact to
their business was “significant” or “monumental”—impacting their long-term
performance or risking real and immediate harm to their business.

The bottom line is that companies are running into numerous issues when buying
software, highlighting the need to reevaluate the entire process for how they
find, evaluate, and decide on a product. If buyers don’t adjust, and continue on
the path to regretful purchases, some may never recover.


AVOIDING PURCHASE REGRET STARTS WITH HAVING A BETTER INITIAL LIST OF VENDORS

Companies often rely on shortcuts to make their initial software vendor list
quickly so they can get back to other responsibilities. They prioritize vendors
they’ve seen in advertisements, or that came up at the top of a Google search.

And it’s here where businesses unknowingly start their path towards a regretful
purchase—by having tunnel vision for the familiar or popular, and ignoring
better options they don’t know exist.

Case in point: Vendor social media posts (77%) and Google Search (67%) are the
information sources used to make initial vendor lists that produce the highest
amount of purchase regret. These sources can tell buyers which vendors promote
their product most effectively, or can dedicate the most resources to search
engine optimization (SEO), but not necessarily which one makes the best tool for
their needs.

On the other hand, outside of having a previous relationship with a vendor
(48%)—something that isn’t possible if you’re a new business or buying software
in a new category—the information sources that produce the least amount of
purchase regret are product comparison websites and consultations with industry
experts (51% each).



A combination of product comparison websites and consultations with industry
experts can help buyers create a better initial list of software options. But we
also find that knowing when to stop with your initial list is just as important
as knowing where to start.

According to our data, buyers that have three vendors on their initial shortlist
have the lowest amount of regret (53%). Having fewer than three doesn’t give you
enough options to compare and contrast, but having more than three slows down
the evaluation process and leads to decision paralysis.

Buyers with three vendors on their initial list also reduce their likelihood of
regret the most if they actively engage all of the options on their list (attend
demos, do a free trial, etc.). “Depth over breadth” is the best strategy when
evaluating software options.


   HOW CAPTERRA HELPS SOFTWARE BUYERS CREATE A BETTER INITIAL SHORTLIST

Product comparison sites like Capterra give buyers more useful information to
make purchase decisions. The Capterra Shortlist™, for example, offers a snapshot
of not only the most popular products in any given software category, but also
the ones most highly rated by actual users. From this grid, buyers can go to
profiles for specific software products to learn more about their features and
pricing or use the comparison tool to size up alternative products in the same
category.

If buyers feel overwhelmed by the amount of options, however, or don’t feel
confident they know enough about a category to decide which products should be
on their initial list, a consultation with a Capterra advisor is just a click
away. These advisors can give personalized software recommendations based on a
buyer’s needs and pain points in less than 15 minutes.


4 ADDITIONAL TIPS FOR BUYING THE RIGHT SOFTWARE

Using better information sources to create an initial list of vendors is
critical to ending up with the right software, but it’s far from the only area
where companies can improve their odds of success.

Here are some other ways companies can reduce software purchase regret,
according to our data.


1. HAVE A MIX OF IT AND NON-IT STAFF ON YOUR PURCHASING TEAM (OR USE AN IT
SERVICE PROVIDER)


/ SURVEY SAYS

Compared to buyers who only have non-IT staff (67%) or only IT staff (61%),
buyers that have a mix of IT and non-IT staff on their purchasing team have a
lower amount of purchase regret (54%).

Rarely does a business software decision rely on one person. More often, a team
of stakeholders is created to evaluate options, and we find that the makeup of
your team matters significantly.

Having a mix of IT and non-IT staff on your purchasing team is ideal for
lowering your likelihood of purchase regret. The IT members can handle technical
details surrounding things like data migration and integration with other
systems, while the non-IT members can evaluate features and try products to see
if they’re easy to use.

If you lack internal expertise or don’t have the bandwidth though, that’s OK. We
find that companies that use the services of an external contractor for business
software purchases have the lowest regret rate of all (46%).


2. DEFINE SPECIFIC GOALS FOR YOUR PURCHASE


/ SURVEY SAYS

Buyers that experienced regret say the top changes they would make on future
purchases are ensuring alignment among the stakeholder group about
evaluation/selection criteria (38%), and clarifying desired goals and outcomes
(37%).

Part of the reason success or failure is hard to pin down with a software
implementation is that “success” or “failure” aren’t fully defined. Companies
know they need software to fill some type of need, but many don’t go as far as
to actually measure if the software will fulfill that need or not.

Whether the goal is to increase customer satisfaction by 10% or reduce the risk
of a cyberattack by 60%, having defined, measurable goals with your software
purchase can help you determine if your decision was the right one.
Communicating these goals, and using a feature comparison template, can better
align your purchasing team around which products are most likely to check all
the necessary boxes.


3. UNDERSTAND THE TOTAL COST OF OWNERSHIP (TCO)


/ SURVEY SAYS

The #1 driver of product-related purchase regret is the software being more
expensive than expected.

It's not a coincidence that software being more expensive than expected and
poorly managed expectations from vendors are top drivers of purchase regret.
Unlike a lot of purchases, the price you usually see for software is not the
price you pay.

While vendors may advertise a certain price on their website, that usually only
covers the cost of the actual software license. On top of this price (and
usually buried in the terms and conditions), there are add-on fees for things
such as setup, data migration, user training, and customer support.

Asking about and knowing the TCO for a product will keep your expectations in
line and ensure your purchase doesn’t blow your budget. For more help on this,
check out our helpful guides on software pricing models and TCO.


4. MAKE A DECISION IN THREE MONTHS OR LESS


/ SURVEY SAYS

Companies take five months on average to evaluate software options and make a
purchase decision, but can minimize purchase regret if they do it in three
months or less.

There’s value in taking your time, fully weighing your options, and signing on
the dotted line only when you feel like you have enough information. What there
isn’t value in is bloating your initial list with tacked-on products, having
reruns of meetings, and stalling on a decision because you can’t make up your
mind.

Unless you truly feel like you need to go back to the drawing board, once you’ve
fully evaluated the three options on your initial shortlist, meet with your
stakeholder group and make a purchase decision. Our data shows the companies
that take decisive action on a software purchase are the least likely to
experience regret.


WITH SOFTWARE SPENDING ON THE RISE, COMPANIES HAVE A CHANCE TO RIGHT PAST WRONGS

In 2023, small and midsize businesses (SMBs) invested heavily in software
despite recession fears, and we find that 2024 will be a similar story. All
told, 65% of the U.S. buyers in our survey, from SMB or enterprise, say they
plan to spend more on software in 2024 than they did in 2023.



“The way we do things,” including when buying software, can be hard to change in
any organization. That being said, the typical ways that companies find and
evaluate software products have led to disappointment more often than not. If
you plan on increasing your software spend in 2024 like most businesses in the
U.S., it’s important you follow the advice in this report to avoid more
regretful purchases.

But we’re not done. Below are some stats on which businesses experience purchase
regret the most. If you’re more inclined to experience purchase regret based on
our data, it’s even more important that you implement the best practices cited
throughout this report.


WHO EXPERIENCES PURCHASE REGRET MOST OFTEN?

 * Buyers from large (1,000+ employees, 66%) and midsize (250 to 999 employees,
   67%) businesses experience purchase regret more than small businesses (5 to
   249 employees, 51%). We chalk this up to having more bureaucracy and IT
   complexity. 

 * Buyers from newer businesses (1 to 5 years old, 74%) experience purchase
   regret more than older businesses (10+ years old, 45%). Software buying
   experience matters, so if you’re concerned about your lack of experience,
   consider working with an IT services agency that can lend their knowledge.

 * Of the industries represented by at least 30 respondents in our survey,
   buyers from IT businesses experience regret the most (76%), while buyers from
   manufacturing businesses experience regret the least (43%). This may seem
   surprising, but IT businesses often purchase tech that addresses more complex
   needs, increasing their likelihood of regret.


ADDITIONAL SOFTWARE BUYING RESOURCES

 * The Ultimate Guide to Getting the Most Out of Product Demos

 * Why Your Software Search Doesn't Stop After Purchase

 * How To Communicate With Software Vendors During the Purchase Process

 * 5 Things Buyers Wish They’d Known Before The Software Buying Process

 * 6 Steps For A Successful Software Contract Negotiation

Capterra’s 2024 SMB Tech Trends Annual State of Software Adoption Reports
capture global trends across industries and reveal how small to midsize business
leaders are adopting technologies to embrace change, optimize efficiency, and
accelerate growth. Our reports are designed to support decision-makers with the
insights they need to embrace the right technology and services.

 * Capterra's 2024 Tech Trends Report: An In-Depth Look at Software Purchase
   Regret (e-book)

 * Capterra’s 2024 Tech Trends Report: Insights From Marketers To Watch

 * Capterra’s 2024 Tech Trends Report: How Retailers Can Avoid Regrettable
   Software Purchases

 * Capterra's 2024 Tech Trends Report: Manufacturers Are Increasing Tech Spend,
   But Selection Process is Complex

 * Capterra's 2024 Tech Trends Report: Software Selection Best Practices for
   Financial Firms







--------------------------------------------------------------------------------

Methodology

*Capterra’s 2024 Tech Trends Survey was designed to understand the timeline,
organizational challenges, adoption & budget, vendor research behaviors, ROI
expectations, satisfaction levels for software buyers, and how they relate to
buyer’s remorse.

The survey was conducted online in July 2023 among 3,484 respondents from the
U.S., U.K., Canada, Australia, France, India, Germany, Brazil, and Japan, with
businesses across multiple industries and company sizes (5 or more employees).
Respondents were screened to ensure their involvement in software purchasing
decisions. This report focuses on the 700 respondents from the U.S. Respondents
were screened to ensure their involvement in software purchasing decisions.

--------------------------------------------------------------------------------


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ABOUT THE AUTHOR


BRIAN WESTFALL

Brian Westfall is an associate principal analyst at Capterra, covering human
resources, with a focus on recruiting, talent management, and employee
engagement. Over the past decade, Brian’s research on the intersection of talent
and technology has been featured in Bloomberg, Fortune, SHRM, TIME, and The Wall
Street Journal. He also led a session - “Become Data-Driven Or Drown: Why
Winners and Losers of The Next Recession Will Be Decided By Tech” - at the SHRM
Talent Conference & Expo in 2023.

When he isn’t helping small and midsize businesses get the most out of their HR
technology, Brian can be found playing with his two corgis or traveling the
world.


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