Richard FoutsAutomating the management of customer references is an emerging software category whose time has come. Companies like Boulder Logic, Point of Reference, References-Online and Metia all see how complex it can be to not only recruit customers to act as references, but to manage them as well. When customers act as references, they put their reputations on the line. And when customers migrate to evangelist territory, they are worth 10 great sales people.
Case in point: now that Metia has supercharged Microsoft’s customer reference solution, the sales process moves faster, site traffic has increased and more prospects and customers download Microsoft case studies. Boulder Logic has created similar results for NetApp.
While I commend these providers, I urge them to think bigger. Marketers are leaving a lot of ROI on the table when it comes to customer reference programs, by limiting their applications mostly to sales opportunities. But, investments in the comprehensive management of customer references drives impact (and ROI) far beyond the sales organization. Customer success stories help:
- Brand managers. When brand managers point to real customers who validate the firm’s value proposition, brand equity naturally increases. As marketer Guy Kawasaki reminds us, “What others say about you is more important than what you say about you.” (Reference: Reality Check. The Guide to Outsmarting, Outmanaging and Outmarketing Your Competition).
- Investor and public relations. Vendors that support brand promise with viable references reduce risk for investors. Savvy CEOs sprinkle reference stories throughout things like earnings calls, major account pitches, and conversations with institutional investors to show that the business strategy is working. PR and corporate communications people also use reference stories to validate the firm’s ability to execute its vision.
- Industry analysts and other members of the media rarely settle for theory; they want to know where you’ve succeeded in practice. Few publications mention a product from a provider without an associated customer success story.
- Finance managers. By investing in a well-defined, structured customer reference program, providers note improvement in customer profitability. Why? One marketer we talked to explains it this way: “Customers who act as references are also our most loyal and most profitable. Our CFO loves this program.”
Even HR managers want to get in on the game. Recruiters love to name drop. They love to use reference stories to convince the best talent to choose them over competitors. After all, who doesn’t want to work for a company with happy customers? If you’ve ever worked for a company full of unhappy customers, you know what Dante was talking about.
As in everything marketing, it starts with customers. When customers are happy, employees are happy, managers and executives from PR, IR, HR and all those “relations” boxes on your org chart are happy. Oh yeah, and Wall Street is happy too.
Okay, I’m not trying to develop a screenplay for Disney, but you get the picture. If more people get in on the love, the results can skyrocket. So vendors, if you agree with my point-of-view, think about updating your marketing copy.
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8 responses so far ↓
1 Corey Mahoney April 19, 2010 at 8:39 pm
Great point. Customer references are so dense and valuable that you want to make sure you’re using them as efficiently as possible.
Ideally, these are also the customers who can give valuable constructive feedback about products – they can help figure out what works and what could make it better, which can often be at least as useful as negative feedback. Don’t just amplify their voices out to potential clients and the media–bring their voices back to your internal team, as well!
2 Steve Ells April 20, 2010 at 5:04 am
Hi Richard
Excellent post. Thanks for the recognition for the work Metia has done helping Microsoft and others in this area.
Its great to have organizations like Gartner (and I see elsewhere McKinsey too, now), advocating the huge value of the voice of the customer to corporations.
The solutions and programs we have built for corporates tend to be constrained by org chart driven responsibilities. I expect both our peers and direct customer contacts experience similar constraints.
We can definitely build the voice of the customer into the fabric of modern corporations – both in terms of culture programs and supporting information systems. But I suspect corporates need the authority of Gartner and other strategic advisors recommending the sort of cross-organizational approach that ‘thinking bigger’ requires. How can we work together to push this forward?
3 Milap Shah May 17, 2010 at 8:22 pm
Hi Richard,
Great post! The timing of your post couldn’t be more appropriate – as businesses up their marketing spend while remaining focused on ROI, leveraging existing customer references is a great option. After all, if ‘a picture paints a thousand words’, then a loyal customer reference rebuts a million prospect objections!
Along the lines, I wanted to share that customer references worked well in some of the campaigns we’ve done for our customers – case in point being the Marketing Sherpa B2B summits, where video testimonials from past delegates on youtube.com helped create tremendous interest among marketers.
I’ll be watching your blogs to see how other stakeholders, beyond sales, derive the benefits of customer references and testimonials!
4 David Sroka May 21, 2010 at 8:19 pm
Hi Richard,
What gives you the impression we aren’t thinking bigger?
This vision for realizing the full value of references, promoters—however you think of them—must be both ours and our clients’. Our message is: Think of both customer contacts and related content as assets. Not just program assets, but *corporate assets*.
AR, IR and PR are the low hanging fruit for most of our clients. The dots are connected between these functions and the reference program. You’ve listed a few interesting additions. The possibilities are endless really when thinking about leveraging the positive aspects of customer relationships (measurable and soft benefits).
Often overlooked, we find that candid (due diligence-oriented) reference interviews (one-on-one or one-to-many), which inherently include the good *and not-so-good* aspects of the relationship, are priceless to the enlightened product manager, to the sales force (new hires and veterans), the services manager, etc. Here are opportunities to improve already good relationships, served up on a silver platter.
Reference programs are too often on an island and not part of the broader sales and marketing ecosystem. While we say this every chance we get, progress in changing this paradigm requires a visionary at the helm of the reference program. These individuals connect with executives (or are part of the exec team), are patient, but tenacious and never lose sight of their goal.
Hopefully your attention and research will inspire more visionaries to join our cause. Thanks for giving the community additional legitimacy.
5 val stephen May 24, 2010 at 9:39 pm
I second David — what makes you think this isn’t happening already? I don’t know a single company that isn’t leveraging customer ‘evidence’ in every way possible. The problem isn’t lack of usage, it’s *competition* for usage, as there’s only so much even the most referenceable customer will do.
6 Richard Fouts May 25, 2010 at 2:01 am
Well, I’m glad you guys agree that references can be more than just sales. Of course, during a critical sales cycle, it’s the reference that can make the deal … but as we’ve all said, they are much more than that. As one who takes vendor briefings, I can tell you references are scarce. So, my plea to you is to spread the word. I think the marketing copy of vendors that help companies manage references could be far stronger – references help business functions far beyond just the sales organizations. I know you believe it… just turn up the volumne. Don’t be shy.
7 Richard Fouts May 27, 2010 at 7:16 pm
Following is an email I received from Bill Lee of the Customer Reference Forum. He can be reached at bill@customerreferenceforum.com.
Richard –
Great to see Gartner’s interest in the field along with Forrester. I would suggest that the way to view the real importance and potential value of references is not as a stand alone-program, but as a critical part of larger, strategic initiatives.
For example:
- Demand Generation, or the entire process of drawing buyers into a seller’s orbit. This is an area of marketing where budgets are looking very strong. Why are customer references critical to this? A recent study by Sirius Decisions, for example, shows that the most consistently trusted source of information to buyers–at any stage of the buying process–is information from peers. Obviously, effective Demand Gen programs will want to encourage, enable and/or deploy reference participation as a critical part of their efforts.
- Customer Loyalty: Bain’s Fred Reichheld, Satmetrix, and a growing number of top drawer firms believe that the best way to build market share and profits in your industry is to develop the most promoters among your customer base (more precisely, the highest Net Promoter Score in your industry). And “promoter” of course, is just another name for enthusiastic reference. Remarkably, few of these firms take the next logical step: collecting the promoters they’ve so diligently cultivated into an organized reference program–lots of money left on the table there.
For most companies, telling your senior leadership that you run the firm’s reference program isn’t going to get their attention (re: significant budget). Even visionary reference managers are strapped with small budgets. On the other hand, showing how you’re holding a critical piece of the puzzle for improving demand generation, or improving (and leveraging) customer loyalty is more likely to get these programs a seat at the table.
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