[May 9, 2005]

The Enterprise Technology Reference Program Shift: From Tactical Output and Customer Burnout to Strategic Corporate Impact

BY PROMISE PHELON AND STEVEN NICKS, Phelon Consulting

The Phelon Group’s 2005 Customer Reference Program Benchmarking Study of 32 leading hardware, software and service company reference programs uncovered a difficult dilemma facing reference program leadership: How to balance a rapidly increasing demand for references by sales and marketing in the midst of reference burnout and a shrinking pool of customers willing to be references?

Alongside the supply vs. demand squeeze, CMOs are demanding that reference programs demonstrate success with measurements that contribute to overall marketing metrics. And finally, reference customers are demanding that their participation in reference activities be wrapped up in the comprehensive value proposition offered by vendors, vs. an add-on incentive program.

The Study clearly indicated that while expectations are higher, program resources are actually decreasing. To meet the challenge reference programs are struggling to close the divide between the potential and unrealized impact of reference customers. The Study revealed three areas in particular where reference program leaders are shifting priorities in 2005 to meet divergent demands and demonstrate impact.

The first shift is that enterprise technology companies are now viewing their reference customers as assets to leverage rather than simply tools to achieve short-term goals. 67% of reference programs now use segmentation models to increase their ability to identify and align value propositions with customers, and to align customers with demand. This shift from using customers to leveraging them is also noted by a higher priority on creating stronger value propositions to attract more and better reference customers; on a scale of 1-4, with 4 representing the highest priority, participants prioritized stronger value propositions as a 3.4. Programs are also now dedicating a portion of their very limited budgets to strategy. In 2004, zero percent of participants reported budget for such engagements; in 2005, participants valued the priority of such engagements at a 2.3 scale on a scale of 1-5 with 5 being the highest priority.

The second shift is indicated by a move from simply generating content for internal stakeholders like marketing and sales, to cultivating much stronger relationships with reference customers. Participants noted on a scale of 1-4, with 4 representing very often, that they are enabling reference customers to influence the product roadmap (2.6) and to access vendor executives (2.1). The resulting intelligence is also being shared across the company. This demonstrates a much stronger commitment to mutually beneficial relationships between vendors and their customers.

Third, reference leaders are shifting from reactive programs that require defensive measures to maintain support, to proactive programs that organically attract support. 41% of participants revealed that their programs are now formalized, and many of the companies that didn’t have ‘formalized’ programs are currently in the process of formalizing. This shift indicates a results orientation and also a commitment to scalability.

The Customer Reference Program Benchmarking Study 2005 is priced at $295 and may be purchased at www.phelongroup.com.

Partial list of participants: Amdocs, Citrix Systems, Cognos, EDS, Epiphany, EMC, Fujitsu, HP, i2, Informatica, Intel, Juniper Networks, Lucent Technologies, Macromedia, palmOne, SAS, Siebel, SPSS and Symantec.

Study authors: Promise Phelon with Steven T. Nicks and Kenneth L. Benson

About The Phelon Group

The Phelon Group is a privately-held consultancy that has established itself as a major force in defining and implementing Customer Leverage as a distinct methodology to help enterprise technology companies build and sustain powerful reference programs. Led by customer experts Promise Phelon and Steven Nicks, The Phelon Group defined Customer Leverage to increase the value of referencable customers and offer actionable and sustainable strategies based on key benchmark research and client work. Areas of expertise include critical path intelligence, strategy and execution, research and analysis, and training and education. Since its founding in 2002, The Phelon Group has conducted successful Customer Leverage initiatives for leading enterprise solution providers such as Intel, Adobe, HP, Sun Microsystems and EMC Corporation.

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The Phelon Group

Driving reference value for technology buyers and sellers

Suzy McKee, Marketing Director
(877) 717-9210 x507
[email protected]
www.phelongroup.com

Promise Phelon is founding partner of The Phelon Group. She leads the firm by studying and analyzing enterprise markets to develop strategies that help the firm’s clients anticipate and meet changing market directions head-on. Promise is also a recognized thought leader in developing and applying Customer Leverage principles to customer reference programs. She has helped market-leading companies such as Adobe, EMC, Hewlett-Packard and Intel minimize sales cycles, maximize marketing impact and strengthen crucial customer relationships. Before founding The Phelon Group, Promise held senior marketing positions as Sales Enablement, Product Strategy and Product Marketing Manager at BEA Systems, and also worked with other leaders such as SAP and KPMG. She may be contacted at [email protected].

Steven Nicks is a founding partner of The Phelon Group and leads the firms’ operations and service delivery. With more than 15 years of proven experience in strategy, CRM, project management and large-scale enterprise implementations, Steven brings to The Phelon Group’s clients a strong consulting background and a unique blend of innovation, strategic thinking and the ability to understand technology from both a business and technical perspective. Steven honed his consulting expertise at PricewaterhouseCoopers and Ernst & Young, and also served in senior marketing management and operations for eAssist Global Solutions and 3M Europe. He may be contacted at [email protected].