The Art Of
Referencing: Accelerating Sales Through Satisfied Customers
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There must be a law of economics that says
when times are good we overspend, and when times are bad we promise never to
do what we did when times were good.
As the economy regenerates, several artifacts of
the IT spending downturn will remain with us. Large, enterprise-buying
decisions will continue to be made with precision and scrutiny. CIOs and IT
organizations will continue to seek solutions that meet the real business
challenges of their internal stakeholders. And, solutions that present low
risk and substantive return on investment will continue to receive top
billing from senior IT buyers.
In the late 90s, when IT budgets were bloated
and internal spending requirements were liberal, companies could experiment
with projects, innovative technology and vendors. This reality is gone in
most industries, especially telecommunications, technology and financial
services, all of which were hard hit by the recession. Technology-buying
decisions are no longer driven by features and functionality, but by
proven solutions from proven vendors. Proven is the operative
word, as risk is a significant factor in making purchasing decisions
today.
Why? Because no one ever lost a job for buying
IBM.
Today, vendor and technology validations are key
to unlocking budget dollars. "When a company is trying to sell me enterprise
technology, my first question is, 'Who else is using your solution and what
was their return on investment?'" says Didier Arnaud, CFO of Monarch
Beverage Company. "Most of the time the sales rep avoids the question. I'm
skeptical about their product when they have no other company with a similar
business challenge to provide as a recommendation."
Enter customer references.
Until you offer a 30-day money-back guarantee,
prospects will want to talk with your successful customers or references.
According to our internal lexicon, a customer reference is a company (and an
individual) that has successfully used your products or services over
time, and is willing to provide external validation.
The concept of references is quite simple. Just
as references are important for job searches, objective recommendations can
help sell everything from security software and mainframes to cruises, cars
and mobile phones. Although the idea is simple, the task of building a
mechanism that allows your company to truly integrate customers into its
sales cycle is anything but simple. As many of you understand, enterprise
solution providers are burdened with long, highly-competitive and protracted
sales cycles. References help companies selling to the enterprise avoid long
and costly sales cycles; they reduce the need for multiple technical
evaluations, product demonstrations and proofs of concepts. Further,
customer references, empowered with business metrics, such as ROI and total
cost of ownership, help your prospective customers accelerate toward
attaining internal buy-in for projects. We’ve also seen, in some cases, how
references can increase the perceived value of a solution and eliminate a
company’s reasons for requesting a heavy discount.
In summary, the benefits of sales references are
as follows:
-
Increased conversion rates,
where more prospects are turned into paying customers;
-
Lower cost of goods sold and
shorter sales cycles; and
-
Higher average sales price as a
result of fewer discounts.
The good news: Most companies that have
integrated customers into their sales cycles have realized “selling”
customers and business metrics is more effective and expedient than selling
functions, features and product specifications. Gone are the days when the
list of standards your software supports or the speed of a machine
differentiated your company. Today, it’s your customers that differentiate
you. It’s the successes they’ve had. It’s the ROI they’ve achieved.
ALL ARROWS POINT TO THE CUSTOMER
Our recommendation: Before you write another datasheet or whitepaper,
focus on telling your customer success stories. When asked what would have
the greatest impact on increasing sales effectiveness, more than 90 percent
of the enterprise IT sales reps we surveyed identified customer
intelligence, customer wins and references as the most valuable purchasing
"tools."
How do references help sales? Referenceable
customers, at each stage of the sales cycle, are invaluable. Customer
validation -- a success story, logo or quote -- opens the door and creates
an audience for your company’s solution. Later in the sales cycle, customer
references, case studies, ROI reports and onsite visits can be employed to
get users, lines of business buyers, senior management and CFOs onboard. The
reality is that vendors vying for wallet-share are doing so in
highly-competitive situations. CIOs not only want more for less, they want
proof that your solution will create no risk for them …and their jobs.
TAKING CUSTOMERS A STEP FURTHER: REFERENCES
AND YOUR INSIDE GAME
As a consulting organization, we have always been acutely aware of the
importance of cross-selling and up-selling existing clients. We counsel our
clients that as the cost of customer acquisition rises, identifying and
capturing new opportunities within existing accounts is critical to
long-term profitability. Referencing is a tool that reopens and widens doors
within existing accounts; it is also a way to create internal customer
champions.
Internally selling the success of a deployed
project is yet another stage in the sales cycle. Assessing a customer’s
success based on their predefined criteria, and then getting the internal
customer to "sell" the project in order to get more budget or new projects
is second to none.
To achieve this outcome, effective sales
organizations employ "post-implementation" ROI and business metric analyses
-- not only to document customer successes, but also, to help internal
customers "sell" future projects. The result: Internal customers’ cases to
senior management are strengthened, creating an opportunity for you to gain
future budget positions.
EFFECTIVE MARKETING: CUSTOMERS ARE THE
SOLUTIONTM
Customer references not only turn the sales wheel more quickly and
efficiently, but also, are fundamental to any successful marketing strategy
or campaign. Customer references help marketing organizations reinforce
messages, strengthen value propositions and build credibility with market
influencers, such as industry analysts and the press. Customers are your
proof-points.
During the technology boom, industry analysts
were extremely busy measuring the size of expanding markets, evaluating
technology and helping their clients (your customers!) make buying
decisions. Also during the boom, many of those analysts were burned by
companies with great, yet unproven, technologies. Industry analysts
from organizations like Meta, Gartner and Giga have an incredible sphere of
influence over the press, market analysts, and, most importantly, your
prospective customers.
"Analysts play a critical
role in the sales process. Our enterprise clients look to us to provide
objective and educated advice about solutions to their real business
challenges," says Beth Gold-Bernstein, a recognized analyst and expert in
e-business integration technologies. "Throughout my career, I have always
prioritized customer case studies and use-case scenarios to make those
recommendations."
Gold-Bernstein is VP Strategic Services of ebizQ.
Prior to joining ebizQ, she was the director of business integration
technologies at the Hurwitz Group.
Successful customers accelerate sales and
convert ever-skeptical industry and market analysts into advocates. As one
colleague recently shared, technology doesn’t get you on the Gartner
quadrant, customers do. Additionally, customers’ case studies and best
practices attract interest to your marketing programs such as
Webinars, executive
series, user groups and other core field events.
RECOMMENDATION
Point internal resources towards educating the market, as well as your
prospective customers, on how easy it is to be successful with, and how
rapid the payback is on, an investment in your company’s solution. Not only
will you be able to identify your references and customer best practices,
but also, you will develop stronger relationships with your high-value
customers. These relationships not only enable referencing, but infuse your
organization with real customer intelligence that drives positioning,
product development, pricing and service offerings.
All organizations need a mechanism that allows
customers to be advocates. We have consulted and worked with companies that
had no methodologies in place to capture customer success, as well as with
others that had elaborate reference management systems, incentive programs,
customer reference portals and the like. Program structure, resources and
processes notwithstanding, the one key to reference program success is the
existence of satisfied and successful customers. Assuming that engineering,
product management, consulting and other groups have this under control, we
can begin to discuss structuring a reference methodology and program.
In the next article in this series, we will
discuss how to build a program that leverages your most valuable customers
as references and creates a compelling value proposition for both sales and
customer support. We will also dispel the following myths about customer
references:
-
Contracts and discounts create reference relationships;
-
The
Sales organization is an obstacle to a reference program;
-
Sales
wins = customer references; and
-
The
longer the reference list, the better the program
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Promise Phelon is the
founder and principal at Phelon Consulting, a consulting firm focused on
enabling enterprise software companies to shorten their sales cycles by
leveraging sales and customer successes. She may be contacted at
[email protected].
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