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[April 2, 2004]

Customers Are The SolutionTM

By Promise Phelon

The Risk, The Reward: Know What "Customer References" Really Say About You

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If you missed my previous TMCnet articles presenting questions, insights and information about how to build a strategically and tactically sound customer reference program, large or small, to leverage your customer assets, you may find them here: http://www.tmcnet.com/tmcnet/columns.htm#ph

If, however, you have been following this six-part customer reference series developed exclusively for TMCnet readers, you may have taken my complimentary advice and launched, expanded or made changes in your company’s approach to customer references.

I ask you now to take one more thing into consideration:  What customer references say about your company can be either gold or silver to you: Gold, as in enabling quicker sales and smarter marketing; or silver, as in the silver bullet competitors use to discredit your company. Learn how to secure your customer reference base and prevent silver bullets that create negative publicity, and ultimately, spoil deals. 

Over the past several months, too many companies have become embroiled in what I call the "customer perception" quagmire. Enterprise companies, especially those that promote satisfied and successful customers, may easily find themselves compromised by an analyst or other organization that attempts to validate customer loyalty statements, deployment successes or return on investment (ROI) data.

You may have heard about four rather high-profile cases over the past year in which, unbeknownst to the enterprise vendors involved, third-party analyst firms contacted customer "references" to ask specific questions about implementations and service quality, and to collect actual ROI and payback data.

Although this is a valid method for gathering unfettered customer intelligence, the affected enterprise vendors were shaken to discover their supposed gold "customer references" were actually silver bullets. Not all felt an equal negative impact on marketing and sales activities, although one vendor in particular found itself in the midst of a public relations disaster.

How did this happen? And what can your company do to make sure your customer references do not become weapons? Since you cannot control who talks to your customers, focus instead on your selection of customer references and on what those selected customers say

Follow these steps to ensure gold customer references: Those that allow marketing to garner positive awareness for your company and enable sales to close deals more quickly.

  1. Know what your customers are saying about you and how they perceive your company, its solutions and services. Invest time and resources to understand not only who your customers are, but also to find out if they are satisfied. Learn for yourself what your company, as a strategic vendor, can do or give to contribute to their successes.  Obtaining customer insight and feedback is an ongoing exercise. Customer success is not static and should never be taken for granted.

  2. Beware the customer reference “laundry” list. Based on our interviews with senior IT decision makers, we’ve discovered there is little to no value in listing every customer on your Web site. When it comes to customer references the cliché stands: Quality is more important than quantity.

    Why? A list of customers on your Web site is a potential liability. Aside from consuming an enormous amount of Web real estate and appearing in five-point type, you may find it challenging at best, impossible at worst, to maintain the integrity of that list. Invariably, your list will include customers who are temporarily less than 100 percent satisfied. The longer the list, the higher the probability it will contain less-than-ecstatic customers, and the greater the likelihood a third-party might find them. So, rather than giving you credibility and support, these potentially negative customer "references" could, in principal, disqualify you from a deal and create irreparable image damage.

  3. Realize that references emerge from successful, satisfied and loyal customers… not from reference programs. Encourage your customers to communicate issues about their deployments or services and educate them on how to do so. Internally, ensure an organization and process exist for resolving and escalating customer problems. Then, ensure that customers know how to access the organization and use the process. 

  4. Most importantly, have clearly-defined reference management processes so your customer references recognize when a request is outside the scope of your program. This way, when an intelligence-seeking competitor or other third party calls to ferret out silver bullet-type information, your reference will know you did not approve the request.  And your reference will have guidelines to follow in such a situation.  

Reference programs today are highly tactical. That’s not such a bad thing, as long as tactics follow sound strategy. Hidden silver bullet-type customer references inevitably show themselves when strategy is reactive -- when strategy is the result of the success or failure of tactical decisions. 

Because gold customer references don’t just “happen,” Phelon Consulting works with its clients not only to help them act more strategically and to up-level their customer reference programs, but to ensure that all parties involved are aware of the impact on and responsibility of references to an enterprise company.

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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 promise.phelon@phelonconsulting.com.

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