Growth in a Shifting Technology Market
Leaders at IT
companies are scratching their heads: “Where’s that recovery we’ve been
hearing about?” CEOs at prospect companies are supposed to be pursuing
revenue growth and investing in new technologies to help them achieve it.
Budgets are supposed to be loosening. Buyers are supposed to be buying.
But they’re not--at least not as much as enterprise vendors would like. And
even when buyers do make purchases, they do so with a mentality, promoted by
media and analysts firms, that encourages them to take advantage of sluggish
technology markets--get your discounts while they’re hot.
In response to this ongoing economic crunch, a
slew of books and articles promoting “customers as your sales force” have
made their way to market. Authors of these works would have you believe
that the path to faster sales and more intense marketing is easy--hug happy
customers; they’ll do all the work for you. Thanks to the proliferation of
such propaganda, hugging customers is now all the rage. And using the
success of those customers, even more so: in a recent survey, 100 percent
of enterprise IT companies with revenues over $5 billion annually reported
chartering central teams to influence buyers through formal customer
Referencing is big business, no
doubt. With program budgets well into the millions and sales effectiveness
on the line, reference management keeps busy chartering one or more of
dozens of agencies that qualify reference customers and write success
stories. But is that enough to sway wary buyers in today’s economy? Is a
willingness to enlist reference customers really enough to fuel faster
sales, higher-impact marketing and better products, and ultimately to impact
the bottom line? Read on. You decide.
A Seismic Shift is Coming:
Will Your Reference Organization Be Ready?
The buying process for IT
organizations has changed; the playing field has shifted--and further shifts
are in sight. With internal purchasing processes and cultures putting jobs
on the line, it’s not enough anymore for buyers to say, “Yeah, we talked to
a few references; we did our due diligence.” Why? Reputations and future
access to monies are tied to the success of IT projects. Prospects are
smart. In addition to conducting lengthy solution and vendor evaluations and
their own ROI (news
alert) and TCO assessments, they read online publications like
TMCnet.com--they may even be reading
this article. Prospects also know references may be enticed to speak on
your behalf with discounts, special rewards and incentives. And for those
reasons (among others; another article altogether), prospects are hesitant
to rely solely on formal references.
One vice president of IT
Development from a large telecommunications company is a perfect example of
this hesitancy. He says, “For big-ticket items, we want
to talk with references. But we want candid feedback. We want all the
details. So we usually try to get around the formal reference by going to
the lowest point possible within an organization.”
Because prospects don’t quite
trust formal references, and because jobs are on the line, prospective
customers are seeking channels outside your reference program to learn more
about your company’s technology, value and ability to deliver. They are
turning to external sources for vendor information that tips them to buy or
run in the other direction.
We believe that over the next
five to seven years, as the Internet continues to shift how people think
about purchases, more than half of all reference activities will occur
outside of formal reference programs. Your ability to control the medium and
message will erode as prospects increasingly turn to sources like these for
Technology forums; IT executive and manager councils
enterprise technology analyses organizations
user Web blogs (news)
networks of colleagues
IT journalist and independent analyst reports
This May Be Your Buyer Five
Years from Now
Over the next five to seven
years, more and more prospective customers will go around the system--your
reference system. Just as buyers shopping at Amazon.com and E-bay are
bypassing the middleman, technology buyers seeking proof will, too. They’ll
beeline to your customer base to search out candid references regardless of
whether you have qualified them as success customers. And just as buyers on
E-bay and Amazon.com seek negative feedback and reviews for reasons not to
buy, so too, will your technology prospects.
Think about your experiences if
you’ve shopped online--all it takes is a less-than-stellar feedback rating
on E-bay, or for one not-so-good review on Amazon.com to resonate with you,
and your credit card stays tucked in your wallet. Somehow, that one unhappy
and discontented voice seems much louder than the din of 10 others because
we all look for reasons not to buy--as will your technology customers.
We are not saying to do away with
your references or the programs that nurture them; nor are we negating the
value of references. You leverage references to create market momentum with
the press, industry award and organizations other media to get people talking
about your company. You leverage references for branding. You leverage
references as part of an orchestrated effort to validate your solutions with
prospects and analyst communities. There is no doubt--references are
intrinsically valuable and will continue to be useful and important.
But references alone are not
References alone will not enable
your organization to evolve and to tap into opportunities presented by this
seismic shift in technology buying behavior. Although important and a
critical foundation, the key to surviving and thriving throughout and after
this shift will not be found by enlisting more references or by chartering
more success stories; the key will be found within a business strategy:
Beyond References: Reaching
for Customer Leverage
Customer Leverage goes beyond the
acts of identifying and qualifying success customers, and beyond recruiting
references and developing static stories about them. Customer Leverage is a
holistic strategy smart companies deploy to build genuine, mutually
beneficial relationships with their most strategic asset--customers.
Leverage enables relationships that result in more effective sales, more
insightful marketing, more market-aligned solutions and more customer-aware
Truly leveraging customers means
shifting from pockets of sales and customer lore to organizational wisdom;
from reactive customer communication to dialogs and a closed loop; from
reactions and complaints to proactive quests for customer advice; from
overburdened customer references to active promoters; and from data analysis
about customers to insight into their feelings and perceptions.
Customer Leverage is also a
natural extension of your existing reference program—it’s a strategic
concept you can successfully introduce today.The only extra
building blocks you need are a commitment from senior management and the
framework of a well-oiled customer reference program. In past articles,
research reports and speaking engagements, we presented real insight,
industry data and allegories about building, improving and expanding
customer reference programs. Now, we take you one step further: to an
evolutionary approach that lets you build on your company’s customer
reference program investment—to Customer Leverage.
Surviving the Shift: Customer
Leverage Points the Way
A solid Customer Leverage
strategy is built upon the foundation and measurable impact of customer
referencing. It combines your existing financial investment and the value
of current success customer relationships with the following leverage
Knowing your customers and why they bought your company’s solution;
knowing your defectors and why they left.
Creating active listening and speaking
relationships with your customers and defectors.
Building insight communities for your best customers and others in
your technology community.
Promoting your success customers and their stories to industry and
financial analysts, the press and prospective customers.
Two leverage points in particular
allow you to meet the upcoming shift head-on: communication and
connection. First, when you actively communicate with and listen to your
customers, you learn early on who’s happy, who’s not--and why. By doing the
same with defectors, you learn why they defected and what they might be
saying about you in external forums. Like we said, all it takes to sway a
wary technology buyer is one unhappy voice that negates 10 positive ones; it
takes just one person to say they had horrible experience with your
company--and that experience might not even have been related to your
technology. Maybe it was a problem with order management or with shipping.
But it does not matter—just as a low-flying F14 drowns out the drone of 10
vacuum cleaners, so too does one negative external voice drown out the din
of 10 positive ones. Leveraging customers means more than having a cadre of
success customers and people who promote your company unprompted; it also
means knowing what existing and ex-customers are saying about your company…
Our second leverage point,
connection, lets you meet wary and truth-seeking buyers where they are most
likely to be found--among strong insight communities of best customers and
others in the technology community—perhaps your community, filled with
customers who will help spread the good word about you. Communities help
every touch point: customers get best practices, prospects get the
objective proof they need, and you get happy customers and more sales.
Some communities are
long-standing and allow customers to share best practices related to your
technology, others are short-lived and designed to give your services
organization feedback on a new offering. Regardless, these communities show
existing customers that you want them to access their peers, and they allow
prospects to understand what they will be getting into when they purchase
your product or service.
The Impact of Customer
Leverage on the Bottom Line
From 40,000 feet, customer
leverage is similar to what your company probably does through various
unconnected programs, initiatives, campaigns and special projects. The
challenge with operating in unrelated pockets is that pockets tend to
hoard knowledge; pockets are unable to manage customer expectations,
experiences and the evolution from purchase to leverage. For customer
leverage to be effective, the customer must perceive your program to be part
of a collective company embrace—your efforts must be coordinated. When
centralized under a unified and cohesive strategy, customer leverage results
in benefits that uncoordinated activities can not achieve alone:
Faster sales and a higher
return on marketing.
Networks of customers who
learn from one another, share best practices and independently promote
Customer communities incented
to innovate and actively improve your company’s technology and
Channels for strategic and
detailed communications with your customers and defectors.
Smarter solutions and a more
“customer aware” organization.
More in-account and follow-on
Customer leverage is unique among
strategies in that it produces a balanced balance sheet if introduced and
managed correctly. You get what you want. Customers get what they want,
Respect. Customers do not
want to be viewed as “references,” nor do they want to be viewed as your
extended sales force.
Promotion. Customers love
industry-wide recognition, and co-branding and public relations
activities that help their companies and their resumes.
A voice. Customers want a
louder voice for better pricing models and new product features and
services--now and in the future.
Real action. So often
companies conduct surveys or focus groups and make promises to customers
that are rarely, if ever, kept.
True investment. Customers
want a greater commitment to their success, as well as ongoing
Enabling Customer Leverage
At the end of the day, the better
a company identifies, understands and manages its customer relationships the
easier those relationships will be to leverage. And the easier they are to
leverage, the easier you will find it to build better products, accelerate
sales, empower marketing, affect market perceptions and, more importantly,
increase sales during the approaching shift in technology buying behavior.
The next article in our Beyond
Reference Series will highlight 10 things smart companies do to leverage
their customers. Steven Nicks and I will explore this topic and provide real
examples of how companies you know are putting customer leverage first--and
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