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[January 7, 2004]

Customers Are The SolutionTM

By Promise Phelon


A Case For The Customers: Addressing Strategic Issues That Face Your Customer Reference Program

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The last article in my six-part Customers Are the SolutionTM series presented a wealth of proof points, experiences and anecdotes about the asset value of customers to your organization, showing just how critical customers are to enabling and accelerating sales.

The initial purpose of this second article was to provide a how-to for building a successful customer reference program; a tactical piece that would have educated and empowered marketing and communications vice presidents, customer reference program directors and managers, and those who create tools that enable reference selling and marketing. After serious consideration and debate among the Phelon Consulting team, we decided to change this article’s focus.

Through both our consulting practice and the research and analysis arm of Phelon Consulting, and from feedback on our past articles many of you provided, we realized that the value of customer referencing is gaining momentum and visibility among higher ranks within large enterprises. As a result, in this article, I will instead focus first on strategic-level issues faced by the executive who is in the process of assessing the value and success of his or her company’s current reference activities; tactical details will follow in a future article.

To potentially influence your thinking and help you make decisions about your reference program’s fate, I begin with a fundamental question: Is your customer reference program designed to be successful? If you answer ‘yes,’ no need to keep reading this article. Enjoy your afternoon. If you answer 'no,' or if you’re not sure, please consider these four questions and responses designed to spawn more thinking and to guide your decision:

  1. Is your reference organization staffed for success? Since managing a reference program is not easy, placing the right person at its helm is a critical success factor both in the short and long terms. Oversight is best handled by someone who understands the art of relationships -- specifically the program’s relationship with the sales, marketing and product organizations, as well as the company’s relationship with its customers and strategic partners.

Further, this individual should be comfortable with the science of references to a) tackle the analysis required to assess reference inventory versus demand so that high-value customers are not burned out; b) tie target customers to sales forecasts and marketing activities; and c) identify tactical alternatives to 1:1 reference activities where demand for a certain reference category exceeds supply.

In essence, a reference manager should be comfortable establishing friendly relationships with customers, while at the same time, being able to direct the reference team so it’s proactive in its thinking about its stakeholders’ needs, as well as the reference inventory and pipeline.

Characteristics of the ideal reference leader include a wealth of sales, business development and services experience, as well as knowledge of traditional marketing concepts and marketing-centric customer reference requirements. The person running your reference program doesn’t necessarily have to be an analyst relations expert, but should be knowledgeable enough to understand the drivers and impacts of customers to the various organizations existing under the marketing umbrella.

A colleague of mine who runs the reference program at a large company has most, if not all, of the aforementioned qualities, as well as one rarely considered -- several years experience in the services side of large, enterprise technology companies. Need I say more? This senior reference manager has been “the” company face for vendors delivering enterprise-wide and business-critical billing, supply chain, application development and security systems. She fundamentally understands that customers’ successes are requirements for building solid reference relationships.

As I’ve mentioned before, referencability cannot be found in contracts or obligations. Your experiences of working overnight with customers making the Y2K transition or helping them resolve Web-based viruses enable a greater understanding of which references to pursue and how to build a quality portfolio of best customer successes. The most compelling case study, nine times out of 10, does not come from your company’s 85th financial services deployment. Instead, it comes from the customer your technical support organization saved when his e-commerce system crashed in the middle of the holiday shopping season because of another vendor’s technology. Not only is the customer more excited, but their story is more compelling and believable.

  1. Have you clearly defined key stakeholders, priorities and organizational values for the customer reference team? We begin most of our consulting engagements by searching for a consistent and cohesive definition of a reference program’s priorities and stakeholders. For instance, if you ask ten heads of household across the country what three expenses they would prioritize if their paychecks were cut in half, responses from Los Angeles to Dallas to Greenwich Village would be similar if not identical. To illustrate, I conducted a quick, informal survey of seven, and found the responses to be absolutely identical: 1) rent or mortgage, 2) utilities and 3) food. Sure, a few of us might prioritize high-speed Internet access and the Sopranos over food and electricity, but undoubtedly, we’d be in the minority. The point is, few customer reference programs have clearly defined priorities based on specific key stakeholders and their respective requirements.

While every company has its unique politics, customer reference organizations as a whole are working with fragile and limited resources, and are often understaffed. Stakeholder groups, priorities and corresponding goals and objectives must be in place or the customer reference organization will be 100 percent transaction-oriented; resulting in burned out customer relationships. 

How to get to where you need to be?  List the program’s likely stakeholders and their corresponding internal or external customers. Prioritize them. Which are the top three? Knowing your stakeholders will impact the rules of engagement; it will dictate the types of customers your program targets and how long those customers are ‘managed’; and, most importantly, it will significantly influence the values and guiding principles of the organization(s) with which the reference program is aligned, as well as the organization(s)’ subsequent requirements.

  1. Does your customer reference organization have the resources and support it needs to be successful? A reality with which many reference programs are faced is that they are often over-tasked, over-criticized and under-funded. Separate from the team headcount issue, it is important that reference management consider the gravity and importance of a group providing the sales team with quality customers -- customers that influence multimillion dollar deals and place your company in the upper right-hand quadrant.

This reference group, which has the potential to save your company a significant amount of sales-associated costs and elevate its marketing messages above the noise, also requires IT resources in addition to the givens of money and headcount. Why? Reference programs have tremendous value; however, data integrity is fundamental to getting it right. Unfortunately, many reference programs are forced to work with single-user spreadsheets. The ability to systematically and centrally manage customer references and their information is critical to the long-term success and effectiveness of the reference organization.

Organizationally, the customer reference program, although it lives almost exclusively with marketing, straddles a very dangerous fence as the ground between sales and marketing is sometimes …contentious. I will simplify the situation by saying that the most successful customer reference programs are not only those with customer-hugging executives, but those with a senior management willing to stand up on behalf of the reference team in its efforts to protect valuable customer references from overuse and outright abuse.

  1. How do you define success? In a recent engagement, we were asked to help improve business operations of the customer reference program within a large organization. After interviewing many of the program’s stakeholders, customers and the reference team, it became apparent that the group had no baseline or set of metrics by which we could study historical patterns, or something upon which we, or they, could identify specific issues within the program.

Kick off your new year by devising five metrics and performance measures that will clearly, and consistently, gauge the success of your company’s reference program. While you’re at it, identify four senior executives in the company who are in a position to participate in the program as advocates. Engaging executives across the organization not only raises visibility, support and awareness of the program, it creates sensitivities to cross-company impact on customer referencability.

CONCLUSION
In summary, the importance and impact of customer references is undeniable. However, as most reference programs have evolved from the event-driven and tactical to significantly influencing sales, product development and marketing, they have lacked the executive and senior-level attention necessary to truly be successful. The objective of this article is to present questions and information that attempt to uncover whether your company’s customer reference program is designed to be successful. The goal is, ultimately, to change the way your organization views the customer reference program.

So, before you keep that customer reference budget flat or not add additional headcount, consider the aforementioned questions, as well as the history of your program’s evolution. Maybe an infusion of executive power, headcount and resources toward the program is in order. Worst case, your company would have a better relationship with its high-value customers, greater emphasis on reference-based selling and a bent toward customer marketing.

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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.


Like what you've read? Go to past Customers Are The Solution columns.






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