Things Companies Do to Leverage their Customers
article in our Beyond References Series, we discussed an
impending shift in IT buying behavior that will all but negate reference
efforts unless they evolve to a larger customer leverage strategy. Because
jobs are on the line, because large IT purchases are fraught with risk,
buyers want the whole truth and nothing but the truth about your enterprise
hardware, software and services. As such they are beginning to circumvent
formal customer references to gain candid opinions. We predict that by 2005,
more than half of all referencing activities will occur outside the formal
reference process. What can you do about it today?
Ditch the Customer Incentives for Real Credibility
Pay-for-play is a term we hear frequently. Many companies reward points in
exchange for reference activities—think airline frequent flier programs. Yet
many of our clients’ customers have visceral reactions to the idea that they
are “paid references.” And, buyers have gotten very savvy about filtering
paid references from proactive promoters, which are customers who have a
genuine desire to talk about their experiences with your company.
From our client experience, we’ve learned that incentive programs are not
only difficult to manage but they warp the dynamics of your relationships
with sales and existing customers. Instead, we recommend focusing resources
on strategies and tools that raise your references on the credibility
The pyramid depicts the credibility level of varying information sources
during IT purchase decisions. The higher the source is on the credibility
pyramid, the more impact that source has on a purchase decision.
1) People believe their own experiences most.
2) People believe the experience of others like them.
3) People believe objective third parties.
4) People believe vendors—last and least.
Invest in customers who are ecstatic about your solution and your company—do
whatever it takes to ensure their continued satisfaction and success so
they’ll want to share their stories—and you won’t have to pay them. And
don’t forget about analyst relations and industry accolades—both truly
under-used tactics. Prospects rely heavily on what analysts say (and don’t
say) about vendors and their solutions. They also trust industry
assessments, benchmarks and evaluations.
Whether you are upselling to your install base or prospecting for new
customers, invest in elevating your references on the credibility pyramid.
Things Companies Do
To create the list of smart ways to leverage customers, we first established
a list of criteria and then interviewed dozens of companies including our
own clients. Each example meets the following criteria:
Mutually beneficial for vendor and customer
Great idea coupled with smart execution
Is part of an overall strategy that is both realistic and sustainable
Demonstrates the long-term benefits of customer leverage
And because these “smart things” are main courses, not appetizers, we split
this article into two parts, each of which allows you to feast on five smart
things. You’ll still get 10 altogether, but we are serving five here and
five next time.
Our aim is to spark new thinking and to give you ideas that are easy to
emulate—direct from companies reaping the benefits of customer leverage
1. Recognize and cultivate customer innovation. The average case
study is low on the credibility pyramid because it comes from you. It tells
how well XYZ Company enabled its customer to achieve incredible returns on
i2 Technologies, a developer of supply chain software and services, and SPSS,
a predictive analytics technology firm, are two industry-leading companies
that have leaped way beyond standard case studies and success stories to
comprehensive programs that elevate customer best practices and foster the
innovative spirits of their customers.
i2 presents The Ken Sharma Awards for Excellence, named for i2 co-founder
Ken Sharma who was an early innovator of supply chain management, to a
select group of i2 customers every year. Winners are chosen by an
independent panel of analysts and other innovators, giving prospects the
objectivity they crave. The award
…recognizes leading companies for the pioneering work performed in supply
chain management… [and] honors companies with i2 deployments either planned
or already in progress, as well as to [sic] organizations that have
completed i2 deployments and have documented the value they are receiving.
These awards are co-sponsored by i2 Technologies and the i2 User Group.
Past winners of the Ken Sharma Awards include tipping-point customers such
as Boeing, Toshiba, Samsung, Caterpillar, Texas Instruments, Volkswagen AG,
Best Buy, Panasonic, Honeywell, Hewlett-Packard and more.
In 2003, winners included Airbus, Whirlpool and Matsushita Electric
Industrial Co., Ltd. Winning customers, their teams and innovative-use
cases also received significant media recognition. “Sponsoring the Ken
Sharma Awards is a great goodwill gesture for our customers, and it's great
for us,” says Tom Smithyan, Senior Director of Customer Programs at i2.
“Not only do we promote the winners' innovation and technology leadership
throughout the media--which they love--but by recognizing their supply chain
successes we are able to strengthen our relationships with them. As a
result, many now view us not as a vendor, but as a strategic technology
partner. And we love that."
SPSS will honor winners of its first ever Insight Awards at a ceremony in
Las Vegas this October. "The Insight Awards encourage customers to
innovate, reward them for doing so and give us great insight into how
customers are using our products,” says Jennifer London, Director of
Marketing at SPSS. “We've seen several examples of customers who had rather
unique needs to address, so they applied our technology in some very
creative ways. That's what we need to know about, and that's one of the
things we like to promote."
The benefits of recognizing and cultivating customer innovation profoundly
increase your solution’s value. Awards also demonstrate to the market that
your customers have a vested interest in the success and continuance of your
solution. Even better, market and peer award recognition tightens customer
bonds and helps your company get and maintain traction. Good for you. Great
This strategy is especially smart when companies:
Adhere to objectivity in the judging process
Recognize customers for their innovative spirits and not their brand
Package best practices and share them with existing customers and
Invest in communities of partners and customers who use products to
incubate and innovate
Pull customer innovations and best practices into the product
One word of caution: only engage in a program like this if your organization
is serious about the pursuit of customer innovation. Awards programs require
tremendous time and people resources, and long-term commitment. If your
efforts are disingenuous, half-hearted or only for marketing purposes, your
customers will see through the ruse.
2. Call your customers regularly. That’s right. Just pick up the
phone and call your customers—out of the blue. And do so regularly. Say,
“This isn’t a sales call. We just want to see if there’s anything we can do
to enhance your experience or to help you be more successful.” If you
proactively reach out to identify and resolve issues, you’ll be more
effective in your efforts to get close to your customers. And, if you do so
regularly and consistently, you’ll often be the first to find out when
IT buyers overwhelmingly tell us that they feel a new and welcome channel of
communication opens whenever a vendor calls unexpectedly. Call your
customers regularly to instead of waiting for them to initiate contact.
Customer satisfaction and loyalty evaluations only solicit limited
information. Surveys with convoluted questions get sent to the wrong
people. Tech support and customer service take calls when something goes
wrong or breaks. Here’s your chance to speak with and get close to
One large enterprise designates a few people who regularly contact customers
and assess their satisfaction firsthand. Customer outreach is a powerful
mechanism for checking in with your constituency. And knowing how your
customers feel about your company and its solutions—when they are not
experiencing a problem or taking a survey—is at the core of customer
A word of warning: this technique will backfire if your company does nothing
with insights gained or if it ignores cries for help and restitution.
Whoever is charged with this relationship must have a process for
documenting, tracking and close-loop communicating with customers. Be
sincere—don’t hire Mo’s telemarketing firm to call your customers.
3. Find an innovative way to demonstrate your customer’s success.
Buyers want to mitigate risk by learning what a product, service or certain
experience is like in the real world—from people who’ve already tried it.
Unfortunately, many case studies and success stories are quickly tossed to
the circular file. Writers forget your company not only is competing with
other vendors, but also with the hundreds of e-mail messages backed up in
the CIO’s inbox, dozens of voice messages, and 360-degree peer reviews piled
on his desk. Success stories that read like your company’s brochure will not
cut through the clutter to make it to the top of the pile. And, anything
you produce internally is likely to be viewed as least-credible to
If your company is on the success story bandwagon, we challenge you to step
back and see who’s downloading your stories. Is it your own sales rep in who
can’t find success stories on your internal site? Is it your closest
competitor? Or…could it be prospective customers? The point is…everyone has
case studies and success stories.
Hewlett-Packard has evolved their customer successes in some exciting ways.
Rather than develop traditional success stories, HP works with its customers
to co-author thought-leadership articles that highlight how HP’s customers
are achieving success with help from HP. Customers often distribute the
articles to their colleagues who in turn, are often HP prospects. The
company is also producing customer video testimonials—not about how many HP
widgets customers bought, but about how their partnerships are leading to
market innovation and increased profits. Finally, HP+ advertisements are not
really about HP. They’re about HP’s customers; about what customers plus
HP can achieve.
Stay tuned! In September 2004, Phelon Consulting will host a Webinar on
innovative ways you can demonstrate your customers’ success.
4. Build a well-oiled customer reference program. At the foundation
of every successful customer leverage strategy lays a well-oiled customer
reference program. Why? Because any program that promotes customers should
not exist in a vacuum; a topic we discussed in detail in
article of our Beyond References Series.
Several of our clients are implementing this smart strategy today, and as a
result, exhibit these signs (and experience these benefits) of a well-oiled
reference program—all of which contribute to increased credibility:
The organization ties resources and core activities to tangible
organizational outcomes and business metrics like more effective
marketing campaigns, increased sales and customer satisfaction
Stakeholders understand a reference team’s primary objectives, overall
strategies, processes and best practices
Reference customer attrition is low; reference customers follow an
Reference customers and sales both support the program, thanks to strong
and sustainable value propositions
The organization leverages technology to enable efficiency
Stakeholders and champions ask the organization to contribute to
left-brained marketing activities like customer perception audits, and
they tie those activities to other company-wide initiatives
5. Create purposeful customer networks, purposefully. Prospects want
to hear honest opinions from people like themselves who are using your
solutions. There’s no better way to spread the word than by building online
communities in which customers share ideas, insights and best practices. So
often, companies assemble customer councils and other groups, but after a
year or two, people begin asking, “Why are we here?” The purpose of your
customer community or network should be very clear, and that clarity should
impact its execution. Ask yourself: is the purpose of our network to
galvanize relationships, enable the sharing of best practices or to get
high-value customers together to evaluate some concept?
Before being acquired by EMC Corporation, Documentum, an enterprise content
management company, created a community with a purpose and they call it
Studio D. The community still lives on after the acquisition. From the
Studio D home page:
What's Studio D
all about? It's about sharing information - what's going on at Studio D,
and what's going down at your place. We'll connect you with happening
product news, the hip User Group scene, live Studio D get-togethers, and a
blitz of other handy resources readily available at Documentum.
Studio D is an
interactive online community where customers share best practices, talk
about ideas and provide references for an interactive audience. EMC’s
Documentum’s customers love it and actively promote it because Studio D
gives them information they can’t get elsewhere. It also gives customers a
louder collective voice with which to influence future products and
Documentum loves it too: the company builds that oft-sought stickiness with
its high-value customers; finds out what customers are thinking, how they’re
using the products and what problems they might be having; and learns about
its customers’ business and industry issues in general.
"Studio D started out as a value proposition for
reference customers, and over the past three years has become a tight
community for our customers to seek references, network and share ideas and
best practices. It's also a powerful way to stay close to our customers,
demonstrate our commitment to their successes, and differentiate our
products in the marketplace," said David Milam, Chief Marketing Officer, EMC
Five MORE Smart Things Next Week
Next week, we
will bring you five additional smart things your company can do to leverage
customers. Find out how smart companies, perhaps your competitors, are:
reference customers without breaking them
technology in exciting ways
the strategic leverage plan
meantime, if you have any questions or comments about the strategies and
tactics presented in this article, or if you would like more information
about implementing customer leverage in your organization, please call
1-877-717-9210 x508, e-mail
firstname.lastname@example.org or visit our website at
Promise Phelon is the
founder and Partner 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@example.com
Steven T. Nicks is Partner of
Steven T. Nicks brings over 15 years of experience helping
companies build and successfully deploy strategies and the
technology necessary to support them. Mr. Nicks, formerly a
Principal at PricewaterhouseCoopers and Senior Consultant with
Ernst & Young, has helped companies understand their customers
and developed innovative approaches to strategic decision making
and communications. Mr. Nicks also held senior marketing
positions with 3M Europe and oversaw the Professional Services
organization of a leading CRM solutions vendor. He may be