Customer case studies pull major weight among your marketing and sales materials. But they are just one way that a customer can serve as a reference for a business.
Customer stories fall under the bigger umbrella of customer reference activities, which can involve anything from taking a phone call from a prospect, speaking to an analyst or agreeing to a press release.
Smart companies manage their customer references, and even smarter ones manage them well to ensure every reference is maximized – without overusing precious customer contacts.
But it’s a hard sell at most companies to add reference management.
What’s the payoff of a well-functioning reference program? Good metrics can be hard to come by.
A webinar put on by Gartner last week featured impressive stats:
Buyers trust references most
In Gartner surveys, the #1 thing that buyers said influence their preference to purchase is references from the IT provider. (The survey focused on technology purchases.)
Why? Because it reduces risk, according to those surveyed. If another company like them has done it, then they can reasonably expect to achieve similar results.
Moreoever, they are 2.5 times more likely to buy from a provider that can quantify the value proposition. That means creating materials – like case studies – that demonstrate the return on investment of a solution.
References get customers to buy sooner
Gartner referenced the CIO Insight survey results that indicated prospects buy 25% faster when a relevant reference is provided.
References are so valuable that a strong one can actually shorten the sales cycle.
What’s the monetary value?
Even more impressive is just how much references mean to buyers – so much that sales reps may be able to bypass other steps in the process.
Gartner told the story of an IT provider that offers pre-sales assessments, which can cost up to $30,000 each.
However, “skillful use of customer references actually reduced the need for these assessments by a third, saving the company almost 200,000 last year while accelerating the sales cycle.”
It’s not easy to make the case for true reference management, but these stats should go a long way.
Wow, I just came across a fabulous resource on the Customer Reference Insights blog.
I'm a big proponent of managing customer references formally, even if you're small. It's important to see a customer's full reference value beyond just one-off reference calls or case studies, and track your use of any reference customers.
The blog post, Marketing Plan Outline for Creating a Customer Reference Program, provides best practices on getting a customer reference program going.
Covering all phases, from securing program approval to launching the program to measuring success, it's a valuable document.
If you're looking to start a reference program or even improve your existing one, check it out and save it.
I'm pleased to bring you an interview with Joshua Horwitz of Boulder Logic, which makes an enterprise customer reference solution. He founded Boulder Logic in 2003 after working in marketing for several software companies in the late 1990s, and seeing firsthand how companies struggle with leveraging customer references in the sales cycle. Horwitz blogs at www.referencesuccess.com and is on Twitter as @boulderlogic.
Q. More companies seem to be adding formal reference management in their organizations. To what do you attribute the increase?
I believe there are a couple factors. First, the marketplace generally is turning away from the voice of the company and even media in favor of the consumer. This is in part a result of new communication vehicles.
Secondly, we are at a point where organizations are looking to better leverage existing assets, and customers' positive stories have generally been underutilized. The move toward formal reference management programs comes out of the recognition that it takes some active steps to get this all to happen.
Q. What are the repercussions of not having a reference management program, or at least someone who owns the customer reference function?
I know of no company able to optimize customer marketing without a program to guide it. Positive word of mouth and testimonials can happen with or without a formal program, but it's safe to say that if a company is leaving it as reactive or a highly decentralized activity, it is sub optimal.
Q. How do you encourage sales or account reps that are accustomed to connecting current customers with prospects directly to give up control to a reference manager?
It is necessary to give account reps confidence that their needs can be satisfied efficiently and that their own customers will be treated well. One part of this is a reference manager that can execute well on a customer reference process.
Another part is communication. A customer reference program needs to be positioned as an important function in the organization, and reference managers need to articulate expectations in advance of activities as well as after in ways that reinforce the confidence of the account rep.
Q. What incentives do you see working most effectively in getting customers enrolled in reference programs?
Customers and their companies agree to participate in reference activities for a variety of reasons, but most often based on a genuine affinity for the company that is reinforced with opportunities for building relationships. Beyond incentives, the strongest advice that I can provide is to be transparent about the level of commitment required. Gain the confidence of customers in the same way you do for account reps; set reasonable expectations and make sure you can demonstrate how they are met.
Q. What "evidence" or reference activities seem to be the most effective with prospects?
There are a whole range of customer reference materials or activities. Pretty much all of them are useful. The best way to build an effective set of tools is to consider different stages of the sales cycle and the needs of different audiences. What you would share with a business sponsor early in the sales cycle is different from what would be appropriate for a technical evaluator during the latter stages. Creating a matrix of these scenarios is a helpful way to think through what will be best for your organization.
Q. What new trends do you see in customer reference management today?
We are seeing more companies looking to increase the level of self-service they can offer in their reference programs. This means reference recommendation engines, automated recruitment tracking, threshold management systems, and follow-up reminders. As companies formalize their customer reference programs, these capabilities help ensure complex processes stay on track.
Q. What advice would you give a company just starting a reference program?
I am happy to help get folks started and have lots of recommendations, but if I had to pick just one piece of advice it would be to have a vision of the full impact of customer references. When you are laying out plans, it is best to define achievable phases, but it is necessary to be able to articulate to executive management the significance of customer reference management and encourage their sponsorship early in the process. Done right, customer reference management can and should become a true strategic program and a high-profile role.