Strengthening the Pipeline for References

by Bill Lee

MarketingHarnessing the power of references and referrals seems like an obvious win. What could make more sense for a business than to leverage the enthusiasm of happy customers to convince buyers that they need its products and services? And in an increasingly social and networked world — not to mention an economy where every dollar of revenue is critical — this type of third party validation is more important than ever. So why do we have so much trouble mastering the art of customer advocacy?

It’s not effective to just half-heartedly paste a few new tactics on top of current operations and expect advocates to start singing a business’s praises. Nor can it rely on a few enthusiastic supporters with vibrant personalities to carry its message. The program has to be well staffed so it becomes a seamless and well-integrated part of the entire growth engine. And it needs to command sufficient resources to kick it off strongly and to keep it going over time.

There are certain predictable mistakes companies make that can derail customer reference programs before they ever get off the ground. Creating the right infrastructure and approaching the efforts with the right mindset will increase the likelihood of success substantially.

“Cheaping out” on resources. Reference programs are often organized as an afterthought, assigned as one of several programs to a junior-level employee who has too much to do, and managed with a spreadsheet. Someone may hand him a list of prospective references who may or may not be happy customers, or strategically significant, or even profitable. Before long, reference requests to the new program go wanting, as sales and marketing return to their old habits of trolling for references themselves, leading to underutilization of potential powerful references at one extreme, or burnout at the other. Reference programs deserve adequate resources to realize their potential.

Failure to install the right systems and processes. This includes an adequate reference management system (RMS) that automates as much of the data needs of the program as possible. And these needs can be considerable: Which references are there, and from which industries or segments? What requests have they fulfilled? What other advocacy activities do they engage in? What reference content have they provided? Where can the business get hold of it?

The key questions to ask are: Are the right processes and policies in place? What policies have been established for references and testimonials in the sales and marketing efforts? At what points in the sales process should references be used? How will customer videos, stories, and other customer content be used in social media efforts? What rules have been established for customer content in marketing communications?

Not integrating references into the growth strategy. It’s easy to spot a reference program that’s disconnected from the company’s growth strategy: Reference managers look puzzled when asked about the corporate strategy for growth. They recruit or keep customer references that may or may not be from markets that senior management is targeting. Everything they do and say shows they’re out of the loop.

Managers of reference programs that are well integrated into strategy can report, for a new product launch, how many customer references will be needed. And they can tell from which industries or customer segments these references should come. They’ll know what types of reference activities they’ll need to engage in. They’ll know how many references are candidates to be early adapters of the new product line.

Failure to measure (or even understand) the business value of references. It’s a red flag when reference managers tout the number of new references they recruited — without regard to their actual value in generating business. They’re measuring inputs that have little bearing on business results, not outputs. More sophisticated programs continually measure their business value and adjust accordingly.

Reference programs can dramatically improve sales productivity by freeing salespeople from the time-intensive task of hunting down references themselves. They can increase media awareness by providing content for reporters or analysts that makes it more likely it will be published. They can ensure the success of new product launches by providing critical early adopters, references and referrals.

Lack of executive support. Too often, customer reference programs are rolled out with limited resources and staffed by junior people working off a spreadsheet — a recipe for failure. A successful reference program needs significant resources and a strong rollout that involves the entire company. It must cross boundaries, working cooperatively with other divisions in the business such as sales, marketing, social media, PR, product development and the like. Without strong, hands-on executive support from a powerful leader who is passionate about advocacy, none of this will happen.

Lack of imagination. Many reference programs suffer from inertia, churning out old-school PDF case studies that are way too long and that don’t get read. With advances in technology and social media — along with the current boom in personal and professional communities — those who adopt customer reference programs must think much more broadly about the forms advocacy can take. These may include references, referrals, testimonials, serving on advisory boards, and participating in a business’s customer communities.

Not giving customers a good reason to reference them. Many companies resort to gifts, prizes, awards, cash discounts and even low-grade bribes to get customers to refer them. Not good. Smart companies think through why their customers would advocate for them — and come up with better and more ethical reasons than those. First, provide a terrific product or service. That’s the price of admission. Then get creative in providing appropriate reciprocal value to the potential advocate.

If she likes the limelight, a business can offer to do a joint case study or marketing piece. If she wants to affiliate with her peers, it can invite her to user groups or customer events. If she’d like a higher profile in her industry, it can arrange for speaking events where she can tout her accomplishments — with the help of that business’s product or service. A business that knows its customer well enough to know what is valuable to her can find a way to give it to her — and she’ll give that business an enthusiastic, and genuine, referral.

Bill Lee, author of recent release The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset, among several others, is CEO of educational organization Customer Reference Forum, which, in response to demand on the subject, created monthly teleconference series The Master Class Series on Customer Reference Programs. Lee has spent nearly a decade building vibrant communities of customer engagement professionals, and his annual conferences, including the Summit on Customer Engagement, have attracted many of the world’s leading global firms.

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