5 Reasons Why Customer Reference Programs Fail
Although every company knows customer references are important, most companies have a lax approach to managing them."
Marc Benioff, CEO, Salesforce.com
That's a key differentiator for Salesforce.com (SFDC): being highly disciplined about creating customer advocates, and making sure they can tell their story to buyers and prospects. It's not surprising to anyone that customer reference programs are important to growth, and becoming more so in our increasingly social and networked world. But a lot of companies fail to successfully tap this source of growth.
My organization, Customer Reference Forum, has worked with and educated customer reference program managers going on nine years now. Here are the major reasons customer reference programs fail.
1. Failure to dedicate the right 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 spread sheet. 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. That's no way to grow a business.
In fact, that's business malpractice. Enthusiastic references are extremely valuable to a business. They can close deals that were stuck, convince skeptical analysts or media that your product or service is the real deal, build your brand on thier social networks, provide referrals--the least expensive and most powerful marketing tool out there--and much more. Reference programs deserve adequate resources to realize that potential.
2. 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 do you have, 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 you get your hands on it?
This also includes having the right processes and policies in place? What policies have you established for references and testimonials in your 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 you established for customer content in your marketing communications?
3. Lack of executive support
A successful customer reference program not only needs resources, it must also cross boundaries and wok with, and get cooperation from, other divisions in your business such as sales, marketing, social media, PR, product development and the like. Sales people may "hoard" their prize references, fencing them off from big opportunities to promote or close business for you. Social media content can go stale fast, without ever refreshed supplies of new content from your advocates. Look at most websites: they bore viewers to death with "all about us" information that most visitors care noting about: how easy it would be to provide interesting content from someone like the visitor? Most often, that's going to be your customer advocates.
The cure for all of these situations is a strong executive supporter, who understands the value of references and is passionate about capitalizing on it. She gets directly involved in issues like those above, resolves them and makes sure the program gets the resources and cooperation it needs.
4. Failure to integrate references into the growth strategy
You can spot a reference program that's done this in a heartbeat. Reference managers look puzzled when you ask what the corporate strategy for growth is? They recruit or keep customer references who may or may not be from markets that senior management is targeting. They're out of the loop.
Reference programs that are well integrated into strategy can tell you, in your next product launch, how many customer references you'll need. And from which industries or customer segments. They'll know what types of reference activities they'll need to engage in. They'll know wow many are references are candidates to be early adapters of the new product line.
5. Failure to measure (or even understand) the business value of references
You'll see this problem when reference managers tout the number of new references they recruited--without regarded 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 them from the time intensive task of hunting down references themselves). They can increase media awareness, by providing content for reporters or analysts that make it more likely you'll be published. They can ensure the success of new product launches, by proving critical early adopters, references and referrals.
Bonus reason: Failure to provide a compelling reference value proposition.
You see this in companies that resort to gifts, prizes, awards, cash discounts and even low grade bribes to get customers to reference. 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, you provide a terrific product or service. That's the price of admission. Then you get creative in providing appropriate reciprocal value to your potential advocate. Does she like the limelight? Offer to do a joint case study or marketing piece. Does she want to affiliate with her peers? Invite her to your user groups or customer events. Would she like a higher profile in her industry? Arrange for speaking events where she can tout her accomplishments--with the help of your product or service.