Looking Up

You wouldn’t hire a new employee without talking to references, and yet many companies fail to leverage their own references when new customers apply a similar level of due diligence to major purchases.

A customer reference program can do a little, or a lot.

At a minimum, a customer reference validates key information communicated during the sales process, reducing the risk in the customer’s mind regarding your company’s ability to execute.

A really good reference does much more, creating enthusiasm for your company and higher credibility than anything you can do yourself. At the end of the day, people—even buyers at large companies—are more inclined to buy from people they believe in. If they believe in your sales rep, that’s great. If they believe in your company, that’s an advantage that’s hard to beat.

While contemplating this post, a colleague told me it wasn’t worth writing because “every company has a reference program.” While that may be true on the surface, in my experience the lack of best practices results in meager returns for many. The two most important reasons customer reference programs under perform are: (1) companies don’t understand the full benefits, and (2) they don’t have the right person to manage the program.

You need to get serious

Many customer reference programs operate more like ad hoc programs drumming up references when demanded rather than as strategic and well-defined parts of the sales process.

The result is references that confirm you have actual customers, and perhaps that your product works, but these programs do not foster and encourage the kind of infectious enthusiasm that makes people believe in your company and make them want to do business with you.

If you are a big, well-known company selling a well-established offer, you might be ok. However, if your company, its offer or how you stack up against competitors is not perfectly known to your prospective customers, then strong customer references provide valuable sales leverage.

Surprisingly, your company can have a lot of problems and still have a fabulously successful reference program. I had an enterprise software customer who gave a glowing reference at the same time his system was actually down (and not for the first time). You can read more about why this wasn’t an exotic “corner case” in a forthcoming post.

What you should expect

Here are five benefits you can expect from a well-executed, programmatic customer reference program.

1. Happier, more committed customers. Yes, asking your customers to do more can actually make them happier. Building the relationships that create great references will also create strong alignment between you and your key references.
2. Higher sales close rate. Sure, strong customer references help close more deals. But not just any deals, references help close deals where you’ve already invested heavily, so the return is even higher.
3. Get more out of your best reps. Strong references help all reps close more deals, but a good program will build trust with the sales reps that own the reference accounts. Typically, these are also your best sales people, and good sales reps control access to key people within their accounts to reduce headaches and the need to do damage control. A well-managed reference program builds the trust needed for these reps to relax access. If they aren’t spending their time being gatekeeper at reference accounts, they have more time to sell.
4. Improve your offer. Many customers will suggest product and service improvements if they can find a willing ear. However, when your customers believe in your company and want to share in its success, they’ll go much further and eagerly tell you which marketing messages are working and how to defeat your competitors.
5. Fewer distracting fire drills. When a major customer, especially an important reference, has problems, a resource-consuming fire drill ensues. In my experience, the reference program manager frequently knows about potential problems long before support or professional services. You still have to build the internal lines of trust, but the opportunity to proactively reduce the number and severity of support fire drills is there if you want it.

A good customer reference program is not easy or cheap, but its biggest dividends are concentrated where you need them most—closing deals where you have already invested in the full sales cycle). In addition, the unexpected benefits are meaningful and many.