Point of Reference

Harnessing the power of references and referrals seems like an obvious win. What could make more sense than to leverage the enthusiasm of happy customers to convince buyers that they need your 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?

“Because companies don’t take it seriously,” says Bill Lee, author of The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset (Harvard Business Review Press, 2012, ISBN: 978-1-4221723-1-5, $27). “Salesforce CEO Marc Benioff put it best when he said that even though every company knows customer references are important, most companies have a lax approach to actually managing them.”

Lee says a company cannot rely on a few enthusiastic supporters to carry its message. “The program has to be well-staffed so it becomes a seamless and well-integrated part of your entire growth engine. And it needs to command sufficient resources to kick it off strongly and to keep it going over time,” he adds.

Method not Madness
Through his Dallas-based organization, Customer Reference Forum (CRF), Lee has worked with and educated customer reference managers almost 10 years. CRF has created a monthly teleconference series, titled The Master Class Series on Customer Reference Programs, that debuted Oct. 29, 2012, (www.customerreferenceforum.com/masterclass). Plus, the company’s live annual conference, The Summit on Customer Engagement (www.customerreferenceforum.com/event2013/), slated for March 5-6, 2013, will reveal what to do (and what not to do) as you seek to create a successful customer reference and advocacy program.

“There are certain predictable mistakes companies make that can derail customer reference programs before they ever get off the ground,” Lee says. “If you can create the right infrastructure and approach your efforts with the right mindset, you’ll increase the likelihood of success substantially.”

Plan for Success
According to Lee, a number of obstacles can detract from the successful execution of a customer reference program:

1. Lack of executive support. Too often, customer reference programs are rolled out with limited resources and staffed by junior people who are 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 your business, such as sales, marketing, social media, public relations, product development and the like. Without strong, hands-on executive support from a leader who is passionate about advocacy, none of this will happen.

Too often salespeople may “hoard” their prize references, fencing them off from opportunities to promote or close business for you, Lee says. What’s more, social media content can go stale fast and needs ever-refreshed supplies of new content from your advocates. All of these problems are best solved at the executive level.

“A strong executive supporter who understands the value of references and is passionate about capitalizing on them is a must have,” Lee asserts. “She will drive the program from the beginning. She will get directly involved in issues like those above, resolve them and make sure the program gets the resources and cooperation it needs.”

2. Lack of imagination. Many reference programs suffer from inertia, churning out old-school PDF case studies that are way too long and that aren’t read.

“There’s so much more that customer advocates can do to grow your business,” Lee says. “And 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 your customer communities, he explains. Customer advocates also can lead customer communities and forums, create content and video, contribute valuable knowledge to product development efforts, defend your brand on social media sites and more.

3. “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, strategically significant or even profitable.

“Enthusiastic references are extremely valuable to a business,” Lee asserts. “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 their social networks, provide referrals—the least expensive and most powerful marketing tool out there. Reference programs deserve adequate resources to realize that potential,” he adds.

4. Failure to install the right systems and processes. This includes an adequate reference management system (RMS). Which references do you have 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 you get your hands on it?

“Ask yourself a few key questions,” suggests Lee. “Do you have 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?”

5. 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 you ask about the corporate strategy for growth. They recruit or keep customer references who may or may not be from markets targeted by senior management.

“Managers of reference programs that are well-integrated into strategy can tell you, in your next product launch, how many customer references you’ll need,” Lee says. “And they can tell you 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.”

6. 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. More sophisticated programs continually measure their business value and adjust accordingly, Lee says.

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

7. 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. This is not good, Lee says. Smart companies think through why their customers would advocate for them and come up with better and more ethical reasons than those. Then they get creative in providing appropriate reciprocal value to the potential advocate.

“Does she like the limelight?” asks Lee. “If so, 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. Hopefully, you know your customer well enough to know what is valuable to her. Give it to her, and she’ll give you an enthusiastic—and genuine—referral.”

This last reason touches on the real reason why customer reference programs work: They are beneficial to all parties involved.

Everyone Benefits
“All successful companies, at least those that are able to sustain their success, genuinely meet the needs of their customers,” Lee says. “Bribe someone to say something nice and you might get a half-hearted endorsement. But strive to truly understand his needs and go above and beyond in meeting them, and you’ll create someone who wants to help you succeed—and who wants to help others succeed by connecting them to you.

“If you don’t start with the right customer value proposition, nothing you do will matter,” he adds. “If you do, your program will be easier and more successful than you ever dreamed possible.”

Bill Lee, author of The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset, is an authority on customer advocacy and engagement.