The Rise Of Customer Reference Programs

Posted by on May 21, 2012

Customers, customers, customers. Those three words (all the same), sum up most technology keynotes. If the CEO is not championing customers, he (or she) is hauling some customers out on stage for discussion. The customer envy doesn’t end on the keynote stage. Sales wants customer references to close business. And the first question from most tech journalists -including myself – is “Do you have some customers that I can speak with about your new product?”

All of this got me thinking. Is the customer reference business the new and important area for CMOs thinking about how to distinguish their company from the pack?

The answer I found is yes, in a big way. Customer reference programs and customer reference management is a big and growing piece of high tech marketing. If you aren’t treating your customer reference operations as a vital part of your marketing strategy, you are missing an important piece of the marketing puzzle.

I was recently at the SAP Sapphire event in Florida which — like most of the vendor sponsored hybrid user group/trade show events — strives to put customers front and center. Bill McDermott, SAP’s Co-CEO (he shares the job with Jim Hagemann Snabe — they say the sharing thing works) in his keynote  brought out not one, not two but three execs to champion how they use SAP software. Those executives — Burberry CEO Angela Ahrendts, Ace Hardware CEO Ray Griffith and Coinstar CFO Scott Di Valerio — added resonance to the SAP claims and were way more interesting than one more Powerpoint deck bulleting changing paradigms and such. As an aside, Ahrendts was also front and center several months ago at a Salesforce.com (a SAP competitor especially in light of SAP’s purchase of SuccessFactors) event where she shared the stage with Marc Benioff which spurred my thinking about customer reference management and whether there is a reference circuit like a speaker’s circuit.

All my questions about the importance of customer references were answered on my way home from Orlando when I ducked into the Hotel Marlowe in Cambridge for a series of rapid fire interviews at the first International Customer Reference Program. This was sort of a big name for a start-up event, but I did get to speak with Customer Reference managers and consultants from a range of companies including Intel.

“You can’t close deals in business to business sales without customer references,” said Jim Mooney, the CEO of RO Innovation in Denver. Prior to his current position as a customer reference consultant, Mooney spent years in high tech sales with several different vendors. Mooney contends that ninety percent of all high tech sales are closed only after customer references are provided. No references, no sale.

Rhett Livengood is the director of worldwide sales development for enterprise solution sales at Intel. He described his use of customer references as “kind of a pull campaign,” where Intel seeks end user customers for testimonials. Those customers are one step removed from the initial Intel customer who buys the Intel processors and then builds the system sold to the end user.

Livengood said he does not favor an incentive program where a customer gets a reward for their reference, but builds reference programs where all the parties — Intel, the systems builder, the end user’s company and the the end user — all benefit from the brand building.

The formalization of the customer reference programs at companies has meant that measurement, organization and occasional disputes over who should own the programs have all come into play.

Just as customer resource management systems hinge on finding and tracking customers and customer leads as they move through the sales cycle, customer reference systems are coming into being that track types of reference media (case studies, videos, face to face events) and their final impact on sales.

Who should own the customer reference program? It really depends on the structure of a company, the interest in developing a structured program and the skill level of executives. The reference program could easily reside in sales, marketing or public relations.

“We are moving to the age of reference,” as the key sales driver contended Robin Hamilton, managing director of UK-based inEvidence customer reference consulting.

The early stage of customer reference as a marketing discipline means that there is still a great amount of research that needs to take place in evaulating how to create, manage and measure customer references said Miriam Rack, CEO of San Francisco-based MRM Reference Consulting. Rack is working with a Berlin-based university to provide some of that research.

The rise of customer reference programs as a high tech marketing discipline creates a wide range of questions and options in how best to create a program for your company. The use of social networks to develop customer reference content, the value of different types of reference media and how to find and manage those references are all in flux. Customers interested in become a reference and building their own brand as a industry experts have much to gain but also need to fully understand how customer reference programs operate.

I’ll be rounding up some of the presentations given at the customer event and talking to some other high tech marketing execs about their reference programs, but for now this is one high tech marketing segment to watch closely.