The Phelon Group just published their fifth annual Customer Referencing Benchmark Study, and MarketingSherpa has exclusive charts and insights for you.
B-to-B companies' customer reference programs (CRPs) run the gamut from as little as a list of testimonials to as much as a full department with half a dozen staffers who manage a library of everything from Case Studies to client-speaking gigs and audio interviews.
Phelon studied the details of CRPs from 40 large companies, including Adobe, EMC, Oracle, Siemens and Xerox, to discover what's working and where the problems lie for 2007.
Biggest finding? Demand is increasing -- especially from the sales department who want more customer references and want them now! Yet, companies studied dedicate only one-tenth of 1 percent of annual budget to CRP, including related staffing and technology. And, budgets aren't increasing to meet demand.Three types of CRPs companies invest in:
#1. Recorded and written materials
Many smaller companies focus their CRP resources in this front, and the marketing department is often in charge of gathering them. These reusable assets include:
o Permission to use client's names/logos/images in marcom
o Written testimonials and quotes for general publication
o Agreement to be quoted in a press release
o Case Studies with named clients
o Archived webinars
o Taped audio and/or video testimonials
o Taped third-party, in-depth interviews to be revealed with permission during the discovery process sometimes in lieu of a one-on-one conversation with a prospect. (See Case Study below about this.)
#2. Clients who’ll make live, mass-audience presentations
Generally, these are not reusable. A client may agree to do a few, not countless presentations. But, at least they reached a fairly large audience.
o Agree to be interviewed by journalists and/or analysts who'll distribute the information to others
o Sit on a panel at a trade show
o Attend a prospect networking event (breakfast or other smaller high-level gathering)
o Speeches at trades shows or webinars
#3. Clients who'll speak one-on-one with prospects
Again, these are not reusable. They are generally reserved for special occasions, helping to land the most important prospects. Unfortunately, your sales team probably wants to use them like crazy!
o Agree to speak on the phone with individual prospects (serving as a reference)
o Allow prospects to visit in person for a tourFive most common CRP mistakes to avoid:
According to Phelon Senior Consultant Whitney Wood, who authored the study, many CRPs make at least one of five mistakes:
A. Lack of strategic mapping
Don't just focus on your biggest-name clients or on your volume of references alone. Having a testimonial from someone very famous or having a giant stack of Case Studies won't be as useful as having the right type of reference at the right time.
So, first map out your needs based on categories that are most important to (and frequently used by) the sales team. This might include references in particular geographic regions, or in particular vertical industries, or running on particular technology, or experiencing particular challenges that your offering solves.
You may also find that you have more than enough Case Studies but a dearth of client-side trade show speakers. Or, plenty of written testimonials, but no audio interviews.
B. Offering compensation for references
40% of studied firms compensate potential references in one way or another. These incentives might range from logo-ed materials, points and rewards systems and discounts. "There's not much payoff in doing this and a huge payoff in not doing it," advises Wood.
Why are incentives a bad idea? Two reasons: Prospects and industry analysts alike distrust references potentially obtained through bribes. Plus, clients rarely find these types of compensation enormously attractive. No one needs another logo-ed hat and, if a client really needs discounts or additional consulting hours, they can ask for them as part of their regular contract.
Many marketers rely on the promise of publicity to clients as their main incentive. However, if your client is a bigger brand than you or PR-shy, they may not bite. Also, the most valuable references of all -- one-on-one phone calls between top clients and prospects -- are inherently private.
What do most clients *really* want in exchange for referencing? Wood says it often boils down to two simple things:
o Insider access to your company, which might include personal meetings with top management, advisory board invitations, and private previews of your R&D roadmap.
o Connections with their peers at other client organizations -- to join, network with, and learn from a private community of like-minded executives.
C. Inadequate technology
"Everyone recognizes the power of customer references but marketing is not investing in the infrastructure." According to Wood's research, only 25% of companies Phelon studied had integrated their reference databases with any other company CRM systems or marketing and sales databases. "CRP systems range from a spreadsheet to a really fancy custom built system."
Unfortunately, in most cases, the systems aren't built with adequate capacity, flexibility or usability. "The hassle of running one of those systems is a nightmare," Wood says. "People are not happy with the technology they have, nor would they recommend the system they use to a colleague. However, most expect to stick with it for years to come."
Why? "CRP system spending slips down very low compared on IT's list compared to lead generation systems," she explains, "even though CRP is a huge tool in the sales arsenal. There is nothing more powerful than a customer telling their own story in their own words."
D. Inadequate staffing
"It's not uncommon to find a CRP team of four or five servicing a sales force in the tens of thousands. Customer reference departments are facing increasing demand but operating with substandard systems and staffing."
E. Not enough meetings with stakeholders
"What's shocking to me is that 30% of CRP staff say they rarely or never take a meeting with key stakeholders," exclaims Wood. (See link to chart below detailing this data.)
She's not in love with meetings for the sake of meetings, but rather meetings for two critical purposes:
o Internal market research
How can you know which types of references you need to build up your library of if you don't know which are really used or would be considered useful?
Tip: Don't ask, "How do you like our references?" or, "Do you want more videos or Case Studies?" Instead, ask, "Where do you have hang-ups in the sales cycle? How could customer evidence help you?" Once you know what problem the sales department needs you to solve, you can build resources to address it. They won't know if a video would be better or worse than a PR blitz, but they do know banking industry customers are concerned about security issues. …
o Internal promotion
To get the budget you need, you have to get the sales department, as well as any other stakeholders (PR, investor relations, marketing, etc.) to become your evangelists. In effect, your most important CRP activities may sometimes be the cones you conduct on your own behalf.
Consider: when was the last time you got a sales rep to give a testimonial on behalf of your own department?How to get a bigger CRP budget approved:
First, figure out what you plan to spend the funds on and how it will help you improve services… and ultimately what the bottom line improvement would be for the organization. Woods shared a chart with us (see hotlink below) showing what the studied companies thought their biggest program issues were.
Then, gather anecdotal evidence from your own internal clients. Did the right reference at the right time help land a big deal? Did that airport billboard campaign with the big-name client spokesperson help lift brand perception?
And then put together the most powerful presentation you can for the management. Be sure to include user stats and results data. Sherpa asked Wood to create a short sample presentation so you'll have an idea of the types of slides you might include. (See link below.)
Good luck! Here's hoping next year's Benchmark Guide reflects your success. Useful links related to this article
Two charts and a suggested PowerPoint presentation (in PDF format) from the Benchmark Guide from Phelon:
Two related past Sherpa Case Studies:
#1. How to Get Fortune 500 Clients to Evangelize with Press, Analysts & Sales Prospects on Your Behalf
#2. How to Create & Use an Audio Testimonial Library to Shorten Your Sales Cycle
The Phelon Group