Gartner: How to Manage a Reference Program
Gartner: How to Manage a Customer Reference Program
This is an old article (2010), but still covers off the basics of customer referencing with some great insight from the brilliant Richard Fouts.
I encourage you to read the article in full, and the below are my favourite tips:
Have a well structured interview, that the client can complete by email. Make this optional of course. At least 80% of your clients will answer your questionnaire over email. If you prefer a live interview, tell the customer it will take no more than 20 to 30 minutes. But, when you conduct the interview, make sure your questions are brief and easy to understand. Stick to your agreement – do NOT go over the time frame you commited to .. and never make it more than 30 minutes.
Include your customer reference program as a natural step in your sales cycle. Too often, we look for references from our current list of customers, where we have no leverage. We are simply asking them for a favor. Hence, it’s more effective to address the customer becoming a reference during the sales cycle as part of your sales negotiations. Think of every prospect as a potential reference. Many providers get new customers agree to be a testimonial when they close the deal, in exchange for a discount, a free service or some other offer. This is a very effective tool for increasing the volume of references.
Position the testimonial as a promotional tool for your customer. Testimonials and case studies, tend to be all about you. This is logical of course, because it’s a tool to demonstrate what a good provider you are; that you have satisfied customers. But you can also use the testimonial and case study to promote the good work your customer is doing. When you write the testimonial, include copy about the customer’s value proposition and their successes. When prospects see this, they often agree quickly to become a testimonial because it is essentially free promotion.
Manage your customer reference program just as you manage your sales funnel. Track your conversion rate. Sales people don’t expect every prospect to close, hence they build a list of prospects with a pipeline value that exceeds their quota. For example, if your conversion rate of prospects that become customers is 50% and your quota is USD $ 1 million, you always have at least USD $ 2 million in your pipeline. You can manage your reference program using the same technique. For example, if your goal is to develop 10 solid references, you know you should be working with at least 20 customers as reference candidates (assuming you have a 50% conversion rate).
Include your reference program in your sales cycle as a negotiation tool. This is effective since it costs the prospect nothing and gives them something in return.
Happy reading!