Many organizations have had customer reference programs in place for years, but not until recently have those programs begun to capture the executive attention they deserve.

Senior management has a vested interest in reference programs (and the customer evidence they create); companies recognize that the role of the truly effective program must be less about merely reacting to requests for customer references and much more about understanding customers, deepening relationships, and empowering industry thought leaders.

Reference programs touch customers at numerous milestones in their relationship with solution or service providers, so the intelligence they capture has huge value within the entire organization. Proof of preference for your solutions provided by happy customers is one of the best competitive tactics any technology partner can leverage, and that proof is precisely what reference programs should strive to provide.

Recent research from The Phelon Group shows that reference programs are entering a growth period. Preliminary results from our 2006 customer reference benchmarking study suggest that reference programs are becoming more centralized and formalized, program budgets are increasing, and program headcount is on the rise.

As the demand on reference programs continues to increase, The Phelon Group offers several insights into growing your program from the customer-reaction stage into a full-blown Customer Relationship Program.

Tie your program to business initiatives

One of the leading challenges that reference professionals face today is how to best measure the impact of their program and communicate successes. We continue to see many companies using volume metrics: numbers of references, numbers of requests fulfilled, etc. Reference inventory will always be counted, but it should not define the success of your program. To elevate the impact of the reference program within your organization, measurement must be translated to a language that your CMO understands and finds compelling.

Gain a clear understanding of corporate goals and how your executives are measuring success, and assess your reference program to see what aspects influence these goals. We've seen customer retention as a high priority for many organizations. How can your reference program measure impact or contribution to this objective? Measure the type of evidence you have that articulates deeper, long-term customer relationships or compare the time to revenue between reference customers and non-reference customers.

Communicate, communicate, communicate

As reference programs go through the transition from reaction to relationship, it's critical to communicate what your program is and does today, as well as where you're headed. Strategic customer reference programs focus on outbound communication. Ensure that program stakeholders understand the primary objectives, strategies, processes, and best practices of your program, and what their contribution to program success should look like. I recommend developing service-level agreements (SLAs) with your key stakeholders. If something seems out of scope, you can refer back to these agreements to clarify expectations and plan accordingly.

Reference programs are ever-evolving. Where is your program going? Spend time developing a program road map that details when specific components of your program are expected to roll out or be revisited for further development. Share this long-term vision with senior executives. It will help create excitement around your program, increase executive buy-in, and set appropriate expectations.

Leverage technology for maximum efficiency

As solution and service providers increase their portfolios of offerings and penetrate accounts more deeply, managing information becomes complex and is a key to your program's success. An evolving, strategic program won't be able to efficiently manage risk if it's still looking at data in disparate or non-trusted sources. Leverage technology and get out of the business of managing various spreadsheets.

The increasing scope of many customer reference programs now extends to channel and partner initiatives. Critical to success in supporting these additional program constituents is a comprehensive and effective reference management system. Permissions, complete workflow, and effective content management are some of the key components of reference management systems today. You only cripple your capabilities when you try to operate without the proper infrastructure and technical support.

Demanding instant and robust reporting from your systems will help insure your program's success. Technology not only provides program efficiencies but also allows reference professionals to look at customer intelligence holistically. Analyzing customer evidence and reporting trends to executives provides compelling information that cannot be ignored.

Know your promoters and address detractors

How many times has the following happened? Your program has chased a reference lead for about three months, only to learn that the customer is merely somewhat satisfied with your solution. As demands on programs increase, this behavior is not scalable… or even practical. To increase efficiencies and effectiveness within reference programs, it is necessary to have a general understanding of customer satisfaction before the start any of reference planning. Savvy reference professionals must better understand what customers really think about our solutions and our companies.

Various reference programs are adopting NetPromoter philosophies—understanding which customers are willing to recommend your product or service to their peers—and leveraging these promoters. Work with customers and account teams to uncover the value your solution provides them, and empower your customers with the information they need to share this with their circle of influence.

In working with your promoters, don't make the mistake of ignoring your detractors. As reference professionals, we tend to focus on the positive, especially those customers who say good things about us. Develop a process to address unsatisfied references—and to discern whether there are trends in a specific region or around a set of solutions. Doing so can greatly enhance senior management's awareness of customer challenges and highlight the value of your program.

Define your value

The days of giving points in exchange for referencing are over. To develop a strategic relationship with your company's customers, offer strategic benefits. Unique value propositions are more meaningful than complimentary passes. Customers are becoming increasingly wary of serving as references because they are being pressed on all sides to do so. Once a new reference is cultivated, it can quickly be burned out by excessive media attention or sales demand. All the more reason for future reference programs to provide real and tangible value to customers.

Differentiate your program from the others vying for a customer's time by offering valued benefits that are unique and meaningful.

How do you accomplish this? Talk to your customers! Let them tell you what they find valuable—don't guess. You might offer reference customers priority participation in existing executive sponsorship programs, customer product councils, or VIP user groups, for example. Build these benefits into the reference plan as a sign of commitment from your organization to theirs.

Conclusion

The "New Customer Reference Program" requires an element of cultural change as associates recognize the ways in which everyone contributes to the customer relationship. For example, the support the sales force garners from marketing, finance, and customer service result in more than just a deal that's been won—the organization garners a customer that wants to tell its story and repurchase.

Listening without assuming that you know nets information on which you can build your business. By integrating reference program activities that glean customer insights, relate to business initiatives, and result in organizational change, your program will capture executive attention and strengthen the enterprise.

The articles in this three-part series:

Part 1: Meeting the CEO's Mandates: Setting Up a (Really Good) Customer Advisory Board

Part 2: Meeting the CEO's Mandates: The 'New' Executive Sponsor Program

Part 3: Meeting the CEO's Mandates: Tuning Up Your Customer Reference Program