Do you know what your customers really think? Do you know which customers will give you a good reference? Here’s how. By Adele Revella and Steve Johnson.

In Pragmatic Marketing’s product management and marketing seminars, marketing professionals learn methods for increasing the company’s profits by creating products that delight customers, and by moving all sales cycles forward for all sales channels. Unfortunately many companies stop their marketing efforts once the sale is completed. “After all, we have the money. They have the product.  Isn’t the sale completed?” But successful companies know that a well-implemented, referenceable customer is vastly more valuable than the money from a single contract.

Do you rely on customer references for closing deals, working the press, and communicating with the analysts? Attendees in the Effective Product Marketing class learn that the customer database decays at a rate of 3% each month. In a year, more than a third of all customer information is invalid. Who is keeping those references alive and up-to-date?

Further, it’s easier to keep a customer than to get one! We go to all the trouble and expense of acquiring a customer and then make little effort to maintain the customer. Unfortunately, dissatisfied customers don’t complain; they just disappear!

Have you contacted all of your customers in the last year?

Every company needs a function to stay in continuous contact with the existing customer base. Someone must know which customer sites are available for reference calls, the state of their implementation, and which features are in production use.

Does this sound like the sales channel’s responsibility? Most companies pay their sales force to generate sales but not to maintain the relationship after the contract is received. In some cases, companies have an account management function, but quota-driven sales people will focus on the 20% of customers that are likely to buy additional product. Or perhaps they rely on technical support to get the feel of the customer base from the calls they receive. But only 20% of dissatisfied customers call the vendor.

Most marketing departments take on the role of customer relations, since the relationship benefits the entire sales channel or channels as well as others in the company.

What about the quiet 80%?

To create a customer relations function, start with a single database. If you don’t have confidence in your customer database (and who does?) you might start instead with an export data file from your tech support database. Now call them– yes, all of them.

In one case, a company had over 1000 customers yet only a few references. They hired a former telemarketer and gave her a telephone headset, a customer database, and an office with a door. She called the entire customer database every 90 days. She talked to both buyers of the product as well as the daily users of the product.

• Who are the buyer contacts and user contacts?
• What is their referenceability?
• How well are they implemented?
• What product features are they using?

After only 90 days, the company had an accurate customer database, providing a broad set of profiled customers for references. In addition, the company had the basis to understand which product features were used in production. Moreover, the company had a reference customer list for user success stories as well as references on-demand for sales.

I’m convinced that you cannot use references as an integral part of your sales and marketing efforts without an on-going customer-relations function.

The primary role of customer relations is to create and maintain customer profile information.

But invariably the function will find problems that are not being resolved elsewhere: “Who is my account manager, ” “I have a billing problem, ” or “Can you check the status of a problem in tech support?” These problems need to be forwarded to the appropriate department. Don’t let customer relations be a substitute for under-performing departments.

In addition to maintaining customer profile information, this can identify companies needing implementation assistance from professional services as well as accounts that are appropriate as beta site candidates. We should compare this database periodically with the billing database to ensure that we’re billing all the customers that we’re supporting. Most companies can easily justify funding the position on recovered maintenance and increased professional services billing.

Challenges

Phone calls should be short. Yet once the word is out that we’re calling customers, everyone wants to add one question to the survey. This results in so many questions that the call can take 30 minutes instead of three. Keep the phone call short!

Sales people always feel understaffed in admin help so invariably they will attempt to use customer relations as an inside sales resource. Just say no.

Likewise, many of the company’s departments are understaffed or have under-performing employees. Customer relations is not the cure. Report the data objectively and let them solve their own problems. Frequently customer relations will identify the poor departments just strictly on the number of calls that are forwarded to the correct department.

Customer Satisfaction

Some vendors say “But we already do this in our customer satisfaction surveys.”

Do you?

United Airlines recently polled their passengers. “How would you rate this airline compared to others?” Well, since I rate them all terrible, I would have to say that United is on par with the rest: that is, terrible. Do they want to know how to improve their service, or do they really just want to claim that their customers are satisfied?

When you bought your last car, regardless of the experience, weren’t you pretty much forced to give the dealership five stars? The sales person and the sales manager both tainted the survey by insisting that you give them an “A” rating, whether it was deserved or not. At this point, you’re just desperate to get off the lot! And they get a nice “Five Star Dealership Award” to hang in the waiting area. But have they provided the best service? How can you choose one dealership over another if they are all “five star” dealerships?

Are you getting the unbiased information you need to create Effective Product Marketing? Do you know what your customers really think? Do you know which customers will give you a good reference?

Here’s how: ask them.

Frequently.

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Steve Johnson is a recognized thought-leader on the strategic role of product management and marketing. Broadly published and a frequent keynote speaker, Steve has been a Pragmatic Marketing instructor for more than a decade and has personally trained thousands of product managers and hundreds of company senior executive teams on strategies for creating products that people want to buy.  Steve is a popular keynote speaker at forums throughout North America and author of many articles on technology product management. His ebook on product management has been downloaded thousands of times. He also blogs on the topic at ProductMarketing.com.
 
Adele Revella is a speaker, trainer, consultant and thought leader on product and marketing strategies that are guided by deep insight into the way target customers evaluate their buying decisions. Adele has served in vice presidential roles at three technology companies, guiding product management, marketing and sales teams to achieve leadership positions in untapped markets and segments. She says that limited budgets and the demands of immature products and markets forced her to constantly focus on innovative strategies and measurable outcomes. She blogs at BuyerPersona.com.

If I had to think about it, I guess this enthusiam comes from a marketing background exposed to too many carefully crafted, super cool campaigns that required a ton of work and money, but just didn’t move the needle on results for the business.

Testimonials from customers are different because they are so directly involved in the sales process. At the same time it’s sometimes hard to put your finger on exactly how to quantify it.

When working with clients and prospects, Boulder Logic typically starts by looking at the number and size of deals that can/should use references and then considers the impact that a positive testimonial can have on the deal closing.

Here’s a table illustrating that formula for a single sales rep with some hypothetical values:

If this is of interest, our company recently recorded a webinar that walks through this and other customer reference ROI calculations step by step. It’s about 15 minutes long.

“Customer references should be managed with the same discipline as any marketing program by putting someone in charge. This doesn’t have to be a full-time role, nor does it have to happen from Day 1, but in order to maximize return on investment in the program, this commitment must be made.”

Gartner’s perspective on customer reference management is particularly interesting. They are in the position to validate their recommendation with successful marketers and also comment based on their own experience. Their analysts regularly rely on and evaluate vendors based on the references they receive.

Those interested in more of Gartner’s perspective on Customer References may want to download their recent report “Marketing Essentials: How to Manage a Customer Reference Program.”