The following is an excerpt from an interview with CRMGuru Managing Editor Gwynne Young from a few weeks ago. Find the entire Q&A on the CRMGuru website: Customer Reference Programs: Businesses Ignore Their Strategic Value http://crmguru.custhelp.com/cgi-bin/crmguru.cfg/ php/enduser/std_adp.php?p_faqid=1463 Promise Phelon, founder and CEO of The Phelon Group, discusses the results of the survey and what it says about customer reference programs in this email interview with CRMGuru.com Managing Editor Gwynne Young. Gwynne Young Why do you conduct your annual benchmarking study? Promise Phelon We really believe that reference customers represent an incredible asset that very few companies know how to leverage. Companies often say they are customer centric, but they rarely invest in truly understanding the customer or in building that relationship. CRP leadership clearly sees the critical role it can play but needs to build the business case. That's what the study gives our clients and the referencing industry in general: hard data about what other companies are doing with their reference programs and customers, as well insight and analysis from a respected third-party resource. Gwynne Young The study reveals a disconnect between the expectations of customer reference programs and leaderships' commitment to them. Can you elaborate? Promise Phelon This was actually a surprise. So many companies say they're striving for customer centricity but aren't investing resources to make it happen. Reference programs have the power to gather and disseminate extremely valuable customer intelligence. They are often the strongest connection between a customer and the vendor. And they are the only post-sales organization poised to manage the customer relationship. The potential for building a very deep relationship with the customer is right there, and marketing leadership just hasn't seized the opportunity. The study also shows that customer reference program budgets are stagnant or decreasing. So while marketing leadership says it wants CRPs to be more strategic, they're focused on very tactical measurements that made sense five years ago but not today. Gwynne Young Why do you think most programs still focused on tactical measurements? Promise Phelon They are still operating within a traditional tactical framework. In other words, they're judged on their tactical tool output instead of on the impact and value of reference customers to the company. Leadership isn't necessarily going to put forth a new set of metrics that judge programs any other way, though. The change from tactical to strategic must happen from within programs first. A team that wants to be seen as strategic must begin to act and measure itself accordingly. Gwynne Young Why should companies increase investments in reference customers? Promise Phelon First of all, it's important to recognize the difference between investing in reference tools vs. investing in reference relationships. We don't advocate pouring budget into another 20 or 30 success stories or case studies. Those static tools are losing their power in enterprise technology selling. Prospects are going around the formal reference program to talk directly with customers about what they like and don't like. The most powerful references have very specific traits, built on a foundation of trust with the vendor. We did another study on the perspectives of customers who serve as references and found that the most common indicators of whether or not a customer would proactively serve as a reference were that they had a say in product development; the vendor cultivated a community of customers who could network with each other; customers were able to access their vendor's senior executives to share business strategy; and they felt their issues were resolved quickly. What we do advocate, however, is investing in a foundation, infrastructure, methods and extensibility that bring to the program strategy, scalability and efficiency. Why invest in reference customers? It's simple: When you invest in your customers' successes, you engender loyalty and advocacy that set your company apart in a competitive market. Gwynne Young You note that 80 percent of study participants expect increased demand for references this year. What explains the increased demand? Promise Phelon We actually find that this is another disconnect; the demand is increasing without resources. The good news is that more companies are allocating budget to refresh or invest in technologies, so more enterprise technology vendors are ramping up sales, PR and marketing activities, especially demand-generation campaigns. These internal stakeholders really rely on references to help meet their objectives. The downside of not investing more in reference customers is that these internal stakeholders risk abusing and burning out these extremely strategic customers. It's a very common issue among companies that view these customers as tactical tools. Gwynne Young The study shows that companies seem to be shifting the locations of their reference programs. Where does it typically reside, and where is it shifting to? Promise Phelon It's interesting that the largest internal reference program stakeholder is sales, yet most often the program champion is in marketing. Oftentimes it's the reference customer who becomes the victim in this tug of war, which is obviously very unfortunate. The study shows that companies are trying to address the issue by moving the programs from sales to marketing or vice versa. We feel the real issue companies need to address is: Who owns and cultivates the customer relationship? It's a strategic question and one that needs to be answered within each company before a program is moved. Gwynne Young What first steps do you recommend to reference program leaders who want to move from tactics to strategy? Promise Phelon First, we recommend that reference program professionals learn all they can about what a good strategic program looks like. (Our web site at www.phelongroup.com is a storehouse of research and knowledge--most of it free.) Then, ... Read the entire interview: http://crmguru.custhelp.com/cgi-bin/crmguru.cfg/ php/enduser/std_adp.php?p_faqid=1463 Promise Phelon, Partner promise.phelon@phelongroup.com