The Phelon Group sees the strengthening and emergence of eight trends that will impact your customer reference program in 2006. Here's what we see and, briefly, related actions you can take to push your program into the forefront in 2006. 1. Customer relationship and internal issues will become more complex, thus requiring more outsourcing of tactical program activities. During the 2005 CRP Forum, many reference professionals told us they don't have the time to be more strategic - that they and their teams are weighted down with too many tactical expectations. Since we expect customer reference program FTEs to remain flat, and because demand for program output is expected to continue to rise, consider leveraging agencies for your program's day-to-day and maintenance activities. Which ones? To find out, list all of the activities your program manages and identify repeatable processes within them, such as customer qualification and customer intelligence refresh/updates. Leverage agencies to manage these maintenance components of your program so you can focus on the strategic issues your program faces everyday but that you typically feel you don't have time for. 2. Customers will shuck the system and continue to leverage their informal networks and reach directly into your customer base for the knowledge they need. To get around this, arm your customers by communicating with them regularly. Give customers the messages you want them to communicate to others about your company's solution. Give them opportunities to learn about your company's solutions (the ones their using and the ones they're not!) so they'll be equipped to speak intelligently at facilitated and un-facilitated word of mouth reference opportunities. 3. The cost of customer success stories will rise, and it will become increasingly difficult to get customers to agree to success stories and the sharing of detailed information. In addition, stories that are produced will take more time as corporate policies tighten the reigns on publicity. It will be obvious in 2006 that CRP programs will need to clearly define processes for developing customer success stories. Customers want more story detail - which often means hiring additional analysts and a writer specializing in your company's technology to uncover and write the story - all of which costs more money. And since a large majority of started stories are eventually abandoned, it'll be more important than ever to gain a formal commitment up front from customers - even before the interviews happen. Also, as headcount remains even and as demand for stories increases, look outside the CRP - perhaps within Field Marketing and Product Marketing, not to mention within Sales - for customers to recruit into the program for stories. Yes, the CRP will still remain the central advisory group that defines processes and best practices and serves as a final reviewer, but it doesn't have to manage every step of the process. 4. Word of mouth and customer references will provide differentiation. As technology providers consolidate and IT solutions become more commoditized, differentiation among solution providers will come down to customer experiences and the strength of company-customer relationships. While "uneducated" buyers and aggressive sales professionals may try to swing the conversation to price, more often than not the strongest customer relationship will win. Also, as more vehicles become available for people to share their views and opinions, the importance of referencable customer relationships is even more so. Individuals will post their unedited, raw thoughts about your company's solutions - good, bad and ugly - on blogs and share them during informational chats. Beat these tactics by empowering your customers and sales teams with customer value propositions that help differentiate your company and its solutions from your competition. Open your own forums in which customers can share experiences and turn for help. But don't just let them rant and do nothing about it - make sure customer issues made public are always openly addressed. To empower sales, build customer proof into the first corporate presentation and continue to provide leveragable proof to sales for use throughout the sales cycle. Then educate them on how and when to use it. Spoon feed them the latest and most relevant customer references so their arsenals are always up to date. 5. Customers will become increasingly wary of serving as references. We know you know demand for customers is high. We also know you know that once a new reference is cultivated, it can quickly be burned out by media interest, sales demand and approval processes for content developed. Take these two actions in 2006 to help alleviate customer burnout: - Start the reference relationship with a reference plan. Understand upfront what the customer is willing to participate in, document it, and share the plan. Include time commitments. And continue to refer to the plan throughout the reference relationship. - Start small with new reference customers. Let them get used to referencing before pitching them to the media or nominating them for events. Begin the reference relationship with a few sales references so both you and the customer understand how best to work together. 6. Benefits will trump tangible incentives. The days of points 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. To differentiate your program from the other reference programs vying for a customer's time, offer valued benefits that are unique and meaningful. How so? Ask your customers! Through surveys or by phone interviews, understand what it is your customers want most out of their relationship with you, their strategic vendor and partner. Not all customers will want the same thing, so be flexible with what your program offers and supports, within reason. Leverage existing programs at your company and offer reference customers priority participation, for example, in executive sponsorship programs, customer product councils or in VIP user groups. And build these benefits into the reference plan mentioned earlier as a sign of commitment from your organization to theirs. 7. More care will go into build v. buy reference management system decisions due to the growing pressure to centralize customer data and effectively manage touch points. The breadth of customer reference programs continues to grow, with channel and partner support being a leading challenge faced by many customer reference programs. Critical to success in supporting these additional program constituents is a comprehensive and effective reference management system. Comprehensive permissions, complete workflow and effective content management are the key components of reference management systems today. Make sure your system also allows you to measure the success of your program. Remember, it's not the number of references or number of success stories that impress higher ups; rather, it's that extra layer of detail on the quality of references available and satisfaction of various stakeholders. 8. Reference programs will need to tie in with retention. Reference programs will need to position themselves as "retention" programs. According to a 2005 Bain study, an average business loses 50 percent of its customers every five years; and the cost of gaining a new customer is 7-10 times greater than keeping the ones you have. Also according to the study, a company can increase revenues by as much as 85 percent by increasing its customer retention rate by five percent, which can translate in up to 25-95 percent increase in profitability. Communicate and publish this often to make sure the message is heard. Kathleen McBride, Senior Consultant kathleen.mcbride@phelongroup.com