Did you know that vendors typically spend AT LEAST 40 hours researching, writing and editing a success story that, if they’re lucky, hints at a successful engagement? A typical reference customer spends over 10 hours researching, providing insight, validating and editing, and then has to face legal and PR for more carving, or to see a story killed in flight. I exposed this data during a speech to a group of senior marketing communicators and then again at the AMA/Phelon Group San Francisco training session for Customer Reference Professionals. And while I completely understand how this happens, I’d like to share with you a few techniques we’ve used to help our clients stop the waste and make decisions about which stories to pursue... that is, before you put them on the calendar and schedule interviews: 1. Talk with the reference customer’s manager or boss to make sure they buy in. 2. Talk with legal and marketing communications groups; they often have the strictest guidelines about who can speak on behalf of the company and about what they can say. 3. Search the Web and other vendor sites to check the quality of stories out there about that company. If the stories you find are super-lite realize that while it could be poor writing, it’s more likely due to the customer’s policies. You already know a success story is an investment. It requires management and reinvestment to keep the information fresh and re-branded. Be cautious about where you spend your resources. And above all, don’t be afraid to use other weapons to cut down sales cycles. Promise Phelon, Partner promise.phelon@phelongroup.com

Thanks to everyone who came out for the Phelon Group/AMA CRP training in San Francisco. We could not have imagined a better turnout! CRP professionals from the U.S. (and even from the Dominican Republic!) gathered on March 21-22 for this first-ever training series on how to build and leverage a customer reference program. Participants represented both large and small companies and reference programs in various stages. A great time was had by all as we learned, challenged our assumptions and networked with our peers. Topics included building a case for a customer reference program, identifying the right customers, managing stakeholders and measuring success through metrics. See the customer reference program training agenda yourself right here: http://www.phelongroup.com/about/events.htm. A special thanks to the AMA team, to members of the Phelon Group who put more than 250 man hours into building this course, and to speaker Christine Englund from Sun’s Customer Reference Program who shared her experiences and best practices. Here’s what a few participants had to say: - "Good to see a community of professionals developing in this area - it is overdue and has great value." - "The course was invaluable. I now feel confident that I can move my customer reference program from a tactical program to a strategic one." - "Loved the material and the presenters." If you missed it, join us on the Discussion Forum where attendees and instructors continue the conversation. Or even better, tap directly into our expertise - The Phelon Group has several dozen engagements under its belt! - by signing up for one of the next two training sessions to be held in Chicago and New York. How can you pass it up? http://www.phelongroup.com/about/events.htm Dianna Sadlouskos, Principal dianna.sadlouskos@phelongroup.com

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

Thank you to everyone who continues to read the Reference Steward blog and provide positive feedback about its content, depth of postings, etc. Your thoughts and feedback mean a lot to me and the other contributors. We’ve watched both large multinational and small technology companies struggle with the basics of managing and investing in customer relationships; through our work we understand that successful reference programs are never build on academic models and other folks’ best practices. The most effective and well run programs are those that have developed and maintained this view: that the customer is central; that sales is a powerful contributor to programmatic success; that accountability and discipline ensure sponsorship and ongoing program funding; and that it’s necessary to operate like a small line of business with a clear mission in mind. The Reference Steward blog is a medium designed to provide you with insight into that view. Anyone who tells you that all you need is more/better success stories, their model or someone else’s best practices might as well be selling snake oil. Thank you for your support. Please continue to reach out! You can reach me at promise.phelon@phelongroup.com. Promise Phelon, Partner promise.phelon@phelongroup.com

While lunching with a colleague last month, I dispensed some "free," albeit uninvited, advice about his company’s reference program based on feedback TPG received directly from several of his program’s stakeholders and sales account managers. He looked at me for a minute then said, "We’ve never had problems with that before." In sharing feedback, I’ve heard several other similar responses that stop the wheels of change from turning: "We already do that." "I already knew that." "I’ll keep that in mind" with a subtle roll of the eyes. Maybe you’ve responded to feedback about your program from stakeholders and windsocks in similar ways. Perhaps you received unsolicited input about the way your reference program communicates with sales on an irregular basis, or about that list of 200+ customers on the Web site. But you hold those things sacred–they’re non–negotiable and not open to change–so you tune out the feedback and continue with business as usual. If you know what I’m talking about–if you hold any aspect of your program sacred–then here’s more unsolicited advice. But this time, it’s not about your program, but about how to deal with negative feedback. Law of Business #2,453,587: If you hold it sacred, you’ll lose it First of all, know this: the more sacred your program, the more difficult it is to change. The more difficult your program is to change, the harder you’ll find it to get support. And without support, your success will be limited. Holding anything sacred in business is a dangerous approach. It restricts change. It ill–equips you to accept new ideas and to bond with stakeholders. If you’re in denial, if you don’t listen, your critique–giver will tell someone else... who will tell someone else... who will tell someone else... and before you know it, everyone will know what you’re not doing well. One small issue can easily grow into a major challenge from an external perspective. And if it does, you might lose everything–including that which is sacred to you. Law of Business #2,453,588: If you’re willing to change it, you’ll not only keep it, but grow it To evolve beyond the sacred cow, first invest in listening, in a non–defensive listening strategy. When you hear negative feedback, be positive about it. Ask the person to put it in a constructive way. Say, "That’s good... what would you recommend I do?" Or, "How do you suggest we make it better?" By accepting criticism openly and willingly, you demonstrate across the company that you want your program to be well–perceived and that you’re willing to make investments in change. It also encourages fountains of feedback to come back and give you more. Second, establish windsocks; people who are not immediate stakeholders but who are well–respected and who talk a lot. Others listen and talk to windsocks often, so you should, too. Engage them in informal dialogs about your program, and do so even more frequently than you do with your stakeholders. Ask them what they’ve heard about your program. Ask them what they think you can do better. To Manipulate a Cliche: If You’re Convinced that Something in Your Program Must Stay, Set it Free and See What Happens Some believe that the safest bet is to keep things sacred. This maybe true in the short run. If you don’t manage feedback well, the best case scenario is that your program exists exactly as it does now. But in the long–run, your safest bet is to manage feedback as it comes in; to create a positive environment for constructive criticism. When you do, you’ll demonstrate that your program’s not sacred, that you’re interested in partnering with people, and that you’re open to change. Try it. I bet people, especially in sales, will start treating you differently. Promise Phelon, Partner promise.phelon@phelongroup.com

Do your customers get what they want for participating in your company’s customer reference program? Or do they get what your company wants to give?

What Customers Want (in descending order)	What Customers Get (in descending order)
Ability to network with peers	Team/project/individual promotion
Access to vendor executives	Ability to network with peers
Influence on the vendor’s roadmap	Influence on the vendor’s roadmap
Rewards and discounts	Access to vendor executives
Team/project/individual promotion	Rewards and discounts
(From the 2004 Customer Perspectives Study, The Phelon Group)	(From the 2005 Customer Reference Program Benchmarking Study, The Phelon Group)

These two columns come from recent Phelon Group research that is available on our web site. See the disconnect? Customers want promotion least but are offered it most. Access to executives is high on the customer want-list, but low on the list of programmatic offerings. Every customer is unique and there are no "best practices" of what they should be offered. Bridge the disconnect (among other things) by downloading our complimentary Customer Perspectives Study - 2004. It’s a provocative report that offers a fresh look at what customers really want and need to act as a reference for your company. And, by talking to your customers to understand what really matters to them. Our clients often ask us how they can get their customers to participate in their programs. In some cases, we answer that question by actually doing the work and recruiting the customers. This helps us identify opportunities and diagnose problems. In other cases, we help our clients identify and narrow their value propositions by understanding what is important to their unique customers. If you can’t get a customer to say yes, think of it as a sales opportunity... sometimes the buyer is ready, other times she isn’t. Other thoughts to ponder: - Are you the right person to deliver the pitch? Is there an executive, account manager, technical lead, or a person currently in the reference program (someone your customer respects) who would be a better and more convincing messenger? - Is it the right time? All too often we forget that a customer’s definition of success may be different from that of the program or the company. Timing is everything. We often help our clients perfect the timing of the initial recruitment contact-usually at a point when the customer is excited, when they have a great story to tell and feel good about the relationship. The result: a better and more loyal reference and a more powerful story loaded with metrics-based success. - Are you making the program clear and simple? Customers we’ve spoken with have often been annoyed because they are not sure what they are signing up for and what the rules of engagement will be. It’s got to be crystal clear! - Are you up-selling? Look at each relationship as a strategic partnership. Start small and work your way up to asking a customer to act as an "under-NDA" or as a member of a customer advisory board. You gain great value when you start small because you allow the customer to acclimate to a deeper commitment and signed agreement-you give them a chance to understand the risks and to see first-hand how you will protect their boundaries. Before you do anything though, I recommend you start by reading the Customer Perspectives Study - 2004, which draws conclusions about what customers want based on what they’ve told us. Download your complimentary copy here. And then pick up the phone and start talking to your customers. Promise Phelon, Partner promise.phelon@phelongroup.com

Ask yourself these questions: 1. Do I lack the information I need to craft a solid action plan for building my program? 2. Are there one or more areas of my program that face constant challenges – for instance, content, customer inventory or metrics? 3. Do I need new thinking and proven methods that will enable my program to get more respect, sponsorship and budget? If you answered "yes" to any of those questions, good for you! Good, because it means you want your program to be a class act. And it also means you know that getting better and expanding your skill set is a requirement for customer program success in today’s changing environment. Now is your chance! Update your skill set with the joint TPG/AMA training series, Customer Reference Programs: How to Build and Leverage a Successful Customer Reference Program. The series combines best practices with TPG’s methodology and practical experience to help you avoid false-starts and overcome blockages. During the two-day session, discover:

• Why 2005 is an incredible year of opportunity for leaders of customer-facing programs who want a seat at the strategy table
• Which metrics various stakeholder groups really need and want
• How to segment your customers for maximum support and leverage
• Which programmatic value propositions customers are looking for
• How to capture powerful success stories and leverage them over and over again
• Roads around key program obstacles
• And more

Join me, won’t you? The program will be held in: San Francisco, March 21-22 Chicago, April 11-12 New York, April 28-29 Get more details here or let us know if you have specific questions. Seats are available on a first-reserved, first-served basis, so be sure to reserve yours today. See you there! Dianna Sadlouskos, Principal dianna.sadlouskos@phelongroup.com