It’s possible you may have some frustration with your company’s customer reference program. You might feel like the program doesn’t deliver enough customer references, or you might wonder why each story takes so long to develop, or you might think the program is too slow to develop references for your hot new products. But if you’re looking to the reference program alone to solve those problems, you’re looking in the wrong place.

Fundamentally, customer reference programs harvest customer referability. That is, once a customer is happy with your products, services, and company in general and is ready to talk about that positive experience, the reference program captures information about the customer, develops deliverables, and matches the customer spokesperson with reference opportunities.

That’s an important role that delivers value to your company, but it’s also important to remember that customer reference programs don’t make the customers referable in the first place. They don’t cultivate referability, and they shouldn’t – it’s not their role, and they’re not empowered to do it. No matter how professional, efficient, or focused your reference program is, they can’t create reference customers where none exist, and they can’t single-handedly overcome the reasons customers decline reference opportunities.

If you’re frustrated that you don’t have enough reference customers, or that you don’t have the right ones, don’t blame your customer reference program. You’ll have better results if you explore what it would take to make more of the customer base referable, and see what your company can do to cultivate that state.

Whitney Wood, Director
whitney.wood@phelongroup.com

I was recently in Singapore and met with a colleague who works for a large government agency there—one that just received a few billion (yes, billion!) dollars from Singapore’s government to roll out new programs. As we walked and talked, I asked about utilization and if their current programs were being adopted. After a long pause, I realized that tracking usage and adoption wasn’t something their team focused on. Instead, they tie success to new programs and attracting new people into them versus getting folks to maximize their use of what’s already there.

Like a lot of companies and organizations, teams tend to be intoxicated by the newest frontier. A client’s customer told me a few years ago, “Solution providers live with an eye toward the future, but we’re just trying to survive in the present.” Yes, every company needs to be forward-looking; but it’s also true that adapting to new, new, new is a challenge for most customers and their organizations.

Study re-confirms the importance of retention

A small, recent study put out by an organization called DemandGen highlighted, as we’ve said for years, that retention as a corporate strategy is essential to profitable growth—not only because retention gives you the ability to get more from existing customers, but also because it gives you and your customers a better ability to absorb change. The study, which took into account the responses of 200 sales and marketing executives, focused on the sales and marketing aspect of being “new-market focused.” Two key takeaways for you:

1. The majority of sales and marketing executives said that their companies’ top two growth strategies for the coming year are “new product/extensions” and “change focus on customer/segments,” at 76% and 62% respectively. This is shocking because “deepening customer relationships” and “growing existing accounts,” two of the other answers, are known to be key to rapid growth and yields but were not noted by respondents as top priorities.
2. Constant “innovation” is becoming hard to digest. Sales organizations, marketers and customers often are not ready to receive new products and services, new models for engagement, new… new… new…. DemandGen’s study pointed out that 58% of respondents said their greatest challenge was “implementing strategy,” while 34% said they were only somewhat prepared to deliver on their customers’ biggest demands.

Is retention in your plan for the next fiscal year?

What are you doing in your plans for the upcoming fiscal year to connect with and segment your customer base and put into place a retention strategy for your value segments? As part of your new fiscal year plan, do a simple exercise of valuing the new versus the existing base: what is the potential value of your current customers versus the value of the new market (taking into account the cost required to enter that new market or attract those new customers)? If you consistently do this exercise and implement a retention strategy as par-for-the-course, you’ll be able to better put your current versus new market opportunities into better context and capitalize on the breakthrough growth that retention as a strategy provides.

Promise Phelon, CSO and Founder
Promise.Phelon@phelongroup.com

Labels: corporate strategy, customer retention, customers, growth, marketing

If you’ve ever walked down the strip in Las Vegas, taking in that flaunting of excess, you’ll appreciate what a feat it would be to achieve any kind of conservation goals there. Making do with less? In Vegas? That’s a tough sell. But it’s also just what Pat Mulroy, the water chief for the city, has accomplished (here’s a great story about her that aired the other day on NPR’s Morning Edition). She got big results that crossed state lines, changed the way the Colorado River is managed, and made new artificial lakes illegal in Las Vegas, to name just a few specifics.

There are a lot of tough sells in business – getting resources devoted to listening to customers, making changes to the business javascript:void(0) Publish Postin response to what you hear, creating a strategic customer reference program – and I think Pat Mulroy’s water conservation efforts hold a lesson for everyone fighting those uphill battles.

Here’s how she did it, according to Alan Feldman, vice president of the Mirage Resort: "She framed it as a business issue: 'This is a resource, this is how much we have, this is its correlation to the economy. How do we manage it to its best impact?'"

A lot of forward-thinking people find themselves frustrated by their inability to get everyone to agree on how to manage customer referability – that is, willingness to recommend your company to a colleague – “to its best impact.” You may be convinced that listening differently or better or more often to your customers is critical. You may think you listen plenty, but don’t respond well enough. But mobilizing others to action around these ideas is arguably harder than getting Vegas to conserve.

But think what you’d be able to do if you could get everyone to see customer referability as a resource, and then trace its impact. Referability may be a slightly more complex resource than water, because so many moving pieces go into creating it, but it’s a resource nonetheless. And it certainly has a powerful impact on your bottom line – the challenge is to make that connection visible. If you did, maybe you could change the way your company manages its equivalent of the Colorado River.

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Labels: customers, listening, referability, reference, vegas, water

Are you in the camp that is counting down to the release of Apple’s iPhone, or in the camp that doesn’t have June 29 marked on your calendar as a day that will go down in history? (That’s the release date, for those in the latter category.)

I’ll probably hang onto my free-with-plan Nokia handset for a while, but I’m watching with interest as this potentially game-changing gadget comes on the market. Any businessperson can identify with the anxiety Apple’s competitors in the handset market are feeling.

But a recent New York Times article quoted a competitor who make a good point about the “media-centric” iPhone: “It will hit one sweet spot, but not necessarily all of the sweet spots — we hope.” I’d tell you who he was, but he was only identified as “a director at a handset competitor who declined to be identified, saying that his company did not want to elicit comparisons with the iPhone.”

How smart, and by that I mean both what he said and his disinclination to be pigeonholed as an iPhone competitor. He gets that some potential customers want what the iPhone has to offer, but others see the value their cell phones deliver differently, and that his company should focus on what its own customers want – its own sweet spot. If his employer is truly wise, it will keep on top of how its customers define the value they seek in a very straightforward way: by asking them.

Our own Promise Phelon tells about a similar situation a recent Inc.com article. Chasing after the imagined sweet spot of innovation led one company down an expensive and unprofitable path, because its customers were after a different sweet spot of quick, predicable value. They didn’t know, because they didn’t ask.

So what’s your sweet spot? Are you letting your competitors define it, or your customers?

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Last Thursday I attended SVAMA’s event on MARKETING THOUGHT – Ideas That Drive Results. Overall there were some good points and learnings to take away. While Guy Kawasaki is always great to listen to and learn from, it was the Gartner Group presentation by Robert Goodwin that resonated with me. Of course that was because his topic speaks to what the Phelon Group lives and breathes every day, Customer Buying Trends and Influence - the TOP 10 Most Effective Marketing Activities in IT. Gartner is in the process of releasing one of their studies, and Robert shared some of the insights gained from the study. So in the spirit of “Pay it Forward” (and by the way if you haven’t seen the movie, you should rent it), I share with you some of the IT buying trends that emerged:

1) The Sales channel is becoming more important in technology as buyers look to this group to help them determine the value they will receive from their purchases.

2) High touch selling is still the most effective way and preferred way that executives buy. These decision makers put Digital Media at the bottom of their list as ways they make decisions or are influenced. So much for all this blogging and webcast stuff! Gartner recommends investing in all the classic high-touch methods: sales presentation and interaction, contact management, events, the website.

3) There is a growing trend that technology solutions are now being purchased from the line of business and not purely the IT departments.

So for those of you in the technology sector who are reading this, it may be time to check in with your customers on “How they WANT to buy” and time to get in touch with your sales people on what they need to more effectively sell.

Debra Colombana, Vice President of Client and Market Development Debra.Colombana@phelongroup.com

Labels: blog, blogging, customers, marketing, results, sales, selling

Today, I posted a comment to Fred Reichheld's Ultimate Question blog, in response to his call for examples of companies who are kicking the bad profits habit. See his post on "HBR Highlights the Bad Profit Problem."

In response to Fred’s request, we would like to highlight how one of our clients, Mellon Investor Services, has deployed a Voice of Customer practice, built upon the Net Promoter discipline, to become addicted to good profit by transforming their client base into advocates who drive growth.

In a nutshell, Mellon needed to win new customers and grow revenue in a highly commoditized market place that was shrinking 3-5% each year. Mellon recognized that they needed insights on how they could differentiate within their market. Mellon already had systems in place which allowed them to track customer satisfaction, but their data gave them no actionable insight to be able to predict the willingness of their customers to recommend/refer or likelihood to purchase additional services. Mellon was looking for causal linkages of what drove customer behaviors beyond just the measure of satisfaction. Mellon launched an NPS initiative to help uncover the key drivers behind a customer’s willingness to recommend and its impact on profitability and growth.

To Fred’s point, Mellon could have easily explored contractual vehicles that created bad profits. Instead Mellon looked for the levers and dials they could control to create advocates to drive customer retention, repurchase and referrability. The company realigned around the Net Promoter methodology and put customer insight at the center of their decision making process and have successfully defined the actionable levers they could control to increase loyalty and drive growth. This led to many process changes within the company and like Intuit, has created an environment that enables Mellon to have more action-oriented, open conversations with their clients and thereby improving the quality of their relationships.

One of the key aspects of Mellon’s Net Promoter program was the quality of the verbatim comments that they have been gathering via NPS. They found that there was something magical about the nature of the "recommend" question that got their customers willing to offer meaningful verbatim responses to the "why did you vote that way" follow up question. With these verbatim comments in hand, Mellon formed an executive council who reviews the data from their customer listening posts on a monthly basis. This council works to identify key trends, create actions around what their customers had to say, and more importantly, closed the loop with their customers as to the actions they planned to take. As a result of this process, Mellon discovered that in a commoditized market, where "product innovation" is difficult, you can create meaningful differentiation by creating an environment where you bring your clients into the decision making process. By asking, listening and then acting they found themselves actually changing their product and services to best meet their customer’s needs—which in the mind of the customer created a customized and differentiated offering. Pure satisfaction research never created the opportunity to create the dialogue that facilitated this degree of impact. Further details of the Mellon Investor Services case study can be found at http://phelongroup.com/clients/success.htm.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com