Why are customer references so important and how to use them?

When you are in a sales cycle invariably a question that will be posed to you, either by the prospects or the sourcing team within the prospect’s organization, is to provide a reference for similar work done in the past. 

This question is thrown at you:

1. To assess how you react to the situation and if you’ll be able to provide any references – Your initial reaction will give a fairly good clue to the prospects on your confidence to deliver the project. If you had mentioned any similar projects that you had executed well in the past, this will be your test to come true on it.

2. To actually talk to the references in order to ascerrtain if you are the right partner for the project – This is a good indication to you as the sales person, because it means that you are very close to sealing the deal. Typically this request is sought in the final stages of the sale cycle, when the prospect wants to tie up the lose ends and want to finalize the deal with the vendor they are engaging.

In either of these situations, the take away for you should be that the buyer is serious about moving ahead otherwise this question normally doesn’t arise. Notice I used the word ‘normally’. The reason is that, there are times when this question does get asked prematurely.

You are in the very first meeting with this prospect and the following statement pops up, “All this looks great. So can I get some references that I can talk to?”. It can be a very harmless question that is asked after you are done with your presentation. It doesn’t mean that they are trying to corner you, it could just be them trying to be polite or buy some time till they can get back with you again. To some it might be just one of the questions that the prospect believes is part of a sales cycle.

But from your perspective you got to be really careful in these situations, because this is way too early to be asking for references. This prospect isn’t far along the sales cycle, as you have just met them. Also remember that references (even great ones) given at the wrong time can cause you more harm than good. As I’ve experienced, there are three issues that can crop up here:

1. Overused References: If you have been in account management you know that references are a scarce commodity. Good customer references are rare and take a lot of time to develop and nurture. And a lot of them are based on mutual understanding and respect for the services you have delivered to them in the past, along with the type of relationship you share with them. So every time you use them as a reference you are losing a bit of your relationship capital. Use them too much without them seeing much of a benefit in it for themselves, you’ll slowly start losing them as a reference.

2. Delayed/lost opportunities: When you are in sales, you will quickly realize that convincing the customer to TAKE ACTION is the hardest part. Despite all your good work and great conversations, the onus of pushing the customer to close the deal will almost always be on you. Don’t expect the prospect to do that for you. The same applies for reference calls as well. 

Lets run through a scenario. Your prospect has the phone number of the reference you just gave them. The prospect gives the reference a call. The customer reference doesn’t pick the call immediately and the prospect leaves a voice message. The reference will probably listen to the voice mail and call back at their own convenience. It’ll most probably get to the prospect’s inbox now. How long do you think this phone tag will continue? You’ll be lucky if it goes on longer than one round. If you are depending on this reference call to seal the deal for you, you’ll probably be waiting for a long time.

3. Un-impressive call: Every customer scenario is different. In the circumstance that a prospect does manage to connect with the customer reference, they’d typically talk about what environment (IT environment) they had along with the issues they were facing before your service/product came along to solve those issues for them. Even if there are a few questions back and forth, its very unlikely that the prospect finds an exact match to the problem he/she is trying to solve. Fast forward to the end of the call, you’ll have an unimpressed prospect who’ll give you a cold shoulder on the next contact you try to establish with him/her.

When faced with a premature request of a reference, politely let the prospect know the following in your own words:

-The list (names of companies) that can be given as a reference. This should be mentioned in order to inspire confidence within the prospect.

-Let them know that it’s better that the reference details be shared later on as it will be of more value to them once the details of the project are clearer.

-You want to be respectful of the reference’s time as well. You hope that they themselves will be a reference one day and would be treated to the same standards.

-State that when the time is right, you’d be happy to make the connection yourself between the prospect and the reference. This will also help avoid the phone tag and give a context to the conversation.

CONCLUSION

Customer references are normally asked for by the prospect when they are in the final stages of their decision making. A good reference can seal the deal in these circumstances. But be sure to not indulge the prospect in scenarios where such a request is sought prematurely. References given early on in the sales cycle can not just result in a lost opportunity but also in a lost future reference.