Customer References & Buyer Confidence

Buyer confidence is an under-appreciated factor in purchase decisions — and customer references are key to building that confidence. I can’t think of a more humbling, stressful purchase decision than the one we go through when buying a home. You juggle multiple options, each with a list of pros and cons, price/feature trade-offs, the neighborhood’s compatibility, and, specifically, the neighbors. Plus, your decision will impact your personal (and perhaps family) happiness for a long while. No pressure.

To reach a decision, you process loads of information. Some data comes from the salesperson (realtor), some you find online, and your peers (friends & family) will happily weigh-in, but in the end, there is a significant gut instinct component you just can’t get around. So many of these same factors apply to B2B buyers. The consequences of a decision are different but still weighty:

  • How peers and leadership will perceive their decision
  • Impact on their future in the company (e.g., promotions)
  • Co-worker satisfaction with the choice they made
  • Effect on their personal happiness (Did the decision make their life better?)

As Brent Adamson, Distinguished Vice President, Gartner has written about and presented on, all the selling activities that go on must ultimately help build buyer self-confidence in making a decision. That’s different from a buyer’s confidence in a vendor’s ability to deliver. This new perspective means all these sales and marketing steps need to be re-thought in terms of bolstering the buyer’s confidence.

 

 

 

 

 

Without that buyer’s confidence, you lose—to a competitor (who got the buyer to that confident state before you) or status quo. Either way, it’s still a loss.

Status Quo Bias

On average, over 60 percent of B2B evaluations end up with no decision: status quo. Why? A pesky human attribute the psychologists call status quo bias. We put every decision through a loss vs. gain analysis. Research on how we avoid loss (i.e., loss aversion) found that the potential for loss weighs more on peoples’ minds than a possible benefit—negative wins over positive. We are, in fact, twice as likely to make a decision based on avoiding loss than realizing a gain.

What does that mean for B2B marketers and salespeople? Corporate Visions wrote, “If you truly want to differentiate your value, you need to tell a powerful, disruptive story that inverts your prospect’s perceptions about staying the course versus changing.” But more than that, the buyer needs help sifting through all the information to isolate what’s relevant,  and ultimately help achieve the necessary confidence about their decision logic.

Enter Customer References

You may have noticed one exclusion from the sales and marketing activities listed above—customer references. When references aren’t a serious component of a company’s go-to-market strategy, it is comical and tragic.

All the other activities produce messaging from a common source: the vendor. Customer advocates speak for themselves and from the most informed perspective. They have lived with the vendor, lived with a solution, and seen results, all in a real-world business environment. They offer the most persuasive and reassuring insights a buyer could ask for. Those insights can come in many forms (written, video, audio), but a live conversation with context-specific Q&A is ideal for resolving critical concerns or uncertainties.

 

 

 

 

 

CxOs don’t tend to allocate much attention to the customer reference part of the sales and marketing strategy. It’s not new. It’s not sexy. The reference management function is often not even elevated to a professionally run, bona fide program. But if cultivating buyer confidence through customer references was recognized as the most efficient way to win deals (fact), a customer reference strategy would be part of the sales and marketing DNA.

Customer Advocate Best Practices

Focusing just on the sales team, it’s worth noting that most salespeople are never trained on how to use customer references: when to use them, how to find them, which ones will be most valuable to the buyer, and how to show gratitude for their help.

When to use

Sales leadership should define/prescribe appropriate reference use at various stages in the sales cycle. Early stages call for customer reviews (e.g., TrustRadius), case studies, and customer videos. Later stages require ROI studies, reference calls, and site visits. Because reference databases often don’t exist, there’s a scarcity mentality about using the limited number of references salespeople do know about. If that information was centralized and the supply was ample, salespeople would not hesitate to arrange reference calls, for instance, before being asked, which could be a significant competitive differentiator.

How to find

Finding a customer reference should not be a major chore. Organizations need a process in place, and that process should not disrupt the entire sales or customer success teams due to a barrage of Slack messages or email. The relationship owners of reference contacts (e.g., customer success managers) should be aligned with the company’s customer reference strategy and rewarded for their ability to maintain a pool of reference-ready customers.

Which ones to use

A salesperson should be able to find customers that line up with the buyer’s characteristics. Not just any customer reference will do—relevant perspectives, like industry, size, use case, geography, and peer-level, matter. The first vendor to deliver a well-matched reference will gain the advantage.

How to show gratitude

A strong customer reference can be worth 5-10x their company’s contract value. This fact alone should cause leadership to take notice. A $50,000 per year account might have a contact who has helped influence $250,000 of new business by giving prospective buyers the confidence necessary to make a change and a decision. That’s worth showing some gratitude, isn’t it? There are many ways to show your company’s appreciation: an invitation to the product roadmap advisory board, elevated service SLAs, complementary event attendance, or professional services, to name a few. At the very least, a gift that reflects the customer’s personal interests is appropriate. Salespeople will feel good knowing customers are rewarded for their contributions and make them more likely to leverage these valuable resources.

Level Up Salespeople

Depending on the study, somewhere between 50% and 70% of salespeople hit their quotas. That leaves a lot of room for improvement. Salespeople have between 5 and 15 apps/tools at their disposal, plus robust lead gen, sales methodology training, social selling training, and so on. But too often, they’re left to figure out the “customer reference thing” on their own.

What if they were provided with the tools and training to maximize the use of customer references? How many average or below-average performers could move up a level in performance if 1) they understood the importance of helping a buyer feel confident in their decision and that 2) customer references were the most effective means for building that confidence? There’s little to lose and much to gain by abandoning the disorganized, inefficient customer reference status quo.

In case you were wondering. Yep, we practice what we preach, starting from the beginning of our buyers’ journeys.

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