Outsourcing Your Customer Reference Program: Compelling Option During Uncertain Times

Gayle Mestel
September 29, 2011 — 1,528 views  
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Sales and marketing professionals recognize that satisfied customers are a major corporate asset-that word of mouth is a prized sales driver and that marketing collateral gains power exponentially when it leverages testimonials.

So it's little surprise that customer reference programs-initiatives that formalize the grooming of customers for reference activities-represent a hot new marketing discipline.

But in today's financial climate, where budgets are tight and many companies are understandably risk-averse, not all corporations are prepared to invest the resources required to develop in-house reference programs.

The solution: outsourcing.

Outsourcing your company's customer reference program offers a number of benefits-many of which become even more compelling during periods of economic uncertainty.

First, outsourcing maximizes adaptability from a budget standpoint. Hiring an outside firm lets you ramp up your customer reference program quickly-the firm will "hit the ground running" with pre-established tools and processes-without a corresponding upfront investment. Should your organization decide to leverage the program in new ways after it's established-a distinct possibility, once the program's value becomes known-your agency can add resources quickly as well.

At the same time, should circumstances require you to cut budgets in the future, you can do so without the expense and other complications associated with displacing full-time employees.

Outsourcing offers budget flexibility by letting you choose to implement your program with a mix of in-house and external resources.

For instance, a customer reference program encompasses three main areas: operations, sales, and marketing.

Operations comprises the management of the reference database-which can be as simple as an Excel spreadsheet or as sophisticated as a full-blown customized Customer Relationship Management (CRM) database. Database management tasks include capturing and updating customer details needed to match them to desired reference activities, and tracking reference activities themselves-so that the company knows how customers have been leveraged and what the results were.

Sales and marketing represent two separate outreach portions of a reference program. Examples include activities like qualifying customers willing to host on-site visits for  prospects-something that can greatly facilitate B2B sales in particular-or securing permission from customers to participate in media interviews as part of a marketing initiative.

With outsourcing, companies can break out these three areas and choose to outsource only one or two of them. This enables companies to allocate funding selectively, and leverage internal resources where doing so might make more fiscal sense.

Outsourcing also lets you lock in your costs over the duration of the contract. This makes cost projections easier, and provides a built-in hedge against factors like increases in personnel costs that might impact programs staffed internally.

Because outsourcing gives you more control over costs, it also makes it easier to justify those costs in terms of program ROI-another advantage right now, when companies are scrutinizing budgets to eliminate low-value programs.

Of course, to achieve ROI you need a customer reference program that is well-designed, well-run and expertly managed. Here's where outsourcing can help, too-as long as you pick the right agency.

So what should you look for when you evaluate customer reference program vendors?

One important criterion is the agency's track record. It's easy for agencies to claim they have customer reference expertise, but the fact is, this is a relatively new marketing specialty. Ask how long the agency has been managing customer reference programs. Determine whether they were formal programs that had clear objectives and were designed to deliver measurable results.

Make sure the agency is well-versed in the legal ramifications of leveraging customer references. Your customers need to give formal permission before their names, company names, or trademarks can be used in your sales or marketing programs. Skip this formality, and you could alienate the customer; your company might even be at risk for legal action. A reputable customer reference program manager will be able to guide you through the process of obtaining and managing customer releases to protect your company and ensure customers are aware of the program's intentions, objectives and scope.

     An agency that has expertise in customer reference program management will be able to demonstrate experience in qualitative issues as well, such as handling customers tactfully and professionally in typical as well as unanticipated situations.  When approaching a customer to determine their willingness to participate in a reference activity, for instance, it's important to respect the customer's parameters relative to lead times. You are asking them to do you a favor, after all. The last thing you need is for happy customers to perceive your outreach as pushy or unreasonable.

Another issue to consider is the agency's location. Many companies today select offshore resources to perform database management tasks, for instance. While this might make sense for some tasks, when it comes to customer outreach you have to weigh issues such as time zone differences and language fluency. In some cases, there might also be regulatory reasons to maintain customer information close to home-to more effectively ensure best practices relative to customer privacy, for instance.

Ask about reporting. How does the agency track its success in meeting program objectives? Can it report its accomplishments to you in a way that allows you to document ROI for your company's executive team?

Finally, look for a firm that has confidence in its services. The gold standard, of course, is the willingness to tie pricing to performance. An agency that knows it can deliver will be more than happy to accommodate arrangements of this nature.

An effective customer reference program will pay for itself many times over. It will enable your company to maximize the value of existing customers to close sales and boost the impact of your marketing collateral. By outsourcing the management of your customer reference program, you get all that value packaged in a way that makes budgeting and cost-projection simple and ensures a fast and smooth implementation: truly a winning proposition.



Gayle Mestel

CCS/Public Relations, Inc.

Since joining CCS in 1981, Gayle Mestel has managed the effective and strategic use of thousands of customer references in a broad range of deliverables, events and campaigns. She manages CCS' business unit that develops outsourced customer reference programs for corporate clients. This includes cultivating and tracking customer relationships, matching those valued alliances to sales and marketing opportunities, as well as developing case studies, testimonial quotes, videos and other marketing communications deliverables to maximize exposure.