Plan For Customer Reference as Much as Payment

Written by Sean Murphy. Posted in Consulting Business, EDA, skmurphy

JL Gray left a short but thought provoking comment on yesterday’s post  about customer reference, “Negotiate the Level of Reference in Parallel with Price and Others Terms and Conditions.”

Asking for references is something I’ve never felt especially comfortable with (gasp – what if they say no!) but can be crucial in getting your foot in the door with a new client. You’ve done a good job categorizing the types of references and describing how one might go about including the possibility of a reference in an initial contract. It seems like most of the above would work for product companies, but would be more difficult for service companies. Any thoughts on that?
Thanks Sean, JL

I wouldn’t start by asking for a reference, I would ask for feedback on the quality of your services and the business results that you enabled. If it’s positive you then have the basis for asking for a reference. If it’s negative then you have a chance to remedy and ask after they are satisfied.

We do most of our work with early stage software firms. They often have to wrap their technology in a thick protective blanket of services to protect their customers from jagged cuts by the rough edges of tomorrow. So to their early customers a young software firm can look as much like a consulting company as a technology company.

One of the key concerns that early customers have about a new company’s offering is not whether it works–they know “nothing new ever works” from Secrets of Consulting

The first line of defense is accepting that the new system willfail, possibly in several ways. When I find myself thinking, “I must have this change because I can’tafford failures,” then I’m in big trouble. If I can’t afford some failures, a new system won’t help. And neither will an old one.

Nothing new ever works, but there’s always hope that this time will be different.

What’s harder for them to assess is the level of commitment to persevere through the normal challenges of new technology introduction so that they don’t get a dent in their career. One of the ways that they make that assessment is your past performance and the best way to substantiate that is through customer references and testimonials.

I think that the suggestions I made yesterday would be appropriate for consulting to a large firm or a public firm. It’s very reasonable to address up front how you can talk about the engagement and ask them up front for an honest quote, endorsement, testimonial, or joint technical paper as an outcome. Certainly asking for a LinkedIn endorsement after a long engagement is very reasonable.

One other thing to consider is to have another member of your firm do a periodic ‘quality check’ on how the engagement is progressing, certainly at key milestones or deliverables. One reason to use someone else is that sometimes a customer may be more candid with a third party than they will with you directly (it’s also more credible when another member of your firm has a discussion about what is going well and less well as it implies a corporate commitment to customer satisfaction even if there are aspect of your performance that they are not happy with).

We will also do these “customer view” exercises when we are helping a new client build or verify a positioning. We not only interview customers but as many “near misses” or prospects that proceeded some way forward in the sales process and then dropped out as we can. We have uncovered examples of “reference customers” who were unhappy (and shouldn’t have been used as a reference until their issues had been addressed) as well as novel uses for a product, different perspectives on how to talk about a product and what the true benefits were.

I wrote about some aspects of this about a year ago in “Best Feedback From Early Customers is a Story” and built on Peter Cohan‘s formulation of four categories of customer success story (with the applicability to consulting engagements in parentheses).

  • Vision: what were their reasons when they gave you the purchase order (or statement of work).
  • Initial Implementation (perhaps first or second milestone in a consulting engagement) what are the initial benefits and problems they observed.
  • Consumed: what actually got used (what is the impact of your work on the overall project as it progresses)
  • Evolved: how did they ultimately use the solution (when they look back in a final project after action or they start the planning or kickoff  for the next project, how do they plan to use your services).

When you consider the introduction of a new methodology or a new project that is early in your support of a new technology, the reference that a customer can give you is often what will tip the balance for future work: both with that same customer and with other prospects with similar challenges.

An internal project plan that addresses not only how to manage the delivery of quality consulting services but their substantiation by your customer is therefore an important component of your long term business success.

The current economic downturn will only exacerbate technology firms’ risk aversion. This will increase the need for  references to complement your credentials and technical competence as demonstrated by technical papers and professional presentations.

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Comments (3)

  • SKMurphy » Why Conferences Persist: DAC Will Be Here in 2020

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    [...] It’s also important in the leading edge of Design Automation for early customers to meet the vendor team and form a direct impression of their credibility and trustworthiness. One of the largest risks a firm faces in working with a startup is how the startup will perform when things go wrong. Nothing new ever works. In fact, because major EDA customers are often seeking maximum differentiation from each other, they want to engage before the tools are fully baked so that they can start down the learning curve and be prepared to take full advantage when they do work. [...]

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