The American Marketing Association published an interesting study on the value of business references in the buying process. Defining, Measuring, and Managing Business Reference Value defines the reference characteristics sellers value when providing client references to prospect accounts. The study also defines the reference characteristics valued by prospect accounts and their ability to positively influence these prospects. Conveniently, the factors chosen and valued by sellers and prospects are the same.
These are the factors identified in the study that affect the value of a client references, from most valuable to least valuable:
- Client Size – Defined by both number of employees and annual revenue. The more employees and revenue, the higher the value of the reference.
- Length of Client Relationship – The longer the client has been with the seller firm, the higher its reference value.
- Reference Congruency – The more similar a client reference’s products/services, industry, and role are to the prospect, the more valuable the reference.
- Reference Media Format – References that use richer media formats are more valuable. Video testimonials > Audio testimonials > Written testimonials > Case Studies/White Papers.
So what’s the takeaway from this study?
- Ditch the Boilerplate Reference List – Choosing the right references has a significant effect on sales outcomes. If the client is asking for references, congratulations, you are in the final stages of the sales process. Don’t use the same-old reference list – chose your references carefully and take the time to give them the heads-up that they might be called. Save yourself the embarrassment of providing a reference to someone who has left their job or who has lost love for your firm.
- Go for Alignment – Choose references that have something in common with your sales prospect. Similar products and services have the greatest effect on reference value, followed by similar industry and similar organization roles.
- Bigger is Better – Reference value is positively affected by the number of employees a reference has. Revenue has a similar effect.
- We Go Way Back – Client references with longer tenures are more valuable as references. This is valid to a point however, as clients with very long tenures may have institutionalized the seller’s product and are not aware of other options available. Chose reference clients that have had time to integrate your product and service successfully and have lots of enthusiasm to share about your firm.
- Put Your Best Foot Forward – References delivered using rich media have the greatest impact. Use the richest media available – not only is it the most effective strategy, it also allows you to exert some control over the message.
- Keep the Fires Hot – Good references are a valuable asset – keep them happy. Take the time to quickly brief your references for each prospect that may contact them. Most reference clients consider it an honour to be reference, not a burden. Don’t be shy in asking for references.
We’ve also prepared a Slideshare of this information, which you can see below.