Author: Bill Lee

Who sells your products or services? This may seem like a silly question, the answer being of course, the sales & marketing team. But increasingly, the most important person selling what you’re offering is — your customer.

More specifically, your customer advocates. And, as buyers increasingly expect to learn about products and services from their peers who are using them, companies are getting more creative at putting their happy customers in front of those buyers. The forms that this kind of community marketing can take are varied, and might include straightforward references and referrals, customer blogging or video (an area of exceptional creativity), participating in communities, associations or consortiums, speaking at industry events…it’s a growing list.

One predictable result of this activity has been increasing demand from marketing and sales leaders to find more such advocates to showcase, in some cases creating a “beast that needs to be fed” similar to what you see in traditional media channels — like sports or the entertainment industry — that experience rapid growth in popularity.

So the question becomes: in order to keep the advocate pipeline filled, should you incent customers with rewards, discounts, even payments of some sort? My strong suggestion — based on actual experiences from companies who are not incenting customers to advocate — is to avoid this slippery slope. It’s not good for them, or for your business.

So then, how do you make this happen? How do you create the conditions that generate not only happy customers, but true customer advocates? Here are some key elements for creating an overarching value proposition that fosters customer advocates and preserves the integrity of their advocacy:

Deliver what you promise and promptly fix what goes wrong. The obvious starting point, which everyone knows, but many firms lose sight of this over time. Marketing that’s based on customer advocacy and influence must keep this basic truth front and center. These frontline actions are what underlie any genuine enthusiasm from a customer. You can’t create or enlist a customer advocate or build a customer-based sales force without the solid foundation of an ongoing, responsive delivery and service relationship.

Know your customers’ problems. “The most important thing you can bring to a dialogue with me is knowing my problems,” says Patty Morrison, CIO of Cardinal Health. “And it’s really not that hard.” She suggests that reference program managers invest in, or otherwise get access to, their firm’s market research about key-customer references. “If you want to develop a customer as a reference, know everything you can about them. And then know everything you can about your important prospects too.”

Put your customer references together with their peers. Your firm is in a great position to connect your customers to their peers — other executives and managers like themselves who deal with similar issues. And those connections are highly valued. But where do you find them? Among your other customers, of course. Find ways to bring them together — live events, in teleconferences, on the Internet — so that they can exchange ideas and learn from each other.

Market and sell your customers. Tout your customers’ achievements as much, if not more than, your own in that white paper or case study. Remember, that (and not a bunch of information about how wonderful your firm and its offerings are) is what prospects care about.

Provide your customer references with opportunities for growth. Often your most dynamic customer references are eager for personal and professional development. Provide these in the form of speaking opportunities, interviews with the media, and the like, where customers can demonstrate thought leadership.

Remember, you have leverage. If your firm is a smaller supplier or brand new, your customers want to help you. “Helping my smaller vendors grow and get established is in my interest,” notes Morrison. “So I’m willing to do what I can to help you grow your customer base. On the other hand, if you’re larger and better established, you can help me reward my team by letting them go to conferences and present papers. It’s great career development for them.”

Tie referencing to performance. For larger relationship accounts, some reference programs try inserting an agreement to provide references up front in the customer’s contract — a major and obvious turnoff. Yet many companies persist in doing this, or trying to. A better, value-based approach is to initiate a quarterly review process to, first, review performance metrics; next, identify how your solutions are benefiting the customer and document it; then (and only then), when you and the customer are feeling good about the relationship, turn to talking about your prospects faciging similar issues. Almost always, the customer will be ready to share contact lists and talk to prospects on your behalf.

Align your PR messaging with your customer’s. “If you want a customer to publicly reference for you,” notes Morrison, “you need to understand what message their PR is trying to get out to the world about their company. And then ask, how might our message tie into theirs?” When she was CIO at Motorola, for example, the firm wanted to talk about things like mobility, devices, and public safety. So, if you’re doing business with Motorola, how can you tie your messaging to theirs? “If my PR person comes into my office with you and you both say, ‘Here’s the message we think benefits our companies together,’ then I see a win-win.”

Offer other customer-engagement possibilities. This is particularly important for your higher-level key customers, who may very well want to provide input into product or solutions development, or even your strategic direction. Offer such customers positions on your advisory boards or executive forums. Or they may want to engage with your other customers or other peers in community efforts.

Succeed. Finally, remember that a customer who’s taken the risk of putting her eggs in your basket wants you to succeed for obvious reasons — if yours is a small company, you’re more likely to survive. If you’re a large firm, you’re more likely to invest research and product development dollars improving the solutions you’re providing. And that’s true even if your customer is a large or even marquee customer. Don’t be intimidated about asking for appropriate reference support.

Getting customers to advocate for you is a lot different from getting them to buy your products and services. It should come as no surprise that it requires a new value proposition. Once you embrace this, you’ll find that customers can help you grow your business in remarkable ways.

One of the most inspiring things to come out of the horrendous recent events in Boston and West, Texas, was the outpouring of help from ordinary people. In Boston, people ran toward the blast site to help victims, or opened their doors to stranded marathon runners so they could rest, make calls if needed, and then gave them rides to wherever they needed to go. In West, firemen who had never seen such a horrific explosion walked into the flames to try and save lives — in some cases losing their own. If there are any doubts that humans have a deep instinct for helping others, such events wipe those away.

Sometimes it seems like it takes a disaster for the media to notice this deeply human trait. But in fact, we can see it every day at food banks, volunteer tutor facilities, churches and other charitable institutions, and just plain friends helping friends and members of their communities.

Many companies strive to tap into this natural impulse, in search of a gentler, kinder, more fulfilling — and some might say old-fashioned — way to build customer relationships and a more powerful customer experience. Think of the old community general store or bank, which gets to know customers on a personal basis and is considered a pillar in the broader community.

That community business ideal is now increasingly possible — and available — on a much broader, even global basis and many firms are striving to make this transition. Why? Because it creates deeper emotional connections with customers, who are not only open, but eager to create new communities among themselves, which in turn generates extraordinary mutual value for customer and business. Such emotionally engaged, altruistic customers will do a remarkable range of things for a business: spread positive word of mouth, funnel referrals to you, provide valuable input into your product roadmaps and strategy, even contribute time and resources to your business.

Yet many companies completely overlook this source of value, or stumble when they try to make the transition to cultivating this kind of customer relationship. Facebook’s efforts to build such social norms into its business have had decidedly mixed results, for example.

Here are some guidelines to help keep you on the right side of the social business street.

Beware of Inserting Market Norms into Social Situations

Suppose one of the stranded runners in Boston had offered $50 to one of the local residents who gave him a ride, under the rationale that it’s about what a taxi would have cost. That would, of course, have been highly offensive: it would have introduced a market norm into a decidedly social situation.

Businesses make this mistake all the time, as MIT professor of psychology and behavioral economist Dan Ariely points out in his book Predictably Irrational. Think of banks that cultivate an image of being like the local community bank of yore, yet rack up nuisance fees to shocking levels when they’re added up over time.

Remarkably, people who should know better are often surprised at this. Researchers conducted an experiment on getting customers to refer business to the firm, offering three incentives: $10 to refer; an opportunity to pass along a $10 discount to the friend (no reward for the referrer); and a mix of the two ($5 discount for the friend and $5 for the referrer). The researchers expected the $10 reward to generate the most referrals, but in fact it generated the least. In other words, they were surprised that people don’t want to spam their friends for money.

Ariely points out that once you cross the line from social norms into market norms, you’ll find it very difficult to get your customers to return to social norms.

Social Rewards Are More Powerful

It’s true. But to work, these rewards need to focus on helping customers build social capital, not financial capital. I once engaged in a lengthy conversation with one of Salesforce.com‘s “MVP” customers at a reception, during one of our Customer Engagement Summits a couple of years ago. SFDC under Marc Benioff has done a superb job of instilling social norms with the firm’s customers, and its MVPs (Most Valuable Professionals) do amazing things to promote the firm. They blog regularly about topics of interest to fellow SFDC customers, participate avidly in the firm’s events, and robustly defend the firm when it is unfairly attacked.

Over wine and hors d’oeuvres, I asked him why he did such things. I was expecting him to say that this was a good career move, or that it would help him with a new business he wanted to start. But it turned out it wasn’t about such market norms — it was about social norms. He intrinsically valued the experience — and thus seemed actually confused about my questions. Being an MVP helped him greatly expand his network of valued affiliations. It helped him build his reputation as a leader in the industry. He gained professional status — at the firm’s annual Dreamforce conference, he and fellow MVPs are in reserved seats, front row, center.

The Best Test: Your Own Small Town

How do you tell when your firm is crossing the line between social norms and market norms? The best filter is your own “small town” experience. We all have our own small towns — even those of us born and raised in big cities like New York. Your own small town includes your valued communities: your neighborhood, your local church, the PTA, your book club, your professional association (particularly those in which competitors take off their competitive battle gear and work together in ways that make sense for the larger industry). Ask yourself, what behaviors would be acceptable — or not — in those communities.

Here’s a quick test using Facebook as an example. Would sharing the fact that a Facebook friend “liked” a company Facebook page violate the small town test? Yes. It would be like accumulating information you’ve heard from your friends and neighbors in casual conversation, taking it out of context and putting it in an ad for your business in the town newspaper.

Or what about positioning your friends’ postings on your news feed according to how much they paid? (Basically what Facebook does.) Facebook is also considering introducing video advertising on people’s Facebook pages. Ask yourself, would Starbucks, another firm that generally excels with social norms, consider hanging TV screens from the ceilings at its coffee shops and playing TV ads? Airports do this — but no one would accuse them of trying to build social norms with their customers.

As companies strive mightily to improve the customer experience, and to create much higher mutual value for customers and themselves, they need increasingly to think in terms of social value and social norms as the relevant unit of measurement. And they must ask themselves, “Are we actually treating customers in a way that we’d treat neighbors in our own small town?”

What are your customers telling their friends and colleagues about your business? As I described in my last post, your prospective customers and buyers increasingly learn about you from their peers — including your current customers — while tending more and more to ignore traditional sales and marketing communications from corporate. Companies are now taking advantage of this new marketing reality, becoming more skilled at getting their customers to advocate for them, create peer influence in their markets, and make important contributions in areas like product development and services.

Creating and capturing such value from customer relationships doesn’t just happen, no matter how stellar your products and services are. It requires an enhanced value proposition, what I call a Level 4 customer value proposition.

At Level 1, buyers perceive you as the supplier of a commodity. They’re entirely price sensitive. And more companies are at this level than think they are. Think PC makers, who load their computers with features and functionality believing they’re adding value and creating differentiation. In fact, the vast majority of their customers not only don’t care about such features, but find that all the clutter detracts from the user experience.

At Level 2, buyers perceive you as helping them get a job done. They associate your product or service with their desired outcome, and the fact that you help them achieve that in some way that makes you stand out. Significantly (and ironically) companies that reach Level 2 often remove features or functionality that competitors provide. Think Apple, or Southwest Airlines, or for a more recent example, Zipcar.

At Level 3, you engage the customer emotionally, which strengthens loyalty and retention. And here’s where it gets interesting. Some firms have such great offerings (at least, great compared to the competition) that their products or services alone are enough to create significant emotional attachment, again, such as Apple and Southwest (when I fly Southwest, I can actually feel my blood pressure drop as I interact with their friendly people.)

But not everyone can create such awesome products or services — and even when you do, maintaining that emotional connection through your products and services may be fleeting. (With TiVo, for instance, customers have come to rely on the service so much, they don’t even think about it.) Firms that excel in the new world are discovering that they can create strong emotional attachment by moving to the next level…

At Level 4, you’re helping customers build their social capital — that is, helping them to build and expand valuable support groups and communities.

Helping customers build social capital may seem far removed from the concerns a competitive business should occupy itself with. But think about it: these days, buyers and prospects are open to receiving, and are even seeking, information from your customers &#8212 their peers. Helping your customers build social capital is the way to make it attractive to them to provide this information.

This is an area of tremendous creativity. Here are some specific ways that companies are doing this:

Help customers build their reputation

When Jeff Bezos made the controversial decision to allow customers to post reviews of the books they bought on Amazon’s site — a seminal event ushering customer-based marketing into the online world — he reasoned simply that ordinary reader reviews were what buyers wanted. To encourage more of this, Amazon now designates top reviewers on the site and a reviewer Hall of Fame (based in part on ratings from readers), lets reviewers set up their own pages showing their reviews of other books, provides them with a distinctive badge for their pen names, and more — all of which builds their reputation in the book buying community. Top Amazon reviewers are often more powerful than traditional media reviewers.

Help customers build their affiliation networks

Customer advisory boards — in which a firm’s customers provide input and guidance on products and strategy — have been around for years and are often an effective way to gain “buy-in” from customers. Firms like Microsoft are taking this up a notch, with industry councils. These are groups that focus not on Microsoft’s products, services and strategy, but rather on a compelling industry issue that is top-of-mind with people in the industry — a significant difference with great appeal to buyers. In particular, Microsoft formed a council that focused on one of the most vexing of all business technology issues: interoperability (the council is called the Interoperability Executive Council or IEC). Once people were convinced that this was a serious attempt to address the issue (and not a vehicle to push marketing), Microsoft was able to attract a marquee list of senior technology executives from around the world. At times, the IEC will address issues that Microsoft can’t help with — and the firm will go so far as to bring competitors into the discussion who can.

What’s in it for Microsoft? Over time, the discussions and work performed by the IEC have given the firm insider access to the best thinking on this issue, which informs its product decisions, helps it establish thought leadership, and burnishes its standing as a constructive force for the industry.

Help customers build status in the community

When marketing services and software firm, Eloqua, for example, decided to start recognizing outstanding work and results achieved by firms in its industry with awards, it decided to go whole hog. And for good reason: helping customers build status is an exceptionally valued aspect of one’s social capital. Eloqua patterned the awards ceremony after the Emmy awards (it even hired the firm that designs the Emmy statues — calling it the “Markie“). They’re awarded at a lavish black tie ceremony at a posh location, where some 20 awards are handed out over the course of the evening. The event attracts substantial media attention, in part because the firm is very careful to make sure that winners really are the best. And note — awards are not limited to Eloqua clients. They go the best in the industry, as determined by an independent industry council.

Give them a say

High glamour isn’t the only way to help customers build social capital. CSC, which creates financial services software, has built a tier of for-customer communities that allow customers to exchange ideas and best practices, and have a say in new releases. As products or updates are being developed, customers can subscribe to RSS feeds keeping them apprised of new release progress, and provide input — which CSC takes seriously. This can slow the process down, but it creates enthusiasm, as borne out by the numbers. After implementing the process, request rates for new software releases increased 50%.

What do all of these efforts have in common? They build communities that exert positive peer influence across all the relevant companies’ markets. The ability to create this kind of Level 4 customer value proposition is the key skill set that companies will need in the new world of marketing.