Not all customers are created equally and not all customers we attract are a good fit for our products.
Achieving alignment with your product and marketing is essential. When you consider the numbers, it’s key to increasing your Customer Lifetime Value (CLTV) and decreasing your Customer Acquisition Cost (CAC). Customers stick around longer when they continue to receive value out of the product; it’s also be easier, and thus cheaper, to sell to customers who are already a good fit.
Having Reference Customers will help your team achieve this alignment and stay laser focused on what you need to build and who you need to sell to, reducing the time and effort it takes to grow your business.
What is a Reference Customer?
These are customers that represent a segment of the market of yours very well; these are model customers who you wish you had more of. They are also reproducible customers, meaning there are many more out there like them.
More specifically, they are existing customers of yours that excel with your product. They are typically a customer you've had for a long enough period of time so that you know they are a good fit. These customers have also used your product recently and frequently.
They ideally are also be a big fan of your brand and your team, meaning they often rave about you on social media or in conversation with friends or colleagues.
Ultimately, these customers would be willing to vouch for you, give you honest, and open feedback, and also deeply understand your core value proposition.
These are all good indicators that this customer would be a good candidate. However, if you don't have customers that fit all of the criteria, don't worry, you can use the best ones you have for now and always replaces them with better fits later on.
Once you find your Reference Customers, allocate them a virtual file in a shared, secure database, and keep all relevant information you collect about them there for your team. Additionally, find pictures of the people and their company logos, along with their profile descriptions and place them up around your office, or if your team is remote, pin these files to a slack channel.
How is it Different from Creating a Customer Persona?
Customer Personas are an in-depth summary of the users of one of your segments, presented as a single user. They cover everything from what this fictitious person does in their free time, to their motivation for buying, to what kind of team they work on, as well as age, gender, education, and more.
Personas are more like a summarization of many customers. Most often, real customers are interviewed and analyzed in order to make up this persona.
The one big drawback here is that since they are fictitious, they are not actually using your product, you cannot ask them questions, bounce ideas of them or test to see how they would actually react to marketing and product concepts you are testing. Also, your removing all of the valuable context created by acquiring and interacting with the customer in the first place.
Customer Personas are a great resource in themselves and can also help align the team. However, are often flawed because they are built on perception.
Thus, Reference Customers can help you in ways personas cannot.
How to Choose the Right Customers
We might think we know who our Reference Customers should be based on a hunch. However, I encourage you to perform the following exercise even if you believe you can spot these customers already.
To find your Reference Customers, start by segmenting your users based on the one or more value propositions you offer and provide. Typically, you have one value proposition per product or pricing tier. You can also segment by individual user in a company or account, because they might receive different value out of your products based on their job position.
Next, you'll want to score your customers on a few different criteria. We're looking for customers that are exceptional in 1) having recently used your product, in 2) having used your product frequently within the last couple of months, and 3) who have a high LTV, meaning they’ve spent more money with you than most other customers.
The type of scoring I'm describing is called RFM rank segmentation. Customers who score the highest in these three areas should be considered.
Next, you'll want to look through support conversations and social media, search email correspondence and consider all other prior interactions. Take note of companies that have been mostly positive and who stand out as possibly being advocates.
If you're still early-stages or you do not have a long social or email history with your customers, then you should reach out to them and probe for their sentiments. Though, you really should already be regularly speaking to your customers at this stage, but if you haven't it's not too late to start.
Ultimately, it's going to be your team’s decision who you choose as a Reference Customers. Make sure you choose at least three, and if possible, ten, for each value segment. You’ll want a few examples to pull from, so that you have more than one example to better represent your segment as a whole.
What Information Should You Add to Your Reference Customer File?
It really depends on your target audience and use case, but typically you should add everything you would normally include in a customer persona file. The following is the bare minimum to include:
Their journey from discovery to purchase with your company. Write this out in as much detail as possible.
Their personal background: education level, income level, job role, job title, years at the company.
The company’s background: industry, how old is the company, how many employees are there, and a description of their company culture.
Engagement levels: how often do they use your product, what time of day, how much of their plan is used, what plan they are on.
Their pain points and reasons for using your product, including favorite features.
How they engage with marketing, sales and customer support copy: how often emails and messages are opened and interacted with, what time of day, what type of messages are most effective.
You’ll want to conduct an interview with your customer or do some research online if you do not know this information already.
How Your Team Can Use This Tool
If you are training new sales reps or if you just hired your first few, then you can use your Reference Customers to help them better understand who your target audience is, how you acquired them in the first place, and why you developed the sales strategies you have.
Showing your sales reps real people with real stories helps them more than most other methods because you’ll have detailed situational examples to teach from. It anchors in their minds to whom they are selling to. Otherwise, they might not have a good enough idea, and try to meet quota by selling to a broader, poorly defined market.
For Feedback on Marketing and Product
Just like Customer Personas, using Reference Customers helps when visualizing the target audience, thinking through the tone you should use, understanding how to craft different features, etc. when crafting marketing initiatives and designing your products.
It's also a good opportunity to test out new ideas by showing these customers first to gauge your audiences’ reaction. You might also receive great feedback from fresh sets of eyes the feature or campaign was meant for. You can view this use-case for Reference Customers as a more targeted form of user-testing.
Many people call this group a Customer Advisory Board, which is a more formal process that you can read more about here.
Vetting a New Product
Even before your product reaches the market, you should find at least a few Reference Customers for your intended market. Many companies won't even launch a product unless they can find enough Reference Customers to validate that it is indeed solving a pain point.
As Case Studies
Additionally, you may want to use a couple of references customers’ stories as case studies to use on your marketing site or in sales presentations. You’ll likely want to choose your most well-recognized Reference Customers here to add more credibility and social proof.
A disclaimer: make sure to ask your customer’s permission when using their data outside of the scope of your Terms of Service. You’ll also want to consult with consumer protection laws regarding what can be done with identifiable data you collect from customers.