Tuesday, November 4, 2008

Tuesday’s Tip: Vendor Selection - Deciphering Vendor Provided Customer References

As competition intensifies for new license deals and users are under pressure to be cautious with new spending, all parties should expect increasing pressure for quality customer references. Customers seeking references should focus on the following areas of relevance:

  • Industry - expect to get down to the micro vertical level

  • Market size - focus on number of employees and revenues
  • Geographical - address local as well as global requirements
  • Role - consider individuals in similar roles or account for different roles for a different perspective

Its customary for the vendor to provide their reference lists. Keep in mind, many of these references are receiving monetary and non-monetary favors for their time. For vendor supplied references, customers should ask seven key questions to gauge the motive and incentives of these references:

  1. Did your organization conduct an open vendor selection process?
  2. If you were not representing this vendor, which product would your organization have purchased?
  3. Is your organization part of a vendor specific reference program?
  4. Are you earning points or credits for other vendor related services such as training, conference passes, professional services, etc.?
  5. Does your organization receive prioritized functionality requests?
  6. Who is your executive sponsor? Is that person available to regular customers?
  7. Have you received travel compensation for today’s activities?

The bottom line.

As an industry analyst, we often encounter vendor references that are genuine. However, from time to time, we have had to deal with vendor provided customer references who have vested and biased interests. In one MDM related example, 3 out of 5 of the vendor’s references did not conduct an open vendor selection process. 2 out of 5 vendors told us that the product was working well even though we had received inquiries to the contrary from other parts of their organization. It pays to do your due diligence. Make sure you understand what incentives and motivations are driving the reference to spend time talking with you.

Your POV.

Have you had a great vendor reference only to find out that the reference had stretched the truth? Feel free to share with me your experience. You can post here or send me a private email to rwang0@gmail.com.

Copyright © 2008 R Wang. All rights reserved.


Joshua Horwitz said...

Nice post. It's often less a result of malicious intent and more that they aren't well organized or prepared for customer reference requests, and the rush to put something together last minute. It is unfortunate when companies fall into this situation and certainly does themselves a disservice in the end. Your list of questions is very valid. I intend to post shortly on the same topic to help companies understand what questions their customer will be asked so they can provide constructivef references and will highlight your piece at that time.

jay paul said...

I really like your writing style. Such a nice Post, Can’t wait for the next one.

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