Harvard Business Review: What to Do When Satisfied B2B Customers Refuse to Recommend You

August 27, 2015-

By Utpal M. Dholakia

In an ideal B2B world, your happy customers would spread the news about your great products, generating all the well-known benefits of word of mouth. But your customers may not want their competitors to hear about you.

If your product or service has become your customer’s secret sauce – putting them in a position to outperform in the marketplace — then spreading the word may appear to risk diluting the customer’s competitive advantage.

That’s why you might get strange looks if you ask the customer’s managers for referrals. They might even refuse outright, as happened recently to an enterprise-software company that I work with.

But word of mouth is an important ally in your marketing efforts. It can help you overcome skeptical prospects and increase customers’ preference for your products more quickly and effectively than either advertising or PR. It costs very little to generate, yet it reinforces customers’ commitment and strengthens their relationship with your brand. What’s more, customers acquired through referrals are more profitable and stay longer than those acquired in other ways.

So when satisfied customers refuse to provide references, try these avenues:

Explain the product’s network value. Many B2B products become more useful when most players in the industryadopt them. Take price-optimization software: Until the majority of companies in an industry use it, the industry cannot price intelligently as a whole. A competitor using manual methods might fail to pick up on subtle cues, easily detected by optimization software, suggesting that gradual price increases would be appropriate. In such a scenario, the competitor might inadvertently launch a bruising price war. Make the case to your customers that providing references will hasten industrywide adoption and increase the product’s value for everyone.

Extol reputation benefits. In every industry, some companies enjoy alpha status because of their strong reputations. Alpha status has many benefits: risk-averse customers will seek out the company’s products; employees flock to work for it; and vendors and shareholders give it more leeway in downturns or crises. One way to earn alpha status within an industry is to become an opinion leader, by influencing the industry’s business models, standards used, technologies, and customer-management methods. When asking for a reference, marketers should emphasize these benefits. Help the customer realize that providing useful referrals will burnish its reputation among peers and constituents and bring tangible benefits.

Point out the perils of remaining a lone wolf. An ecosystem of users, tinkerers, and enthusiasts is helpful to companies seeking to troubleshoot, customize, or even understand complex products. If others within the industry use the same product, user groups, online communities, and customer conferences can make these tasks less cumbersome and resource-intensive. With a larger customer base, you, as the vendor, also have greater motivation (and resources) to provide education, services, and product improvement. You can let it be understood that without a large customer base, you might even reduce your investments in the product.

Offer incentives for providing a reference. If all else fails, B2B marketers that are keen to penetrate a particular industry must buy their customers’ references. Depending on the product and economic value involved, various forms of incentives may be given for a reference: subsidized maintenance or training programs, exclusive features or services, or the promise of first access to the product’s next generation. But beware: Once incentives are offered, customers may become less enthusiastic about performing such actions voluntarily in the future. Offering incentives may also change the economics of reference-based marketing programs by making them pricey, reducing their power and effectiveness.

Don’t let the imperative to understand and sympathize with your customers’ point of view stop you from seeing the harm caused by their unwillingness to spread the word about your products. If customers view generating word of mouth in narrow terms, help them see more broadly. If they see providing referrals as a potential loss, help them reframe this favor to you as a gain for themselves. Show them that in today’s business environment, network effects can benefit every company, even those that cherish their independence and special advantages.