The Cornerstone of Credibility: Your First Set of Customer References

A Cornerstone is the first stone set in masonry construction and is the most important since all other stones are set in reference to this stone. Therefore, the position of the entire structure is determined by how well the Cornerstone is laid.  Hopefully this is not too much of a stretch but when it comes to establishing credibility in the market place I believe the metaphorical equivalent of a Cornerstone is the first set of customer references for your new product.  Whether it is a new technology company launching their first product, or an established technology company launching a new product, your first reference customers are as important as a Cornerstone.  I like this metaphor because your initial reference customers contribute to ensuring your new product is aligned with the requirements of the market. Your first customers provide critical input on how the product should be best designed, implemented, and used.  This input benefits every function of the company as all departments can learn how real world customers react to all aspects of your new product.  I have found the best way to recruit a company’s first customers for a new product is through an effective Beta Customer Program.

Examples of questions that can be answered during a Beta Customer Program:

  1. Are the use cases for your new product resonating with a customer’s real world needs?
  2. Is the pain the new product alleviates severe enough to motivate a customer to evaluate and buy it?
  3. Does the product have all the features the customer needs to use it?
  4. Will the product fit properly within the customer’s technology environment? 
  5. Is a sufficient level of customer support available to fix bugs and resolve customer satisfaction issues with the new product?
  6. Is the price of your new product in line with the customer’s perception of the value of your new product?
  7. Can the Beta customer be satisfied sufficiently to convert to becoming a customer of record?
  8. Is the customer satisfied sufficiently with the new product to be willing to provide a reference of some kind to prospective customers?

The above list might sound too obvious but I have seen both large and small companies fail to effectively implement and accomplish customer development early enough and extensive enough in their go to market strategy.  The net result can be disastrous.  Loss of millions of investment dollars.  Substantial redesign and rework in engineering.  Attrition of staff.  Business failure, etc.

On the other hand, performing new product development that includes a timely, successful, external Beta Program with your initial prospective customers provides an excellent opportunity to learn more about your market and acquire your first reference customers.   Affirmative answers to the above questions will determine whether your Beta Program is successful. If you have customers who have implemented your new product and are willing to say positive things about the new product to other prospective customers, you have also laid your Cornerstone in its’ proper place. You can now begin to lay the additional "credibility bricks", aka additional paying customers, necessary to build a strong foundation for your go to market strategy.  You will also begin to generate your first revenues from your new product.  

This may be controversial but I believe that the strategic value of first customer references far outweighs the amount of revenue you will likely receive from your first customers.  If you are able to generate significant sales dollars from your first customers then more power to you.  The point I am making is, if your very first customers are in a risk averse posture and want to pay nothing or very little to become your first reference customers you should strongly consider offering a contract with an initial term that offers the new product with deep discounts or no fees in exchange for a contractual obligation by the customer to serve as a reference customer assuming they are satisfied.

In summary, establishing credibility is about establishing trust.  It is about being believable.  Prospective investors, customers, partners, and employees judge the trustworthiness of new products and new companies in a number of ways.  I believe the single most important credibility building block or Cornerstone is your first set of customer references.  Other credibility "bricks" such as the caliber of your employees, the quality of your web site, the quality of your marketing content, the quality of your products, support, etc. are all very important.  However, none of these carry the same weight as satisfied customers exclaiming the virtues of your new product to new prospective customers.  Like it or not customers have more credibility with other customers than vendors.  When you execute a successful Customer Beta Program that results in your first customer references, the inherent credibility of your first customers enhances the credibility of your new product and company because they are now linked through their selection and use of your product.