References and Testimonials

Many entrepreneurs dream of creating something new and valuable. Yet, since change is hard, transitioning the novel creation into the world of its target market demands derisking the process.

Those blessed with the ability to envision and then embody a new thing are often especially capable of embracing change in a way that their target customers are not. The very creation process demands deep and careful thinking as well as consideration of many nuances to make something that will address an unmet need in a beneficial way.

The challenge is that the team who can invest so much thought and energy into bringing the new to life often cannot really understand the point of view of those who simply need a problem solved and often do not invest that much energy into figuring out how to solve it. An analogy for this that I find helpful is that while the team developing the new product is like a group of engineers designing all the systems in a new car, the buyer of that new car may be primarily focused on whether it will reliably get them from point A to point B and have nice cup holders. That disparity in point of view often causes blindspots for the product development team, who invest lots of time thinking about the nuances. At the same time, their target customers are busy with many competing demands on their time and attention. Prospects are often mired in complex systems and environments that make it far easier to continue with the status quo rather than take a considerable risk on advocating for trying something new.

This creates massive challenges for startups launching innovative new products, often targeting business customers who have the budget to pay something material for a new product. The nature of the challenge is that it is hard to create the conditions for change because:

• Business decisions often involve multiple decision-makers with the approval of committees, bosses, or other departments required for trying a significantly new thing.
• Novel products often cost thousands of dollars (super cheap products must usually be sold to retail consumers to get the high volumes required to be profitable), and even with a business’s resources, an expenditure requiring change will draw some scrutiny.
• Integrating and getting benefits from new products often demands changes in other areas, including business process adjustments, changes to roles and responsibilities, and retiring old ways of doing things, so the “cost” of the new product is not just the price paid to the startup.

All of these and others add up to the dreaded risk factor that makes it difficult for prospects to ultimately commit to a new course. So, the challenge for the startup is to try to reduce the sense of risk and support those considering trying something new. This often boils down to three steps:

1. At the very beginning of the process, seek those few who are feeling the greatest pressure to address a powerful unmet need and have the temperament and power to take a chance on something new.
   
   
2. Make it as easy as possible for the earliest adopters to try the new thing and experience its benefits.
   
   
3. As a “price” for whatever special inducements you offer to early adopters, ask for references and testimonials that will reduce the perceived risk experienced by the next group of adopters. Ultimately, you will want to wean out the special inducements in favor of the confidence inspired by knowing that they are not the first and that adopting the new thing is safe and effective.

References and testimonials are powerful tools at every stage of startup development. They will help attract and build the confidence of potential investors. Increase the confidence of early adopters and later adopters. Provide marketing points and insights into product-market fit.

References and testimonials can be gathered from customer discovery interviews, product prototype beta testers, pilot customers, and early adopters. The value of the references and testimonials will be enhanced to the extent that the people giving the quotes, case studies, and taking others’ calls are:

• Representative of your target customers so that your target customers recognize themselves in the target (e.g., if you are selling a product for nurses, testimonials from other nurses will be the most valuable).
• The source has paid something for the product, which demonstrates that they found it valuable enough to pay for (references for free trials are less valuable than for paid pilots).
• Specific comments on the nature and magnitude of the benefits of the new product help to cement in the prospect’s mind how the product could be helpful.

Testimonial quotes are helpful in websites, pitch decks, and commercial sales materials. References are powerful when a potential customer can get their own questions answered directly by someone credible and will provide security that the product delivers as promised when the prospect is making a recommendation for change in the prospect’s organization.

The bottom line is prioritizing and focusing intensively on securing these critical positive feedback data points to provide lift as you seek to launch your novel product into the world.