Speed is of the essence in the technology sales process as risk of a deal falling through grows with each passing day. If both buyer and seller have their acts together, this process can be conducted relatively quickly without compromising on sophistication of evaluation—to a point. When it comes to bringing in third-party references, all bets are off. Though references are recognized as playing a key role in evaluations, they operate on their own schedules, are subject to getting burned out, and may not be well-matched to whomever the prospect assigns them to meet with. At MGI Research, our experience seeing these checks hold up or throw off the evaluation process led to the creation of MGI Verified, a dedicated reference management service. To explain more about Verified and the issues it solves for, we invited Jason Grant, the company’s President, to speak with MGI Research associate Jennifer Holcombe at the 2021 Monetize Forum.
Key Issues
What problems exist in the typical reference check process?
How does the size of a company impact providing and receiving references?
How does the MGI Verified process differ from the current approach to reference management?
Guest Profile
Jason is Co-Founder and President of MGI Verified. Jason leverages his 15-plus years of technology and organizational management experience to launch successful products and growing organizations.
Prior to co-founding MGI Verified, Jason developed an impressive track record of success in senior positions at companies including Monexa, NetSuite, and Oracle, among others.
Jennifer Holcombe
Hello, everyone. This is Jennifer Holcombe at MGI Research’s Monetize Forum 2021. Our next session focuses on best practices in managing customer references. To help us spotlight this topic, we’ve invited Jason Grant, who is one of the founders as well as President of MGI Verified, a company recently spun off from MGI Research. Prior to co-founding MGI Verified, Jason established an impressive track record of success as Chief Technology Officer and Senior Product Management Executive at companies including Monexa, NetSuite, and Oracle, among others. Jason, welcome to Monetize Forum 2021. We are delighted to have you participate in the conference.
Jason Grant
Thank you for having me.
Jennifer Holcombe
Of course. To begin, what does Verified do?
Jason Grant
MGI Verified transforms the way companies manage the customer reference process. In my experience as a software company executive, I’ve seen a lot of situations where the sales process grinds to a halt or even evaporates at the point where a prospect actually asks to do a reference check. It’s fair to say in today’s environment that no meaningful B2B enterprise transaction will be completed unless a prospect can hear from a seller’s references. It’s a necessity, but the prospects and the salespeople are often slow to act on it, and it takes weeks for these reference calls to take place. That results in both more delays in the sales cycle and also often in the seller having to provide concessions to the people who are providing the references. All of this, of course, is accompanied by a lot of manual effort—a lot of scheduling to get people on the phone at the same time.
If you think about it, organizations spend millions of dollars in automating their sales processes, but this process is still largely manual. Even if an organization has a customer advocacy group, they’re still dealing with it in a very manual process. At most, we find that organizations will have developed some lists of prospects and know who they can call when a request comes in, but essentially, they’re trying to mechanize a broken process—one that’s not able to scale. From the start, MGI Verified wanted to automate this, make it frictionless, and provide a lot more value to prospects when they request a reference from one of their sellers.
Jennifer Holcombe
Why is this such a serious issue for sales organizations?
Jason Grant
The status quo actually affects everybody in the marketplace—definitely the sales organizations you’re asking about, but also the prospects and the people willing to provide the references. The sellers spend a lot of time trying to link up their prospects with the references, even if there’s a dedicated customer advocacy group, and the time is not really spent productively. If you multiply this by the number of prospects, by the number of references, and by the number of salespeople, you can imagine the overall impact this has on the sales productivity.
And ultimately, it’s not just time that’s lost in the process. Current processes can potentially give the prospects a completely wrong impression of your company. More and more prospects are looking to accelerate their product evaluations, and they want to see these references much earlier in the purchasing cycle. Salespeople, on the other hand, are very reluctant to give out their references. Their references are precious resources, and they don’t want them to get burned out, so they usually insist on only giving them out when the deal is almost fully baked. Obviously, this reluctance makes the prospect think that the seller is not confident in their references or that maybe they just don’t have a large volume; they may even infer that the company is a little bit difficult to work with. This really deprives the sales team of one of their best sales tools, which is letting customers tell their stories. Of course, this is slowing everything down, and as we know, time kills deals.
Jennifer Holcombe
Right. Sales organizations generally want to make the sales process as smooth as possible for their prospects to put their best foot forward. What have you seen in practice?
Jason Grant
Prospects are getting frustrated. They’ll wait several weeks for a 20 to 30-minute phone call, and oftentimes, that call needs to be synchronized with a large group of people inside the prospect organization. All the stakeholders want to be involved; they want to hear directly from the reference, and they want to be able to ask their questions. Unfortunately, getting all these people together just delays the process more and more. When the calls finally do take place, most organizations are just not equipped to conduct a sophisticated, professional, and structured reference. They ask a few questions, and while some of them are good, some of them are not so critical. They kind of get a general sense and then verbally communicate this back to the larger team that couldn’t make the call. Very few companies have a consistent approach in conducting these reference calls, and even fewer have a consistent way of doing an apples-to-apples comparison and then sharing the results more enterprise-wide.
In their advisory practice, the analysts at MGI Research (the parent company of Verified) have conducted references for hundreds if not thousands of companies. During this time, they’ve developed a very sophisticated process to conduct these reference checks. Even the best-run organizations just don’t have the process sophistication to complete this level of reference check, and that can lead to a mistake in part of the acquisition, which translates into lost time and lost revenue for the prospect—not to mention any reputation damage that could happen for their subsequent customers. On average, a product evaluation has about two to three references, and they ask about 5 to 15 questions. If you multiply that out, there’s a lot of data to consolidate and normalize, and comparing the feedback is difficult, especially without a standard methodology. Additionally, there’s always the lingering question: is this reference providing an authentic account of their experience with the vendor, or are they really participating because they’re looking to gain some benefit from their vendor, perhaps a further discount or other reward?
Jennifer Holcombe
And reference providers—what is their role in this process?
Jason Grant
In a new relationship, customers are often very enthusiastic to be a reference for their new vendor. They see it as a way to exchange value, be that future discounts, preferential treatment on support cases, or other benefits. However, as the vendor starts to scale and call on that reference many times, a lot of that appeal is lost. Basically, they get burned out; we call this reference fatigue. When the prospect and the reference finally talk, as I said, the call frequently fails to meet expectations, not only for the prospect but also for the reference. The reference is often unprepared for the questions the prospect is going to ask. We see kind of funny mismatches where, for example, you have a CFO connected with a statistics man. In such a case, they’re just speaking different languages, and the reference call isn’t productive for either of them. In other cases, it’s just a matter of human nature, and the person providing the reference call is having a bad day.
This transforms what could have been one of the best sales tools, which is the customer telling your story, into something that’s adding a lot of uncertainty and doubt into the process. Oftentimes, the prospects will go back to the supplier to ask for more references or a better reference call. On the flip side, the references go back to the supplier as well. They ask for more discounts and support, and if that supplier begins to lag in any tiny way, that reference will just not return calls, and that will slow down the sales process even further. We’ve often seen that if somebody open to providing a reference is in negotiations with their supplier for any contract, the account exec responsible for that particular account isn’t even willing to engage them as a reference for a different prospect. It’s our belief that managing references in the B2B space in the ways done now, the status quo, is not scalable. Whether you’re a large organization looking to scale rapidly or a high-growth startup looking to establish credibility, the process is just broken.
Jennifer Holcombe
When you talk about reference management, it sounds like you speak from personal experience. Is there a backstory here?
Jason Grant
There is. I was the CTO of a small cloud billing company called Monexa. We were under 60 people, and as a relatively small organization, we struggled with this reference check process. We weren’t a volume play. We very much sought high-quality customers over quantity, and we were very fortunate to secure great customers like Cisco, Best Buy, and OpenTable. Each of those deals relied very heavily on the reference check process. It ended up becoming a chicken-and-egg thing for us as we scaled. We needed references to sell, but we needed to sell to get references. As a startup, our team was nimble. It was very competent, and we were very much in control of the sales process right up to that point where the prospect asked for references. Suddenly, we were relying on the availability and calendar of a third party, and it really slowed down the sales process—and hence, our revenue. Often, our revenue would get delayed to the next quarter. If we would have had a better tool and a better process on this side, we really would have been able to be a much larger company.
Jennifer Holcombe
Is this issue confined to smaller, newer companies only, or is it something that affects large firms as well?
Jason Grant
That’s a great question. Let me give you an example. At Monexa, we had fewer than 60 people, and we were very fortunate to be acquired by a much larger organization, NetSuite. Going from this small, 60-person company to an organization with over 4,000 people at the time (this was pre-Oracle), I remember clearly thinking about all the problems that were going to go away because we were going to have a lot of great processes. I thought it was going to be much easier to get things done, that we’d be able to move faster, and that it would be great. There’s no question that once we got into NetSuite, the company was more mature and more organized. Truth be told though, when it came to this reference check process, things were largely the same as they had been in a smaller firm. The problem was bigger because there were more sales every quarter, a lot more salespeople, and a lot more coordination that had to take place. Additionally, there was a lot more pressure in being a public organization that hit quarterly revenue numbers. Surprisingly, it was still largely a very manual process to work through.
Moreover, the reference fatigue I mentioned earlier is exacerbated in larger organizations. As an organization scales, this fatigue becomes more and more prominent as the references just get worn out. So, over time, I’ve personally experienced that this problem really does slow down the sales process and the revenue in firms of different sizes. I knew many of the senior advisors at MGI Research, of course, from my time at Monexa and NetSuite. When they talked to me about the concept of Verified, I immediately understood what they were talking about and could relate directly to the problem.
Jennifer Holcombe
How does Verified address this issue of reference management?
Jason Grant
Without going into the sausage-making of how we actually do it, let me talk to you about the benefits. I’ll talk about four benefits. First, we provide third-party validation. We obviously have independent analysts who are very familiar with the industry. They’ve conducted hundreds if not thousands of these reference checks before, and they have a sophisticated process that’s in-depth and comprehensive whenever they do one of these. That process can flag any inconsistencies we see across the reference pool. Having a reference validated by a third party brings a lot of credibility to the seller when they give it to their prospects, and it actually helps the prospects build a better business case internally for their vendor.
The second thing that really comes out is the breadth and depth of information actually conveyed in the interview itself. Because of our experience and the structured process we have in place to actually conduct these interviews, we know that there are a lot of things that need to be covered. You need to talk about everything from product fit to customer support to contract and how that process works. We spend a lot of time covering those general things, and we also get specific to the market and the particular concerns that we know a prospect and a reference will want to cover. These in-depth interviews exceed by far the scope and depth that any organization will conduct by themselves, and, because it’s structured, they can compare the results.
Third, we eliminate a lot of the friction in the process. Because the reference is recorded and stored on our cloud platform, we can make it immediately available, and it’s just a lot faster. It allows the seller to provide references much earlier in the sales process in a way that’s a lot more sophisticated and in line with a generally more sophisticated sales process. We make sure that those recordings are stored securely, and we allow access for a very dedicated amount of time so that everybody can be sure the content is not being shared too widely.
Fourth, we help the people who are willing to provide the references themselves. Once they speak to one of our analysts, they realize they’re participating in a very professional reference check, and they know from the security of the platform that we’ll make sure their content is not shared with anybody they don’t wish it to be shared with. That’s obviously a big advantage for them. They don’t get burned out, they can do a much more comprehensive check, and they know they’re helping their vendor.
Jennifer Holcombe
Well, it sounds like Verified can be an important tool for sales and customer advocacy teams. Do you expect Verified to eventually replace the direct, human-to-human reference conversation?
Jason Grant
Frankly, we don’t expect it to replace the entire process. That would be a bit of a naïve fantasy, though it would be great if it did. For very large transactions, especially with different geographical tendencies, there are always going to be prospects that want to have person-to-person contact. We expect instead that maybe 60% to 75% of the requested references can be covered by Verified. Obviously, that 60% or 75% is going to dramatically boost the efficiency, speed, and execution of the reference check process. For example, if a customer wants to do three references in an evaluation process, they might do two by Verified and one in person. Our early experience teaches us that when that third in-person reference check is actually done, the quality is much, much higher because the prospect has the background from the other references they’ve already received from the Verified platform. Of course, you’re also reserving far fewer asks of reference check participation of your quality references, so they’re more willing to participate, and they know the prospect is going to walk in the door with some good questions that are actually worth spending time to talk about.
Jennifer Holcombe
I imagine so. Well, that’s about all the time we have, so what final thought would you like to leave the audience with?
Jason Grant
Most B2B transactions these days require a credible reference check. The current manual process is broken, and it’s not very scalable. In fact, it’s standing in the way of organizations actually scaling. Verified is redesigning this process. We’re automating the workflow and providing global access to intelligent references for prospects. Among the many benefits Verified offers is a third-party evaluation that brings a lot of confidence to the prospects (as opposed to an endorsement), an in-depth and comprehensive interview, and a process with a lot less friction than the current broken process. Hopefully, I’ve given the audience some sense of what we do. Please stop by our booth, and we can tell you more.
Jennifer Holcombe
Well, thank you so much, Jason. We really appreciate your time today.
Jason Grant
Thank you. I appreciate it.
