When you’re making a large investment in software, you want to be sure that you’re buying from a reputable company that will be there to support you long-term.
Getting a short list of happy customers that your vendor has helped — some references — is a common part of most companies’ buying processes, but there is a good way to check references and a bad way to do it.
Are you doing it right? Are you getting the data you really need to make this critical buying decision?
Or are you talking to one of the vendor’s own employees who is just pretending to be a happy customer? Sound far-fetched?
Beware of Scams
I actually know of software companies (one of them is our competitor, in fact) that are guilty of this kind of scam. The Internet often allows companies to appear bigger and more successful than they actually are. Professional-looking Web sites can be created quickly and easily and are not necessarily evidence that a company has been in business very long.
The purpose of checking references bears repeating — you need to verify that your vendor has successful rollouts, not just shelfware. You need to be sure that they have helped customers like you — of your size, in your region and in your industry.
If they have a customer similar to you in your city that you can meet face-to-face, that’s the perfect reference. Face it, if the potential vendor you’re investigating is willing to lie to you about references, then there is no reason to trust their honesty about anything else they’re saying either.
What steps can you take to ensure that you’ll be learning what you need to learn about the entity you’re checking up on? How can you know the reference they’ve given you is real and not somebody’s mother?
Well, it’s time to don your detective hat and investigate these references!
Eight Steps to Confirm References
- First of all, if the reference calls you, be suspicious. Who has time for that? Tell him you are unavailable at the moment and schedule a time to call him back when he’s at his desk at his company.
- Have your potential vendor supply you with a full name, title, company phone number and e-mail address for all of the references that you will be contacting — at least three per vendor. Do not settle for Hotmail, Gmail or Yahoo e-mail addresses, or other temporary e-mail addresses not indicative of a real company.
- This may sound obvious, but you actually have to call all the references and talk to them. Most people never do this. It takes time and it is work, but you may be averting wasted money, time and effort for your company.
- Do a Google search to ensure that the reference company is real. Does it match the Internet domain name of the e-mail address given to you by your potential vendor? For example, if the reference company’s name is “Altman Architecture” and the e-mail address is [email protected], then go search on Google for that company name and see if www.altmanarchitecture.com is one of the top results you come up with.
- Check the company Web site for business model appropriateness. Is this reference company similar to your business? For example, software used by restaurants may not be appropriate for your management consultancy. Are you a company that mostly sells to other businesses? Or do you sell directly to consumers? Does your company handle many transactions and customers per year or just a few? The references that the vendor provided you should be as much like you as possible.
- Call the reference company’s main number, not the direct number of the person you were given. Is this a real company with a real voice/phone system? Is there an automated company directory? When possible, get a receptionist to confirm the reference executive works there. Tell them why you’re calling: do they know who else might help in this matter? Verify that the reference executive is actually an employee at this company.
- Leave voice mail and send e-mail. Follow up your calls with a thank you email to the address given to you by your potential vendor.
- If you have any suspicions that the company isn’t real, use Whois Search to see how long their domain name has been around and who created it. You can also match up locales to area codes on Wikipedia at in order to ensure that your reference is really where he says he is.
Beyond this, you need to determine from the references how many phases the potential vendor had in the rollout of the software, what problems they encountered and what would have made things easier or harder. Were all the people in the company as professional and easy to work with as their friendly salesperson? Were there any expectations set during the sales process that were not met during rollout and product usage? Are all the functional areas of the software being used that they expected? Why or why not?
Gleaning this data from the reference will help all of you — reference, vendor and your company — properly communicate. It will probably convince you that you’re talking to a real satisfied customer, not a plant.
Any company can have one or two reference customers that are “friends of the family” — business owners that are local and known to the company or otherwise too close to be objective about the performance of the vendor. This is why insisting on references in your location or industry is important, and why you need several to check up on.
If you follow these steps, you won’t be hoodwinked by an unscrupulous vendor and you’ll be much more likely to get a software solution in place that will lead your company to greater business success.
That’s a legacy we’d all like to reference.
Curt Finch is CEO of Journyx, a provider of Web-based software located in Austin, Texas, that tracks time and project accounting solutions to guide customers to per-person, per-project profitability. He is the author of the recently published book, All Your Money Won’t Another Minute Buy: Valuing Time as a Business Resource.
Curt: Also I was recently doing some due diligence on an ASP solution and simply did a "Powered By [Product Name]" search to get a list of companies to contact. That simple technique worked great with 6 of the 10 contacted parties responding within a few days.
These tips you’ve provided are all great tips for hiring independent contractors as well. I always do a few minutes of research before calling a contractor’s reference to make sure that they’re legit and there’s no obvious conflict of interest.