The Power of the Pen
Adventures in obtaining permission to publicly announce customer wins.

By: Bruce Bahlmann - Contributing Author (your feedback is important to us!)

Created: April 24, 2003

In the glory days of the Internet boom, company valuations or share price would receive a tremendous boost upon announcement of customer wins. These announcements have become so critical (perhaps so blown out of proportion) and so closely followed by investors that companies often publicize customer wins before their product has been successfully deployed. Many of these announcements are so blown out of proportion that unless the reader does some investigating it is unlikely they will know the full extent of the deal. For example, some announcements with large customers appear all encompassing (worth millions of $) only the fact of the matter is that they are often less than spectacular (if worth mentioning at all). The goal of public announcements is to attract attention and rally future customer acceptance while downplaying or reducing the available market for competitive products. It is almost as if these announcements say to potential customers, “If you want to be associated with a winner come buy from us rather than from any one of those other losers - we are on the rise!”

Today the landscape surrounding publicity details of customer wins has become complicated as customers increasingly learn how best to use this as a bargaining tool or perhaps as a way to maintain their competitive edge. For example, let’s say the customer has negotiated a supplier company (vendor) down to their absolute best price but the agreement does not allow the vendor to publicize the deal. Instead the customer keeps this trump card tucked away in case they need it – potentially to get one more price reduction from the vendor. For example, “We'll allow you (the vendor) to issue a press release if you drop your price another $x." 

Why all this secrecy? Is this really a means of negotiating the absolute best price? Many vendors would argue that their failure to publicize these larger deals has hurt them in winning other customers and in the end endangers their survivability. One vendor, who asked to remain anonymous, has made exhaustive efforts to travel to key customers with the express purpose of negotiating authorization to publicize their deal only to come back empty handed.  

Customers have agued that they do not use publicity rights to deals as a bargaining chip but also request to remain anonymous. If a certain vendor product or technology makes a customer’s business x% more productive, that product could arguably be considered a competitive advantage by the customer. The longer the customer’s competitors don’t know details of this advantage the more likely the customer can exploit this technology or market lead. So by not sharing this information (which vendors and products a customer is using) becomes company proprietary and often closely guarded. If a customer’s competitors knew what vendors and products they were using the competitors could more easily offer similar or more advanced services. For this reason, competition typically restricts what large customers can say about the products and services they offer – especially those primarily enabled through use of its vendors.

There is also the matter of creditability related to these types of public announcements. Some customers will not allow vendors to advertise them as customers as it may provide some kind of unauthorized or pseudo endorsement that the customer is unwilling to extend. If a customer was to extend this kind of endorsement about a vendor providing some critical element of their infrastructure this endorsement could put the customer’s business at great risk. Although the level of risk encountered will vary, the customer’s worst nightmare might come true - especially if that company were to go out of business or run into legal trouble. A customer’s competitors could use this information to attack the customer’s creditability in not only selecting good vendors but also in providing services that are now suspect. 

The subject of pseudo endorsing a particular vendor’s product can also cause other problems for customers as well as some interesting opportunities. Although these public announcements are generally not stated as such, a casual observer could easily mistake a customer’s selection of a particular vendor’s product as a official or industry-wide endorsement. As a result, this could have several unintended consequences. Such a pseudo endorsement may create problems for the customer when negotiating similar contracts with other vendors offering competing products. If the customer has allowed the incumbent vendor to publicize the deal this may establish a precedent that may obligate the customer to allow the competing vendor to do the same or perhaps even establishing a bar against which all future pricing is gauged. Holding back publicity may also create opportunities. For example, let’s say a large customer negotiates this publicity to happen after a large deal is completed and as a result of this deal another company buys this vendor. In cases like this, the customer may want to seek a stake in the vendor in exchange for allowing it to publicize the deal – especially if its business can attract possible buyers. 

The fallout of this trend may ultimately result in an overall industry decline (or elimination) of publicly announcing customer wins. While eliminating customer announcements effects all vendors, it especially challenges smaller companies in their quest to gain traction. It also prompts the need for changes in the way investors follow vendor performance. Although customers will continue to rely on vendors to develop products that keep their business healthy, the days of customers feeling compelled to help their vendors or being coerced to publicly divulge their competitive advantages are about to come to an end. After all, the customer is always right and the vendor should be satisfied with the payment and shouldn’t require anything additional.

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