About the Presenter• Executive Vice President of Market Probe• Over 35 years management and consulting experience;passionate about stakeholder behavior measurement• M.B.A. in marketing, organizational management• B.S. degree in economics and marketing• Ph.D. in strategy, program development, and programmanagement• Author of 150+ articles and white papers, and severalcustomer-centric marketing books, including –– Customer Retention (1995); The CustomerLoyalty Pyramid (1997); Customer WinBack(2001), One Customer, Divisible (2005)., and…– The Customer Advocate and the CustomerSaboteur (2011): Linking Social Word-of-Mouth,Brand Impression, and Stakeholder Behavior
Seven S Customer-Centric DirectionStructure SystemsStrategy StyleSharedValuesSkills Staff
The Case for Customer Advocacy….…in marketing and services decision-makingguidance and ‘how-to’ action, including…• Marketing and communications planning• Customer service/touchpoint experiences• Company image and reputation management• Product and service development• Customer relationship building• Brand messaging and positioning• Loyalty program creation/refinement
What is Customer Advocacy?- Advocacy is the highest form of customer (client)involvement in a brand (business). It is strongemotional connection with the brand andenthusiastic support of the brand.- More specifically, customer advocacy can bedefined as the degree of kinship with a brand orcompany and the favorability and trust of brands asa direct result of personal experience. It ismeasurable at the individual customer level.- Principally, advocacy identifies both the sourcesof brand affinity and the monetizing downstreamcustomer behavioral impact of offline and onlineinformal communication, by individuals on a peer-to-peer basis (and as it influences their owndownstream behavior, i.e. the self-perception effectas a result of personal experiences).
What is the Difference BetweenCustomer Advocacy and Customer Alienation or Sabotage?- Advocacy, principally based on customer informal offline and onlinecommunication, and impression of the brand or vendor, has tremendouspower and potential to create desired high-end customer behavior.- Informal, voluntary, peer-to-peer interaction, however, is a double-edgedsword: Customers’ negative communication, as much as praise, can havedamaging effect on other customers and non-customers, as well as thecommunicating customer himself or herself. Industry to industry and globally,about 20% of customers are alienated.- Much of customer advocacy (and alienation) depends on earned levels oftrust and openness between individuals, and between companies andtheir customers. It also incorporates today’s critical related concepts suchas objectivity, authenticity, belief, credibility and expertise, honesty,sincerity, reliability and originality in both the online and offlinecommunication methods that they, themselves, have created.
Why is this topic so important NOW?- Every company has pressure on marketing, sales, andcustomer service budgets; and they are being tasked andchallenged to optimize customer loyalty behavior throughwhatever cost-effective means are available .- There is increasing understanding that brand favorability,combined with social media and word-of-mouth based onexperience can be leveraged to enhance relationships withcustomers (and can also threaten them); however, mostinformation through presentations and other content isvery general discussion of functional value delivery basics, ora focus on abstract theory.
… and linking strategic valuedelivery planning withimplementationIdentifying the customer focus“line of sight”…Customer Centricity Line Of Sight Concept
Customer value andinsight is (almost)all about the dataand analytics
Order & billing detailsLife, Pensions & InvestmentsTravel, Tourism & LeisureRetail BankingEnergy UtilitiesTelecommunications% with “good”dataContact detailsContact historyComments & complaints3rd Party informationDemographic informationLifestyle information0%10%20%30%40%50%60%70%80%
• Grow Revenue• Position Brand• Increase Share• Decrease RiskThe Impact of Customer Influence has Pushed theStrategic Relevance of AdvocacyAssessing customer relationship has its genesis in quality assessment.Realization that quality alone does not generate a satisfied customer.Satisfaction gets to some of the intangible dimensions of the relationship,but is a passive measure and does not explain nor predict retention.Embrace customer retention to the framework, but it doesnot capture the influence customers have on “other”customers and partners.Advocacy captures the influence thecustomer and partner base have, inaddition to measures below.80s:Quality90s:SatisfactionLate 90s:LoyaltyCurrent:Advocacy
Business has been searchingfor the “best” metric(s) toidentify drivers and manageloyalty behavior of theircustomer bases.Since 1980, we have seenbusinesses support at least10 major metrics.Contingent on the informationneed, product sector andcustomer base specifics,there continues to be someuse for almost all of thesemetrics.Latest metrics movement wasCustomer ExperienceManagement, circa 2005.1980199020002010+Satisfaction/BaldrigeSERVQUALTQM/CVI/CVAConversion Model/Secure CustomerIndex/Dick & BasuRetention/LoyaltyEngagementSix Sigma/TQUpgradeNPS – Net PromoterCustomer ExperienceManagementCustomer AdvocacyCustomer Feedback ToolEvolution
Source: CompuStat and ACSI-1000100200300400%-30 -20 -10 -0 10 20 30%Sales annual growthACSI annual growthR² = 0.00Satisfaction Scores Do Not Predict Revenue Growth
Key Points of EmphasisCustomer Feedback Programs,Need for Accountability and Relevance,andCorrelation of Performance to CustomerBehavior and Business Outcomes
What is the return oncustomer investment? Where is the brand’scompetitive advantagebased on enhancedcustomer experiences? Are we measuring theright customer attitudesand behaviors? Can the metrics help usmake key decisions andallocate resources forour business?Most customer satisfaction research programs today comeunder two types of pressures:Accountability and Relevancy
The BIG ‘How-to’ QuestionIs it possible to demonstrate the impact ofenhanced customer product and serviceexperiences on business outcomes inmonetary terms, and then take action?
The Decline of TraditionalAdvertising and “Push” MessagingAs Decision-Making InfluenceandThe Rise of Personal Experience,Proactive Trust-Building, InformalCommunication, and CustomerAdvocacy Behavior
2007: Personal advocacy valued/trusted far morePersonal AdvocacyAdvertisingEditorial9250401977: Personal advocacy valued/trusted somewhat morePersonal AdvocacyAdvertisingEditorial675347Key Customer Decision Influence Trends
Don’t believe that companies tell the truthin advertisements.76%Source:Yankelovich, 2005Trust other people “like themselves.”Up from 22% in 2003.68%Source:Edelman Trust BarometerPeople Don’t Trust Advertising. . . People Trust OthersPersonal Advocacy Has Trust and Authenticity
…find the advice at leastsomewhat credible.84%Source:TalkTrack TM, Keller Fay Group, 2006Advice makes a bigdifference . . .56%35%55%38%28%17%14%17%0%10%20%30%40%50%60%70%80%Somewhat (7,8) Series4Credibility/believability ofwhat was heardLikely to pass along toothersLikely to purchase Likely to seek outadditional informationPersonal Advocacy Has Credibility
Advocacy Enjoys Strong Support“ Leading companies want to build strong bases of loyal, profitable customers whoare also advocates for the organization. Advocates spend more, remain customerslonger, and refer family and friends, thus increasing the quality of the existingcustomer base and new acquisitions.”– IBM Global Business Services“We predict that customer advocacy will be the new focus for business leaders.Creating the customer experience via customer advocacy will become the singlemost important initiative that cutting-edge, forward-thinking, innovative companieswill adopt.– Hitachi Consulting“Word-of-mouth is the primary factor behind 20 to 50 percent of all purchasingdecisions. And its influence will probably grow…– McKinsey (2010)
New Reality:More Active Social/Community EngagementLeveraging Persuasive Power of WOMEstimates from consultingorganizations now show that onlinesocial communication may influenceup to 90% of consumer purchases
What are the ‘How-To’ Benefits of Advocacy?Advocacy is the most contemporary construct to helpunderstand customer behavior in today’s marketplace.Advocacy provides the strongest linkage to a critical metric ofbusiness growth that is often ignored in all customersatisfaction research: new client growth.Advocacy establishes the strongest linkage to organic growthof a business: retention rates and share-of-wallet growth.Advocacy meets the criteria of an effective marketsegmentation tool: size, stability and business value.Advocacy is an ideal metric for tracking studies for both B2Band B2C situations, where other single question metrics fail.Advocacy helps define priorities and action plans toenhance customer experiences and drive future behavior.
Customer Advocacy as a SegmentationDevice, a Key Performance Metric,and Organizational Management Model
What is an Advocacy Classification?Based on the level of customer involvement in yourbrand or company, your customers can be segmentedinto four behaviorally distinct groups:Advocate Strong customerinvolvementHighest levels of favorability and futureconsideration, creates positive buzz forthe brandAllegiant Moderate customerinvolvementReasonable levels of favorability, futureconsideration and brand supportAmbivalent Weak customerinvolvementBelow average levels of brandfavorability and future consideration andweak brand supportAlienated Weak to negativecustomer involvementLow brand favorability; prefercompetitive options and createsnegative buzz for the brand
Positive and Negative Things Said Past 6 MonthsTotalSoftwarePositive Said 5.7 6.4 5.2 4.4Negative Said 4.3 4.5 2.9 3.2TotalSoftwarePositive Said 8.2 10.6 6.7 8.7Negative Said 0 0 0 0An advocating customer speaks positively abouttheir experience and perception of the brand.AdvocatesTotal Population
Most satisfaction research deals with customer retention and/orloyalty and ignores share of wallet and new client acquisition inlinkage research.Advocacy impacts all three.
0.400.500.600.7010% 15% 20% 25% 30% 35% 40% 45% 50%Percentage of AdvocatesImpact of Advocacy Improvement Through Performance:Case Study of a ClientShare of WalletShare of WalletRetentionRetention
What is Market Probe’s Advocacy Ladder?The Advocacy Ladder is a pictorial representation of acompany’s customer base into Advocacy segments.AdvocateAllegiantAmbivalentAmbivalentAlienatedThe best customers of yourbrand. You need to engagethem.Implement customerexperience improvements tomove them to Advocates.Implement customerexperience improvements tomove them up the AdvocacyLadder.Implement customerexperience improvements toreduce the Alienated group.Move up theAdvocacy LadderProject Deliverables ofAdvocacy Analysisand Modeling
Perceptual Levels: Advocacy EvaluationDeclinedImprovedRemainedSameDeclinedRemainedthe sameImproved• Perceived improvement inperformance has a definite,positive impact on advocacylevel.Performance Change Over TimeAdvocate Allegiant Ambivalent Alienated%TrueAdvocacy/Unconnected
Advocacy Driver/Swing Voter AnalysisSwing up and swing down analysis identifies the service attributes thatwill drive customers from Alienated to Ambivalent, Ambivalent toAllegiant, Allegiant to Advocate.Analysis repeatedfor brand, productand key touchpoint attributes forinput into anoverallimprovementaction plan.10%14%17%15%22%5%1%6%12%Staff always takesthe time to talk with meI have an open andhonest relationship with thepeople at my bankStaff proactively suggests productsand strategies that will help meStaff suggests only thoseproducts that are best for meStaff follows up withinformation as neededStaff delivers servicein a timely mannerStaff are trained to offerreliable servicesStaff appears competentand knowledgeableStaff makes me feel likea valued customer24%21%14%1% Alienated AdvocateCritical to Reducing Alienated Critical to Building Advocates13%13%9%6%1%Quality of Staff Services
Relationship Attributes for B2B Services CompanySwing Up (to Advocate)/Swing Down (to Alienated)25%33%10%4%9%19%22%10%0%1%12%55%Is considered an expertin the employmentservices industryIs a companyI can trustAlways respectfuland professionalIs socially responsibleFinds creative andinnovative solutionsAnticpates yourfuture needsCritical to Reducing Alienated Critical to Building Advocates
55%29%15%1%Alienated AdvocateCritical to Reducing Alienated Critical to Building AdvocatesSwing Up & Swing Down Analysis
Midwest Bank – SMB B2B CustomersImpact of Expressed and Unexpressed Complaints
Convergent Validity from Parallel 2010UK/Singapore SurveysB2C B2BAdvocate(%)Alienated(%)Advocate(%)Alienated(%)Percentage of Customers 12 19 12 30BehaviorsShare of Wallet 73 37 91 44Retention 98 1 40 8Positive Word of Mouth 7.5 2.0 5.1 1.2Negative Word of Mouth 0 9.5 0 5.5Attitudes (Top Two Box Scores/10 Point Scale)Trust and Confidence 81 2 75 2Reliable Service From Staff 71 3 50 0Breadth of Accounts 62 1 45 0ProblemsReported Problems 3 33 0 35
Advocacy Segmentation: Profile of Attitudes(Top Two Box Ratings)Critical Attribute(Scale: 1 – 10; 9 and 10 Are Top Boxes)Advocate Allegiant Ambivalent AlienatedBrandHas earned my trust and confidence 81 28 6 2It is a pleasure to do business with them 78 22 5 1The bank is definitely for people like me 79 26 7 2StaffStaff makes me feel like a valued customer 75 22 8 2Staff are trained to offer reliable services 71 20 7 3Staff follows up with information as needed 71 18 5 2Value PropositionBreadth of checking and savings accounts offered 62 13 4 1Variety of cards with different features suitable to you 53 11 4 1Communication of different products and their features 60 13 3 1Word of Mouth: OnlineI frequently express my positive and negative experiencesabout products and services in social media (YouTube,Facebook, Twitter, Blog, etc.)28 18 14 20I seldom express my views on products and services insocial media (YouTube, Facebook, Twitter, Blog, etc.)36 39 39 33I do not participate in social media 36 43 47 47
Experience QualityExamples of Customer AdvocacyResearch in Action
Capsule Case Study #1National Health Club ChainThe Issue/Challenge/Opportunity:Declining membership, more attritionand passivity, fewer new members.The ResearchAdvocacy research among members; staff mirroring researchThe Learning/Insights/RecommendationsPerformance and relationship diagnostics (group classes, personal traininginvolvement, feeling valued, etc.) had low rating scores but high Advocacyleverage; scheduling and staff training had the first priority for improvement.Unresolved problems causing alienation. Also, staff significantly out of touch withcustomers.Client Actions:Staff relationship training, morescheduling and training variety, betterhandling and resolution of memberissues.
Capsule Case Study #2B2B Computer Customer ServiceThe Issue/Challenge/Opportunity:Mandate for customer service to becomeworld-class, drive downstream businessThe ResearchInitial twenty country, worldwide customer advocacy research based on serviceexperience; impact on customer service operations in sixty total countriesThe Learning/Insights/RecommendationsTo strategically differentiate service, defined need to proactively ‘take ownership’ ofcustomer service issue, not just show knowledge, friendliness, courtesy, and speedof responsiveness. This was found to be true for all service channels, products, andcountries studied.Client Actions:Major overhaul of service and trainingprocesses based on customer insights.
Capsule Case Study #3:Brokerage House Small Account ManagementThe Issue/Challenge/Opportunity:Handling of small accounts at FAC rather thanindividual broker; clients seem unhappy withdepersonalization.The ResearchClient advocacy researchThe Learning/Insights/Recommendations- Strong monetization associated with advocacy (current/future investable assets);alienated unhappy with financial performance, lack of personal attention andcommunication, not feeling valuedClient Actions:Personalization at all touch points, delivering onpromises, more regular communication, advisortraining in personalized contact and expectationsmanagement. Fee-based advisory services.
Concluding Advocacy Value Message“The benefits of building advocacy can’t be ignored.Satisfaction and loyalty are important, but they’re oldnews. It’s a new dawn in customer experience strategy,where the customer controls over 50 percent of the brandmessage. Forward thinking companies will be the onesthat identify and work with their customer advocates togenuinely build trust in the brand, the customer base, andthe bottom line.”Cultivating Customer Advocates: More ThanSatisfaction and Loyalty2011 Peppers & Rogers Group White Paper
To learn more - -• About Market Probe’s work –– Check out the book: The Customer Advocateand the Customer Saboteur– You can find the book on ASQ’s Store, atwww.qualitypress.org – item H1410– Look for 2010/2011 advocacy articles onCustomerThink (www.customerthink.com)• Or connect via -– T: 414-530-5422– firstname.lastname@example.org– www.marketprobe.com• About the topic through ASQ –– Search ASQ’s Knowledge Center@ http://asq.org/knowledge-center/Thank you!