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Harris Interactive Customer Wom Power Final


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Sources and applications of informal communication, offline and online, greatly influence downstream customer atitudes and behavior

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Harris Interactive Customer Wom Power Final

  1. 1. Customer WOM Power Influence by Message Senders and Impact on Message Receivers’ Behavior Michael Lowenstein, PhD CMC Senior Vice President & Senior Consultant Harris Interactive Stakeholder Relationship Consulting Follow the discussion on Twitter at #WOMPower during today's webinar. 03/29/10 © Harris Interactive
  2. 2. How Product/Service Experiences Impact Customers’ Downstream Communication and Loyalty Behavior and How Online and Offline Sources of Product/Service Information Influence Customer Decision-Making
  3. 3. First, the Basics Strengthening Bonds and Building Relationships: Our Concept and Model of Stakeholder Commitment
  4. 4. Evolution of the Quality / Satisfaction / Loyalty Movement Stage Two (1985-1993) Focus on Satisfaction Stage One (Pre-1985 ) Focus on Quality Stage Three (1924-2003) Focus on Competitors Stage Four (Today) Focus on Relationships
  5. 5. How Do Customers Demonstrate Loyalty? <ul><li>They tend to behave in many profitable ways: </li></ul><ul><ul><li>Buy more or give greater share-of-wallet </li></ul></ul><ul><ul><li>Continue purchasing even after a product or service problem </li></ul></ul><ul><ul><li>Willing to try brand or line extensions </li></ul></ul><ul><ul><li>Go out of their way to purchase </li></ul></ul><ul><ul><li>Place frequent, consistent orders and usually cost less to service </li></ul></ul><ul><ul><li>Less price sensitive </li></ul></ul><ul><ul><li>Provide information to supplier on a voluntary basis </li></ul></ul><ul><ul><li>Do not churn when faced with competitive offers </li></ul></ul><ul><ul><li>Have narrowed consideration sets </li></ul></ul><ul><ul><li>Have strong, positive impression </li></ul></ul><ul><ul><li>Have a positive longitudinal relationship </li></ul></ul><ul><ul><li>Communicate voluntarily and frequently, in a very positive manner </li></ul></ul><ul><ul><li>May even become active advocates for your brand/company </li></ul></ul>
  6. 6. Defining Emotional and Rational Bonds <ul><li>EMOTIONAL Based on Trust </li></ul><ul><li>Sense of personal relationship with brand or company </li></ul><ul><li>Reinforced by service experiences </li></ul><ul><li>Supported by customer touch points </li></ul><ul><li>RATIONAL </li></ul><ul><li>Based on Satisfaction </li></ul><ul><li>Relationship based on meeting functional expectations </li></ul><ul><li>Reinforced by ongoing performance quality </li></ul><ul><li>Value for the money </li></ul>
  7. 7. Conceptual Framework: Emotional and Rational Bonds are the Basis of Customer Relationships <ul><li>Customer relationships have similarities with human relationships: </li></ul><ul><ul><li>Acquaintance : Disconnected </li></ul></ul><ul><ul><li>Contractual : Rational Relationship </li></ul></ul><ul><ul><li>Commitment: Rational and Emotional </li></ul></ul><ul><ul><li>Romance: Emotional Relationship </li></ul></ul>Commitment Map Emotional Connection ROMANCE Contractual Commitment Acquaintance Romance
  8. 8. Conceptual Framework: Harris Interactive Customer Loyalty Model Relationship Diagnostics Relationship Conditions Commitment Dimensions Emotional Connection Commitment Rational Connection PURCHASE ENVIRONMENT Trust Satisfaction Product Satisfaction Price Competitiveness Corporate Reputation Policies Service Satisfaction Contractual Commitment Acquaintance Romance
  9. 9. Loyalty Model for U.K. Grocery Stores Committed 37% 29% 30% 22% 12% 21% Rationally Connected 40% 34% 26% 16% 7% 3% Emotional Connected 5% 6% 12% 30% 47% 53% Disconnected 18% 31% 32% 32% 34% 23%
  10. 10. Relationship Map: U.S. OTC Pain Relievers Disconnected Rationally Connected Committed Emotionally Connected Rational Emotional
  12. 12. Committed Shoppers Spend More Per Month: Supermarket Tracking Study Results
  13. 13. Conceptual Framework: WOM and The Role of Advocacy <ul><li>Committed customers are more likely to turn into active Advocates </li></ul><ul><li>True Advocates actively tell others how great the brand or company is </li></ul><ul><li>Advocates create brand momentum through word-of-mouth networks and referrals </li></ul><ul><li>Saboteurs can actively destroy reputations </li></ul>Committed Strong Strong Weak Emotional Connection Rational Connection Advocates Saboteurs Rationally Connected Commitment Disconnected Emotionally Connected
  14. 14. Definitions of Customer Advocacy and Swing Voter Analysis <ul><li>Customer Advocacy </li></ul><ul><li>Advocacy is defined as the active expression (principally WOM behavior) of customer commitment and loyalty to a brand which results directly from actual experience . Level of customer advocacy correlates strongly with such key metrics as overall satisfaction, future purchase intent, and likelihood to recommend; and it also explains results from performance and experience diagnostics </li></ul><ul><li>Swing Voter Analysis </li></ul><ul><li>After customer advocacy level is calculated, swing voter analysis identifies what specific elements of performance and experience, on a prioritized basis, would create stronger loyalty behavior among neutral customers (swing up/delighters) and what specific elements, if there is no improvement or intervention, represent the greatest prioritized threat to customer loyalty (swing down/dissatisfiers) among customers </li></ul>
  15. 15. Word of Mouth: Positive & Negative Comments <ul><li>High Net Worth customers have more to say about FinServCo, on largely positive basis, than Core and Preferred customers. Primary customers tell others more positive things about FinServCo than Non-Primary customers. </li></ul>Q2470. Have you frequently done either of the following: Tell others positive things about FinSerVCo?; Tell others negative things about FinServCo? Core Preferred High Net Worth Primary Non-Primary Total Positive Negative
  16. 16. Customer Advocacy Level Category Descriptions and Definitions DESCRIPTIONS OF ADVOCACY LEVELS Strong personal involvement with brand are active advocates/communicators for that brand Positively disposed towards the brand compared to others in repertoire and consideration sets; strong emotional involvement Relatively well disposed towards a brand will consider next time around but shallow emotional involvement Indifferent or passive towards a brand; may not consider the brand next time around; shallow to negative/disaffected emotional involvement Unconnected/Detractors Positive True Advocates Engaged
  17. 17. Advocacy Measures Analysis April 27, 2007
  18. 18. Advocacy Measures Analysis April 27, 2007
  19. 19. Advocacy Method and Analysis <ul><li>This analysis was conducted on a subset (1,200) of respondents to UBS' customer satisfaction study.  UBS pulled this sample randomly from among the entire base of UBS customer satisfaction study respondents, for the purpose of the advocacy analysis. </li></ul><ul><li>Customer Satisfaction data provided by UBS. Sponsor-identified. </li></ul><ul><li>Interviewing conducted September 2006 through October 2006. </li></ul><ul><li>1200 completes </li></ul><ul><ul><li>$100K - $500K </li></ul></ul><ul><ul><li>$500K - $1M </li></ul></ul><ul><ul><li>$1M-$10M </li></ul></ul><ul><li>Advocacy Analysis was conducted using 6 metrics: </li></ul><ul><ul><li>Q8: Favorability/Overall Impression </li></ul></ul><ul><ul><li>Q9: Tell Others Positive Things </li></ul></ul><ul><ul><li>Q10: Tell Others Negative Things </li></ul></ul><ul><ul><li>Q13: Primary Source for Advice and Guidance </li></ul></ul><ul><ul><li>Q16: Consideration Set </li></ul></ul><ul><ul><li>Q17: Willing to Provide a Referral </li></ul></ul><ul><li>Based on empirical distributions of the data, points were assigned for each value of response (or non-response) </li></ul><ul><li>The points were summed for each respondent and this created a full advocacy distribution </li></ul><ul><li>The full advocacy distribution was empirically bucketed to yield four naturally exclusive advocacy groups – True Advocates (6,7) Engaged (3-5), Positive (1,2), Unconnected ( 0 to -7) </li></ul>
  20. 20. Objectives <ul><ul><li>Analysis was conducted, utilizing advocacy and swing voter assessment techniques, to determine the degree of client commitment to UBS </li></ul></ul><ul><ul><li>Principally, the analysis focused on identifying the perceptual gaps between UBS advocates, or highly committed clients, and UBS unconnected clients, those who are ambivalent about the relationship and value received. Where there were large rating gaps, this would indicate which attributes differentiated group commitment and should be targeted for action </li></ul></ul>
  21. 21. $1M - $10M
  22. 22. Functional Diagnostics Gaps $1M - $10M Financial Advisor Team % True Advocates - % Unconnected Top Box (Excellent) % Unconnected - % True Advocates Bottom 3 Box Online Services 1-800 Service Center Account Statement Investment Strategy and Research Handles/ Resolves Concerns Performance Relative to Market Performance Relative to Financial Goals UBS Overall Value Received Contribution UBS Makes to Community Q1. How would you rate UBS on each of the following…? Like other investor levels, these investors associate the financial advisor team more with the advocate profile than the unconnected profile. The 1-800 service center is strongly associated with unconnectedness among these investors.
  23. 23. Branch Office Administrative Staff Diagnostics Gaps $1M - $10M Providing Clear and Accurate Answers to Your Questions % True Advocates - % Unconnected Top Box (Excellent) % Unconnected - % True Advocates Bottom 3 Box Completing Requests the First Time Asked Following Up to Resolve Any Issues Being Courteous and Professional Proactive Solutions/Reasons/Alternatives Q4. How would you rate the branch office administrative staff on the following? For this investment level, performance on all branch office/administrative staff attributes is more associated with advocates than with the Unconnected investors, again showing their close associations with UBS staff.
  24. 24. Local UBS Branch Office Diagnostics Gaps $1M - $10M Physical Appearance of the Office % True Advocates - % Unconnected Top Box (Excellent) % Unconnected - % True Advocates Bottom 3 Box Hours of Operation Answering the Phone Promptly Making You Feel Welcome and Important Q5. How would you rate your local UBS branch office on the following? This high level investor group shows some indications of dissatisfaction with F eeling important and Hours of operation for UBS.
  25. 25. Service Compared to a Year Ago $1M - $10M Q11. Compared to a year ago, has the service you received from UBS and your Financial Advisor improved, stayed the same, or declined? There is little relationship between advocacy segment and perceived UBS improvement among these investors. The Unconnecteds are the most likely to have felt strong declining performance, however.
  26. 26. Service Compared to a Year Ago $1M - $10M Q11. Compared to a year ago, has the service you received from UBS and your Financial Advisor improved, stayed the same, or declined? There is little relationship between advocacy segment and perceived UBS improvement among these investors. The Unconnecteds are the most likely to have felt strong declining performance, however.
  27. 27. Percentage of Total Savings/Investments With UBS $1M - $10M Q14. Approximately what percentage of your total savings and investments (excluding real estate and employer-sponsored savings/retirement plans) are with UBS? Advocates in this segment are most likely to have all their investments with UBS.
  28. 28. Executive Summary and Implications - Overall <ul><li>For branch office administrative staff performance , offering proactive solutions, reasons, and alternatives was more contributory to disconnectedness among clients. Overall, these attributes were more strongly associated with advocacy than disconnectedness </li></ul><ul><li>The financial goals diagnostics contributing most to UBS client advocacy, based on levels of importance, were ’ensuring adequate retirement income’ and ‘protecting current level of wealth’, followed by ‘formal financial plan in place’. Conversely, ‘paying for care of elderly parent’ and ‘planning for charitable giving’ had very little impact on advocacy. </li></ul><ul><li>Of the client events experienced or planned , retirement was the only one which a) recently happened and b) would, as a result, influence advocacy. </li></ul><ul><li>If service level was seen to have improved a great deal, this was the only support scenario which would have a positive advocacy leveraging effect. Advocates had a higher propensity to perceive that performance had improved a great deal. </li></ul>
  29. 29. Executive Summary and Implications – Results by Investment Level <ul><li>There were significant differences, and significant similarities, in advocacy results by investment level </li></ul><ul><li>In terms of functional diagnostics , financial advisor/team was clearly the strongest advocacy lever for $100K to $500K investors, while the 800 Service Center took on more advocacy importance for those in the $500K-$1MM range (along with UBS overall and financial advisor team). For $500K-$1MM clients, online services, followed by value received for fees, were the strongest levers of disconnectedness. For clients with $1MM to $10MM in their UBS portfolio, interestingly ‘contribution UBS makes to community’ was both the strongest advocacy lever and the strongest attribute contributing to disconnectedness. </li></ul><ul><li>Regarding financial advisor or team diagnostics, results were quite varied, with both low scores and high scores having impact: </li></ul><ul><li>- $100K - $500K – Three diagnostics had the greatest positive advocacy impact: taking time to understand needs/goals, understanding investment risk tolerance, and clearly explaining analysis. Low scores on discussing progress contributed most to disconnectedness, followed by asking clients if they are satisfied with service and bringing new ideas </li></ul><ul><li>- $500K - $1MM – Reviewing portfolio/making recommendations, and bringing you new ideas were the most positive advocacy levers. Low discussing progress scores most contributed to disconnectedness, followed by analyzing financial situation, bringing new ideas , and reviewing portfolio </li></ul><ul><li>- $1MM - $10MM – Reviewing portfolio/making recommendations, plus bringing you new ideas, discussing progress, and asking if you are satisfied with service are the key positive advocacy levers. Low scores on bringing new ideas , asking clients if they are satisfied with service, and discussing progress were the principal levers of disconnectedness </li></ul>
  30. 30. Executive Summary and Implications – Prospective Next Research Steps <ul><li>By investment level, discussing progress and bringing new ideas were the financial advisor/team diagnostics where low scores were consistently leveraging higher levels of disconnectedness. Client requirements, especially on the positive side of performance, could be fully more understood here. </li></ul><ul><li>The above point is consistent with proactive solutions in branch office administrative staff diagnostics, where low scores contributed to disconnectedness. Again, we recommend that further insights be considered here. </li></ul><ul><li>The components of decreased service level performance among $1MM to $10MM clients, having contributed to greater disconnectedness among this important group, is a priority for further study. </li></ul><ul><li>There was a definite decline in UBS advocacy level, at all portfolio levels, when percent of portfolio was below 80%. UBS could conduct additional research to identify what would motivate increased investment (as a percent of total liquid funds). </li></ul><ul><li>Swing Voter analysis showed financial advisor/team accessibility to be a potential swing negative, and this should be understood in greater depth. </li></ul>Not for Public Use
  31. 31. Example Advocacy Metrics Base—All Quarterly Respondents, FY08 Q1 N=355, FY08 Q2 N=390 42% of client customers surveyed are true advocates for the brand. However, 20% of customers surveyed are detractors. True Advocates 42% Positive 25% Engaged 14% Unconnected/Detractors 20% Strong personal involvement with brand , are active advocates/communicators for that brand Positively disposed towards the brand compared to others in repertoire and consideration sets, strong emotional involvement Relatively well disposed towards a brand, will consider next time around but shallow emotional involvement Indifferent or passive towards a brand: may not consider the brand next time around; shallow to negative/disaffected emotional involvement DESCRIPTIONS OF ADVOCACY LEVELS
  32. 32. Swing Voter Analysis: What Turns Positive Customers into Detractors ? What Turns Engaged Customers into True Advocates ?
  33. 33. Service-Based Customer Advocacy Analysis Phone Support Swing Up (Delighters) Rank order of variables that have the most impact on moving customers from Engaged to True Advocates: * Dual driver – Variables that are important in “swing up” and “swing down” Advocacy scores are based on all contact types <ul><li>Tech agent handled your issue in a professional manner </li></ul><ul><li>Time on hold before being connected to an agent </li></ul><ul><li>Tech support hours are convenient for you </li></ul><ul><li>Quality of tech support agent solution* </li></ul>True Advocates 26% Positive 29% Engaged 32% Unconnected/Detractors 14%
  34. 34. Word-of-Mouth: A Hot Topic!
  35. 35. One Of This Era’s Key Marketing Trends 2003: Word-of-mouth valued/trusted far more Word-of-mouth Advertising Editorial 92 50 40 1977: Word-of-mouth valued/trusted somewhat more Word-of-mouth Advertising Editorial 67 53 47
  36. 36. Why Word of Mouth Matters: Trust and Authenticity People Don’t Trust Advertising… … People Trust Others 76% don’t believe that companies tell the truth in advertisements (Yankelovich, 2005) 68% trust other people “like themselves”. Up from 22% in 2003 (Edelman Trust Barometer)
  37. 37. Why Word of Mouth Matters Just About Everyone is Talking 76% of all Americans talk about at least one brand a day (and average 10) (Talk Track™ Keller Fay Group 2006) 15% of every conversation in America includes something about a product or service (Northeastern University)
  38. 38. Harris Interactive WOM Research: A Decision-Making Impact Tracking Mechanism for Product/Service Categories and Individual Companies/Consideration Sets
  39. 39. Conventional WOM/Communication Impact Grid: It's Time for Reconsideration [ Occasion ] [ Setting ] [ Medium/Mode ] [ Social Definition/Client Mkt Segment ] [ Motivation ] [ Positive/Negative Message ] ~ ~ ~ ~ ~ Perception/Behavior Effect* Inside Out : Companies endeavor to influence attitudes and perceptions of customers/consumers, as well as where, how, and when communication occurs Outside In : Customers/consumers informally influence behavior of others on behalf of selected (preferred) companies When does communication take place? How does communication take place? Where does communication take place? Who communicates? What is communicated ? Why does communication take place?
  40. 40. Because These Issues are Important to Our Clients, We Want to Evaluate and Understand… <ul><li>How product/service experiences impact or influence customers’ downstream communication and loyalty behavior </li></ul><ul><li>How online and offline sources of product/service information impact or influence customer decision-making, and </li></ul><ul><li>How insights regarding a) sources and b) leverage of information can be applied by Harris Interactive clients for their marketing initiatives </li></ul>
  41. 41. Overall Objectives <ul><li>Research was principally designed to help evaluate incidence and effect of both online 2.0 social interaction/consumer generated media and also major offline communication modes, as follows: </li></ul><ul><li>Communication Initiator (Creator/Sender) </li></ul><ul><li>-  Product or service experience (category and type of experience) which caused action to be initiated </li></ul><ul><li>-  Action initiated - Note :  If back to company, we identify degree of resolution </li></ul><ul><li>-  Communication mode (formal/informal online, or offline - phone, face-to-face at business or casual, </li></ul><ul><li>etc.) </li></ul><ul><li>- Tone (positive/negative) of communication </li></ul><ul><li>-  What specific experience message, ranging from passive and benign to positive recommendation, was </li></ul><ul><li>communicated (one area of particular interest is whether negative messages, leading to sabotage, get </li></ul><ul><li>communicated more or less frequently than positive ones) </li></ul><ul><li>Communication Recipient (Receiver) </li></ul><ul><li>If information about someone else’s purchase, use, or service experience was received, </li></ul><ul><li>was it active (i.e. solicited) or passive (i.e. received without solicitation) </li></ul><ul><li>-  How communication was received (i.e. mode) </li></ul><ul><li>-  Content of/reason for communication per respondent recall </li></ul><ul><li>- Believability of information received </li></ul><ul><li>-  Action taken, or intended (purchase/non-purchase, consideration/non-consideration, continuity </li></ul><ul><li>communication, etc.), by respondent as a result of communication </li></ul>
  42. 42. Contrary to prevailing belief that the overwhelming majority, and behavioral influence, of WOM takes place online, Andy Sernovitz, founder of Word of Mouth Marketing Association and author of Word of Mouth Marketing , has observed: “Only about 20 % of word of mouth happens online. When it does play a role, it usually sparks the 80% of word of mouth conversations that actually happen face-to-face. Real word of mouth dips in and out of different spaces.”
  43. 43. Study Design and Field Specifics <ul><li>Harris Poll is a nationally representative sample of 2,355 adult American respondents, who are 18 and over </li></ul><ul><li>The field period was from March 9th through 16th, 2009 </li></ul><ul><li>Harris Interactive Loyalty senior consultants and senior methodologists prepared nine questions, reflective of the stated objectives, for the respondents to complete. Questions can be applied to specific companies </li></ul><ul><li>Our qualifying criterion was whether the respondent could recall a ‘notable’ or outstandingly positive or negative product/service purchase experience, or a service/support interaction experience, over the past two months that stood out in their mind. Of the study respondents, a total of 1,404, or approximately 60%, could recall such an experience. By product or service category (with approximately 100, or more, eligible respondents), these were as follows: </li></ul><ul><ul><li>- Healthcare services – 206 (9%) </li></ul></ul><ul><ul><li>- Restaurant dining – 197 (8%) </li></ul></ul><ul><ul><li>- Entertainment, such as seeing a movie or sporting event – 168 (7%) </li></ul></ul><ul><ul><li>- Travel, including hotels, airline, rail, and rental cars – 168 (7%) </li></ul></ul><ul><ul><li>- Automotive vehicles, parts, or service – 123 (5%) </li></ul></ul><ul><ul><li>- Entertainment products, such as televisions, DVDs, etc. – 115 (5%) </li></ul></ul><ul><ul><li>- Technology products, including cameras and computers – 102 (4%) </li></ul></ul><ul><ul><li>- Financial services – 98 (4%) </li></ul></ul>
  44. 44. Communication Recipient Results
  45. 45. Methods of Gathering Information for Choices/Selection of Product or Service for Purchase <ul><li>In this research, respondents were given the opportunity to select which methods </li></ul><ul><li>they typically used as decision-making information sources, among the following: </li></ul><ul><li>Traditional media (advertising or stories from print or broadcast media) </li></ul><ul><li>Online media (message boards, chat rooms, blogs and wikis; company web sites; independent web sites that have reviews; public social networking sites such as Facebook and MySpace; and private social networking sites, such as communities) </li></ul><ul><li>Direct with company (telephone call or email; face-to-face with a salesperson, such as at a retail store or dealership) </li></ul><ul><li>Direct informal (phone call with person not associated with the company, mobile texting, or face-to-face with person not associated with the company), or </li></ul><ul><li>No information gathered for purchase or service decision-making </li></ul><ul><li>Where do consumers get their information? </li></ul><ul><li>How does information influence downstream behavior? </li></ul>
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  52. 52. Where and How Do Consumers Get Product/Service Decision-Making Information? <ul><li>36% - Company web site </li></ul><ul><li>22% - Face-to-face with a salesperson or company representative </li></ul><ul><li>21% - Face-to-face with a person not associated with a company </li></ul><ul><li>19% - Advertising in print media </li></ul><ul><li>19% - Independent web sites that have reviews </li></ul><ul><li>Remainder were 15%, or less; only 4% cited public or private social networking sites </li></ul><ul><li>Key differences by demographics and product/service experience category - some surprising results… </li></ul>
  53. 53. Information Sources for 18-24 Year Olds <ul><li>Traditional Media: 41% net </li></ul><ul><ul><li>Advertising in print media (newspapers/magazines) - 22% </li></ul></ul><ul><ul><li>Advertising in broadcast media (radio/television) - 21% </li></ul></ul><ul><ul><li>Stories/editorial material in print or broadcast media – 15% </li></ul></ul><ul><ul><li>  </li></ul></ul><ul><li>Online Media - 62% net </li></ul><ul><ul><li>Online message boards, discussion forums, chat rooms, blogs and wikis - 16% </li></ul></ul><ul><ul><li>Web sites of the company - 40% </li></ul></ul><ul><ul><li>Independent websites that have reviews, such as Trip Advisor or Amazon - 17% </li></ul></ul><ul><ul><li>Public online social networking sites, such as Facebook, LinkedIn, or MySpace - 16% </li></ul></ul><ul><ul><ul><li>(highest, by a wide margin, of any demographic group) </li></ul></ul></ul><ul><ul><li>Private social networking sites, such as customer communities - 5% </li></ul></ul><ul><li>Direct with Company - 30% net </li></ul><ul><ul><li>Phone call to the company - 12% </li></ul></ul><ul><ul><li>Face-to-face with a sales person or other representative (retail store or dealership) - 20% </li></ul></ul><ul><ul><li>Email or online chat directly with the company - 2% </li></ul></ul><ul><ul><ul><li>(lowest, by a wide margin, of any demographic group) </li></ul></ul></ul><ul><li>Direct Informal - 39% net </li></ul><ul><ul><li>Phone call with a person not associated with the company, such as family member or a friend - 15% </li></ul></ul><ul><ul><li>Face-to-face with a person not associated with the company, such as family member or a friend - 33% ( compared to 21% overall) </li></ul></ul>
  54. 54. Active and Passive Product/Service Information Received <ul><li>Much of the information consumers receive is proactively sought (61%) </li></ul><ul><li>Overall, about 84% of respondents felt that the tone of communication was somewhat to highly positive. It should be noted that, for Telecom Products and Telecom Services , two categories with fewer respondents, communication tone was significantly less positive </li></ul><ul><li>There was also a question regarding level of believability of information obtained. About two-thirds thought the information was very believable and almost all of the remainder thought it was somewhat believable </li></ul><ul><li>The highest level of information believability was for Restaurant Dining (74% said ‘very believable’), followed by Automotive ; and, somewhat reflective of the current economic climate, the lowest level of information believability was for Financial Services . Those who found information ‘very believable’ were more likely to have been among the respondents who actively sought the information out </li></ul>
  55. 55. Information Sources by Product/Service Category <ul><li>Traditional advertising as an information source was significantly higher among Entertainment respondents (58% vs. 29%, overall), but much lower for Automotive , Healthcare Services , and Travel category respondents (all between 13% and 16%) </li></ul><ul><li>Online message boarding/chat rooms/blogs/wikis was significantly higher for Tech Products (24% vs. 11%, overall), and all online media were higher for this category; Travel and Entertainment Products category respondents were significantly more frequent users of company web sites and also independent web sites </li></ul><ul><li>Automotive, Tech Products, and Entertainment Products category respondents were far more likely to receive information from face-to-face communication with a company representative (retail or auto dealership salesperson), while Travel and Financial Services respondents were significantly less likely to use this information source </li></ul><ul><li>Restaurant Dining, Tech Products, and Entertainment Products category respondents were more likely to receive information through informal, face-to-face communication with a person not associated with the company , while Automotive and Financial Services respondents were less likely to do that </li></ul>
  56. 56. Downstream Action by Customers Resulting from Product/Service Experience <ul><li>A total of 72% had taken positive action; and among that group, 79% reported communicating about their positive experience to others, while 56% specifically recommended that someone make a purchase </li></ul><ul><ul><li>Recommendation was significantly less likely to occur among Automotive , Healthcare Services , and, especially, Financial Services (identified by only 4% of these respondents), while Technical Products respondents were much more likely to recommend (80% of those taking positive action) </li></ul></ul><ul><ul><li>Note : This is another instance of where communication to others about the product or service is more likely to occur than recommendation, and the results also demonstrate a high degree of variability by category. </li></ul></ul><ul><li>Additionally, 41% of respondents said they communicated directly to the vendor or supplier, Of those respondents who had communicated directly with the vendor, about 70% were looking for some type of issue resolution </li></ul><ul><li>When specific action taken is broken out by product and service category, communication to ‘vendor’ is strongest in Automotive , followed by Telecom Products and Services , Financial Services and Healthcare </li></ul><ul><ul><li>Only in Restaurant Dining , Entertainment Products , Technical and Telecom Products and Services was positive recommendation stronger than positive communication; and in categories such as Healthcare , Automotive , and Financial Services , propensity to positively communicate was significantly higher than likelihood to positively recommend </li></ul></ul>
  57. 57. Communication Initiator Results
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  62. 62. Methods of Communication to Others <ul><li>About 79% of respondents had communicated to others after their purchase or service experience. Of that group, 86% communicated to someone not directly associated with the company (such as contacting customer service or technical support). We asked what methods had been used, and received the following responses: </li></ul><ul><li>- 63% face-to-face with a family member, business colleague or friend </li></ul><ul><li>- 30% email </li></ul><ul><li>- 15% face-to-face with a retail or dealership salesperson </li></ul><ul><li>- 12% web site of company </li></ul><ul><li>- 11% text messaging </li></ul><ul><li>- 9% public online social networking site, such as Facebook </li></ul><ul><li>- 8% online message board, discussion forum, chat room, blog, wikis </li></ul><ul><li>- 7% independent web sites that have reviews, such as Amazon </li></ul><ul><li>- 5% private online social networking sites, such as communities </li></ul><ul><li>Online communication to others seemed to be concentrated among Entertainment service respondents, and Travel and Tech Product respondents appeared to communicate more frequently through independent web sites </li></ul>
  63. 63. Correlation Between Method of Communication and Personal Downstream Behavior <ul><li>Of those who communicated with others face-to-face, 83% said they were definitely or somewhat likely to purchase in the future . This compares to: </li></ul><ul><li>- 65% who communicated via email </li></ul><ul><li>- 70% via face-to-face with a retail or dealership salesperson </li></ul><ul><li>- 68% via web site of company </li></ul><ul><li>- 67% via text messaging </li></ul><ul><li>- 78% via public online social networking site, such as Facebook </li></ul><ul><li>- 56% via online message board, discussion forum, chat room, </li></ul><ul><li>blog, wiki </li></ul><ul><li>- 77% via independent web sites that have reviews, such as Amazon </li></ul><ul><li>- 80% via private online social networking sites, such as communities </li></ul>
  64. 64. Correlation Between What Was Communicated and Personal Downstream Purchase Behavior <ul><li>Of those who had communicated about their positive product/service experience to others : </li></ul><ul><ul><li>76% are definitely or somewhat more likely to repurchase themselves </li></ul></ul><ul><ul><li>4% would be definitely or somewhat less likely to repurchase </li></ul></ul><ul><li>Among those who had made a positive recommendation : </li></ul><ul><ul><li>78% are definitely or somewhat more likely to repurchase in the future </li></ul></ul><ul><ul><li>6% are definitely or somewhat less likely to repurchase </li></ul></ul><ul><li>Of those who had communicated about their negative experience : </li></ul><ul><ul><li>Only about 23% of would be positively inclined to repurchase </li></ul></ul><ul><ul><li>46% would definitely or somewhat be less likely to repurchase </li></ul></ul><ul><li>Of those who had recommended against purchasing the product or service based on their own experience: </li></ul><ul><ul><li>About 24% would be definitely or somewhat more likely to repurchase </li></ul></ul><ul><ul><li>63% would be less likely to repurchase </li></ul></ul>
  65. 65. Inside-Out and Outside-In Customer Advocacy <ul><li>Inside-Out : Companies endeavor to influence attitudes and perceptions of customers (and prospects), as well as where, how, and when communication takes place, through social media and advertising </li></ul><ul><li>Outside-In : Customers informally influence behavior of others, both offline and online, on behalf of selected (preferred) companies </li></ul>
  66. 66. Inside-Out Customer Advocacy
  67. 67.                                                                                                                         
  68. 68. <ul><li>New U.K. program designed for high net-worth ‘Conscience Consumers’ (aka Cappucino Liberals), est. at 1.5MM now, 3.9MM by 2009; another 31% of U.K. population supports causes, but without investing time/money to do so </li></ul><ul><li>(RED) Program affiliation – Bono and Robert Shriver (chairman of AIDS/Africa group) </li></ul><ul><li>When cardholders spend up to $10M a year, 1% goes to Global Fund (HIV/AIDS), 1.25% above $10M a year; $10 in first month of use. Also receive reward points (REDmoney) </li></ul><ul><li>Special events for (RED) Program promotional activity; millions of dollars in PR for Amex and program with almost no advertising </li></ul>Inside-Out Customer Advocacy
  69. 69. <ul><li>Harley-Davidson is most successful motorcycle company in world; $14MMM capitalization, $2MMM higher than GM; almost bankrupt in 1985 </li></ul><ul><li>Spends under $1MM on advertising per year; depends on ‘mystique’ and engagement, direct customer input into operations for new products </li></ul><ul><li>Profitable growth of company has been largely based on life-style appeal through Harley Owners Group (H.O.G.) Clubs (new owners get free first year). Club began in 1983 with 50 members, now has close to 1MM members in 25+ countries with 1,200 local chapters. Half of members attend HD events and rallies at least once a year </li></ul>Inside-Out Customer Advocacy
  70. 70. <ul><li>Based in Denmark, one of top five toy companies in the world; produce 15MMM ‘bricks’ a year, covering 2,400 products, with 90 colors </li></ul><ul><li>Has clubs for kids, ages 6-12, with 2.3MM members, and magazine in English, French, German, and Japanese. Clubs, and active blogging and event program, as well, for adult LEGO enthusiasts; website gets 5MM visits a year </li></ul><ul><li>Sponsors FIRST LEGO League for kids 5-14, where teams of ten build LEGO robots in tournaments; has LEGO Learning Institute for educators to study how children learn best </li></ul>Inside-Out Customer Advocacy
  71. 71. Outside-In Customer Advocacy
  72. 72. Advocacy Extends Understanding of Customer Commitment <ul><li>Actively combines both attitudinal/perceptual (transactional and rational) and long-term behavioral and emotional involvement with brand or supplier </li></ul><ul><li>Identifies customers who actively purchase and reliably, frequently, and voluntarily advocate (communicate) on behalf of brand/supplier compared to those who range from negative, to indifferent, to highly committed and profiles their perceptions and characteristics </li></ul><ul><li>Measures customers’ degree of readiness to both bond with, and advocate for, brand/supplier relative to other customers and non-customers, and their emotional kinship or relationship with the brand/supplier </li></ul>
  73. 73. Staff-Related Diagnostics <ul><li>Personal interaction-related staff attributes generated highest levels of True Advocacy, but had the lowest top two box percentage performance scores </li></ul><ul><ul><li>Interacting with and getting to know the members (14%): 66% True Advocacy </li></ul></ul><ul><ul><li>Giving guidance on reaching fitness goals (18%): 59% True Advocacy </li></ul></ul><ul><li>Least personal interaction-related attribute had lowest True Advocacy, highest top two box performance score </li></ul><ul><ul><li>Checking you in quickly (66%): 36% True Advocacy </li></ul></ul>% True Advocacy Interacting With Getting to Know (14%) Giving Guidance in Reaching Fitness Goals (18%) Showing You How to Use New Equipment (25%) Making You Feel Welcome (35%) Checking You in Quickly (66%) Being Available to Answer Questions (37%) Base = 457
  74. 74. Perceptual Levels and Advocacy: Usage Variety and Expectations <ul><li>True Advocacy, Detractor proportions highly leveraged by perceptions in both areas </li></ul><ul><li>Expectations strongest advocacy driver </li></ul>Fewer Ways More Ways Same Ways A. Usage Variety Fallen Below Exceeded Met B. Expectations Base = 457 % True Advocacy/Unconnected More Ways True Advocacy Detractor/Unconnected Same Ways Fewer Ways % True Advocacy/Unconnected Exceeded Met Fallen Below
  75. 75. Impact of Negatives and Consideration Set on Advocacy: Problems/Joining Other Health Club Facilities <ul><li>Incidence of problems, though low (14%), had substantive impact on both True Advocacy levels and Detractor levels </li></ul><ul><li>Evidence of other facilities in consideration set (35%), had significant impact on True Advocacy and Detractor levels </li></ul>% True Advocacy and Unconnected No Problems (86%) Problems (14%) Non-Consideration of Other HC Facilities (65%) Consideration of Other Facilities (35%) Base = 457 True Advocacy Detractor/Unconnected
  76. 76. Leveraging Informal Communication to Optimize Customer Loyalty Behavior
  77. 77. Benefits and Applications of Text Mining/Analytics and Social Media Monitoring <ul><li>Beyond ‘buzz’, it is important to understand level of positive or negative consumer sentiment about a product or service (online content and open-end survey data) </li></ul><ul><li>Deep demographic and lifestyle categorization of consumer communication themes </li></ul><ul><li>Attitudes and insights about specific products, services, brands, and even marketing and communication campaigns </li></ul><ul><li>Identification of unmet, or minimally addressed, customer product or service needs, which can be leveraged into either competitive advantage or risk mitigation </li></ul><ul><li>Valuable augmentation, rather than replacement, of findings from more traditional customer research techniques and data </li></ul>
  78. 78. Broader Stakeholder Inclusion <ul><li>Powerful, more readily acknowledged and desired linkage between employee attitudes and actions and customer loyalty behavior; building customer focus and customer centricity </li></ul><ul><li>Growing number of companies with employee ambassadorship programs in addition to, or instead of, employee engagement. Ambassadorship represents top-level commitment to company, to brand and service value proposition, and to customers </li></ul><ul><li>In August, 2004, Honeywell International, Inc.’s Chairman and CEO, David Cole, sent a message to the company’s 120,000+ employees, in which he described their critical role in the company’s program to build and protect enterprise brands: </li></ul><ul><li>“ Every Honeywell employee is a brand ambassador. With every customer contact and whenever we represent Honeywell, we have the opportunity either to strengthen the Honeywell name or to cause it to lose some of its luster and prestige. Generations of Honeywell employees have built our powerful brands with their hard work, spirit of innovation, passion for quality, and commitment to customers.” </li></ul>
  79. 79. Marketing Sea Change: Proactive Dialogue Participation <ul><li>Consumer-generated media (CGM) and WOM are principally created by consumers. They are often inspired by relevant, memorable product or service experiences and frequently archived online for readers’ convenience, and for other consumers or key marketplace influencers. Some examples of online CGM through the social web include blog entries, community dialogue, consumer email feedback, message board posts, forum comments, personal web sites, and personal email </li></ul><ul><li>CGM and WOM can be influenced, but not controlled, by marketers, though some of the viral, guerilla, buzz, or neural networking ‘experts’ suggest otherwise </li></ul><ul><li>Most important, CGM provides a detailed digital trail for marketers to track . It's highly measurable, allowing companies to gauge overall brand equity, reputation, targeted message effectiveness, and potential behavior in real time </li></ul>
  80. 80. Summary of Insights and Opportunities <ul><li>Pattern of results supports the following thesis: </li></ul><ul><li>New technologies complement, rather than replace, traditional forms of communication in generating customer action </li></ul><ul><li>Example: Company web sites are simply an updated form of information-gathering, more corporate-based media than consumer-generated media (CGM) </li></ul><ul><li>Even with younger consumers, who have larger social networks and engage in more communication through them, tendency is still to revert to more traditional communication </li></ul><ul><li>It is far more actionable and productive to seek positive consumer WOM as a demonstration of loyalty behavior than to base decisions or judgment solely on either intended recommendation or actual recommendation </li></ul>
  81. 81. Thank you for Attending Contact our Presenter or Follow him on Twitter: Michael Lowenstein [email_address] Follow Michael on Twitter: @ lowen42 Questions?