Wragg Lowenstein Customer Advocacy

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Article detailing how customer advocacy monetizes in multiple b2b and b2c industires

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Wragg Lowenstein Customer Advocacy

  1. 1. crm Reproduced with permission of Admap, the world’s primary source of strategies for effective advertising, marketing and research. To subscribe visit www.admapmagazine.com © World Advertising Research Center The marketing value of customer advocacy Tim Wragg and Michael Lowenstein, NOP World, examine the elusive potential of detailed consumer information and how to achieve customer advocacy HE ADVENT OF customer manage- stand, identify and capitalise on customer supported and maintained by processes T ment tools and their effect on contemporary marketing still leaves many unanswered questions. How advocacy factors. For many businesses, there is an immediate need to develop and implement not only advanced that optimise the customer experience at each ‘touchpoint’ and in each messaging opportunity. can marketers use detailed customer data customer management techniques, but NOP World ranks customer advocates to their best effect? Can marketing activi- also introduce ‘personal’ marketing, facil- in four degrees: indifferent, fulfiled, com- ties be tailored to suit different types of itated by viral marketing approaches mitted and active. Indifferent customers customers, down to an individual level? through the internet, email, mobile have little or no loyalty to a particular How can technology be used to leverage phones, ‘blogging’ and other new entries brand or product and think other brands customer behaviour? These are just some into the less traditional marketing mix. in the marketplace can meet their needs. of the questions we hear day in, day out. These techniques can be extremely They tend to have at best a fairly benign, Word-of-mouth endorsement and powerful, as they create sets of active or passive, relationship with the supplier positive communication are a key result communication pathways whereby third and are the group most likely to stop of good customer management. A deeply parties ‘pass on the message’, multiplying using the brand altogether. connected customer will tell others about the effect and strengthening the message Fulfiled customers are happy with the their positive experiences, so customer by reframing what had been merely a product or service that they receive, but it management is there to facilitate this marketing message to one that consti- is still almost a functional relationship, process and provide continuity, by com- tutes a personal, direct endorsement. focusing on the tangible aspects of value. bining marketing techniques that create Unlike other evaluative techniques, Going higher up the scale, committed awareness, proactive peer-to-peer com- advocacy levels can be tracked through customers are loyal, with regular patron- munication, endorsement, and even the measurement of the entire cus- age behaviour, and even demonstration ‘buzz’. However, customer advocacy, tomer/supplier interface, segmented by of being cross-sold and up-sold, but they by our definition, is much more than varying degrees of loyalty and also con- still have a relatively passive relationship simply word of mouth. Advocacy is the sidering emotional values and behaviour. with a supplier in terms of going out and fusion of understanding customer needs, promoting the brand. An example of a interpreting value perceptions, motiva- Who are the advocates? committed customer is one who buys a tions and consumer behaviours and Rachel Baynes, the head of customer Sony television every few years, but does then leveraging the customer’s emotional insight at Abbey, defines advocacy as not have the type of emotional bond with relationship with the supplier. ‘an unprompted recommendation of a Sony that makes them want to talk to ‘Advocacy Multiplier™’ has been product, service or brand during a con- others about the brand, unless prompted. developed by NOP World to help under- versation’. We would add that it is Active advocates are fully committed, with an emotional bond beyond the typi- FIGURE 1 cal relationship of customer and supplier. Difference between the advocacy segments: share of spend They are the customers with the highest level of involvement – active, vocal and % proud. These are the ‘crème de la crème’ – 80 the people who ‘live’ the brands that they 70 regularly use. Their lifestyle mirrors that Average Tesco Somerfield of the brand and they are active in talking 60 about their experiences. 50 Owners of Harley-Davidson motor 40 cycles who are members of the Harley Owners Group (HOG) clubs around the 30 world are very visible advocates for the 20 brand. They not only buy the motor 10 cycles, but they actively accessorise with Harley-Davidson equipment, wear a vast 0 array of Harley-Davidson clothing and Indifferent Fulfiled Committed Advocates enthusiastically participate in Harley- Source: NOP World Proprietary Supermarket Study Dec 2003/Jan 2004 Davidson events. Starting with fewer Base: 903 respondents than 50 in 1983, HOG has grown to more 38 Admap • January 2005 © World Advertising Research Center 2005
  2. 2. Tim Wragg is global director Michael Lowenstein is at the Customer senior vice president of US Management Centre of Operations at the Customer Excellence at NOP World. Management Centre of Excellence at NOP World. than 800,000 members, over half of overlook or make excuses for imperfec- starting point for successful advocacy. whom attend at least one Harley-David- tions – recent examples of poor battery Value is at the very heart of under- son event per year. life in iPods were labelled ‘quirks’ rather standing how supplier and individual How important is advocacy to the than failings by the active advocates. purchase decisions are made and we view company? Harley-Davidson does almost According to our advocacy multiplier this as common to all customers. Deeply no advertising, depending upon its com- research, Mercedes-Benz enjoys the held, value-driven beliefs are the emo- munity of advocates to purchase both highest percentage of active customer tional drivers that set the table for loyalty, motorcycles and logo gear and spread the advocates of all global brands. These commitment and ultimately advocacy. word to others. Customer advocacy owners not only drive Mercedes, they ‘Value for money’, a surrogate for cost affects virtually every area of company regularly talk about their experience with and a tangible component of value, has activity. As John Russell, managing direc- others, they live a lifestyle to match any a greater or lesser role in decision-making, tor of Harley-Davidson Europe, has said: Mercedes brochure. As a result Mercedes depending on the individual customer ‘If it is important to the customer, if it is a has a group of incredibly loyal customers and purchase situation. Intangible good insight; if it is a good point of under- who carry the brand to areas that mar- elements are the emotional drivers that standing and connection to the customer keters are normally unable to reach. are core to customer advocacy. In con- – it makes its way into business processes sumer products and services, they are and becomes part of what we do’ (1). Getting the conditions right predominant in customer decision-mak- Another illustration of customer advo- Customers make their decisions based on ing; however, they are also significant cacy is the iPod phenomenon – you can the tangible and the intangible elements factors in business-to-business value not stop iPod users from talking about of perceived value. The tangible elements perception, which many companies and their experiences. As long as they are a are the functionality, design and purpose research suppliers do not consider. reliable and credible source of informa- of any product or service and also include While the creation and sustaining of tion (see the section on Influentials, the costs to purchase and maintain. loyalty behaviour are critical and essen- below) their power to convince others is Before any product or service is made tial objectives for any business, often colossal. Once this level of relationship is available for purchase, these basic, tangi- companies try to address these with a established, loyalty is a given – even at ble elements need to be right. Creating a ‘loyalty programme’, in order to increase times when products or services are less positive attitude toward the product or frequency, ‘recency’ and customer spend. than perfect. Active advocates can often service, ie customer satisfaction, is the However, loyalty behaviour, by defini- tion, is built upon a complex emotional FIGURE 2 relationship between two parties. The Sony: making an active advocate modification of behaviour only results once the ‘loyalty bond’ is experienced Indifferent Active brand advocates over time, making it more difficult for 40% customers to change alliance and easier A brand I trust 62% for them to align their behaviour to the benefit of the business. 48% Reliable products 65% The blending of effective loyalty pro- grammes and loyalty behaviour is not Cutting-edge 41% technology 59% achieved without forethought and effort. Had Tesco not had sufficient, in-depth 23% Makes me feel data on the level of involvement of its 37% happy and cheerful millions of Clubcard members, the chain Makes me feel would never have been able successfully 16% 29% pampered to introduce Tesco Personal Finance, its suite of banking and financial services; 49% High quality 62% Tesco’s Baby Club (where 80% of cus- tomers’ register their babies before they Really cares about how are born); its Kids’ Club (where permis- 16% 29% satisfied I am sion is required from parents to engage in Source: based on a sample of 1,206 drawn from Roper Reports Worldwide, 2004 dialogue with their children) and its on-line service. Tesco has achieved © World Advertising Research Center 2005 January 2005 • Admap 39
  3. 3. crm remarkable results with these pro- FIGURE 3 grammes because it has created Active advocates: top ten ranking brands emotional relevance for its Clubcard members; the ability to offer services that Measured by percentage of customers classified as ‘Active brand advocates’ connect with customers on a highly Mercedes 59% personal, individualistic level. The evidence BMW 53% It is vital that brands are true to their brand promise, minimising or eliminat- Toyota 51% ing over-promise and under-delivery. They must clearly appeal to customer values and lifestyle in communications Nokia 50% and experience creation and have a distinctive, positive, point of difference. Sony 46% While it is more challenging for global brands to engage emotionally with their customers, targeted research can be Estée Lauder 43% applied to identify niches or segments that may be the strongest start-points for Lancôme 43% nurturing advocacy. Building brand and supplier advocacy does not lie with customers alone. Internal Clinique 42% advocacy is as important as external. The whole organisation has to believe in the Ford 41% brand and what it stands for, from the chairman through to the receptionist. If Nike 38% employees do not share and communicate passion, excitement and emotional attach- ment to a brand, how can they expect Source: NOP World Roper Reports Worldwide, May 2004; based on in-depth personal interviews with 30,000+ customers to exhibit this behaviour? 13–65 year olds across 30 countries (1,000 interviews per country) Boots the Chemist is an excellent example of direct employee involve- ment in bringing value and advocacy to advertising, receive low trust scores in with the percentage of society that has as customers. When Boots’ loyalty scheme customer research. Beyond permission much credibility and power as the media. was about to launch, it started with email, brand websites and the like, NOP World defines these as the ‘Influen- employees, who were actively encour- customer trust is highest for word of tials’ and has carried out research in this aged to use the programme personally. mouth. How high? More than 90% of area for more than 40 years. As a result, whenever customers had any consumers, as identified in a recent ‘Influentials’ are the 10% of the popu- questions, Boots’ staff were already study (2), said they trust word of mouth, lation who lead trends, shape public active users and advocates for the pro- compared to less than half of that for opinion and influence the buying power gramme and they were able to help most other forms of advertising and of the other 90%. People look to Influen- customers well beyond the normal call communication. While, since 1977, the tials for advice on how to vote, what to of duty as well as being highly enthusi- aggregate value of advertising as a deci- wear, where to eat – on any aspect of life astic spokespersons for it. sion-making influence has remained where there is choice. The power of the about the same, word of mouth has influentials has yet to be fully explored by InfluentialsTM: believe it or not doubled in leveraging power to the point businesses, but their impact is not to be Once the conditions are right, the mes- where it is the dominant communica- underestimated. This is where trends sage needs to be delivered by a credible tion device in our society. Through its start and public opinions and perceptions source. As Rachel Baynes of Abbey says, studies, NOP World Roper Reports™ has can be swayed. ‘We are presented with so many media learned that over 90% of customers iden- There is nothing stronger than word-of- messages throughout the day that we can tify word of mouth as the best, most mouth recommendation from a reliable experience overload, and the impact of reliable source of ideas and information source. Have you ever asked a friend to advertising and editorial decreases.’ Del- about products and services, about the recommend a bank? There are certain uged with messages and information same percentage who find it the most people you would ask, and some that you from traditional media, consumers often trustworthy source. would not. Why? Because there are only a turn to the most reliable alternatives: The media has a number of ‘influen- few people that you would trust and these friends, colleagues and relatives. tials’: in the UK, Jeremy Clarkson people would be independent, unbiased This is an era where spam, pop-up ads, (motoring expert) can make or break a new (you would not ask a bank manager to telemarketing and other forms of target- car, and likewise reviews by TV chat show recommend a bank), have real experi- ed advertising and promotion, indeed hosts Richard and Judy can determine the ences and they are able to be critical when most forms of electronic and print success of a book. Here, we are concerned necessary. Chances are a positive word-of- 40 Admap • January 2005 © World Advertising Research Center 2005
  4. 4. Now available on WARC.com Knowledge and inspiration for marketing, mouth recommendation from an ‘Influ- ential’ would result in a sale. advertising and media professionals How to measure advocacy? Something as important as advocacy needs to be measured. For Victoria › Top downloads Hodson, British Airways’ head of market What WARC’s 12,000 users are looking research, it is the best measure of at most: customer satisfaction. ‘We believe word- of-mouth is a powerful influence on ›O2 It only works if it all works, IPA Awards, 2004 purchase behaviour and therefore a satis- ›Cravendale How integrated communications fied customer puts their own credibility built a premium milk brand, IPA Awards, 2004 at risk when they make a personal recom- mendation,’ she comments. ›How to use ambient media WARC Quick Identification is easy, with current cus- Brief, October 2004 tomer management systems able at least ›Parent power, not pester power Young to work out who is spending. Mixed with Consumers, April 2004 research, businesses can pin-point and distinguish between active advocates and ›Emotional advertising works Market Leader, merely satisfied customers. Tracking Autumn 2004 surveys, customer comments and staff feedback are also vital to monitor overall customer experience and find out what is being said about a brand behind closed › Quick Briefs doors. New in our series of must-read briefs on the fundamentals of unfamiliar issues: How can advocacy be used? While most businesses tend to focus their ›Making the most of radio the ins and outs attention (and budgets) on attracting of using radio waves for your brand prospective customers or increasing the spending by infrequent ones, understand- ›Integrated communications ensuring the ing advocacy allows businesses to nurture whole is greater than the sum of its parts and multiply value among their existing customers. By ensuring that experience Other recent additions include: exceeds expectation and by building appropriate mechanisms to develop emo- ›Global advertising tional values of loyalty and trust, advocacy ›Ambient media can increase brand value exponentially. ›Market modelling Understanding what motivates your active customers can have other benefits. It can be used in R&D, for example, or in the creation of partnerships and joint › Company profiles marketing initiatives. From adidas to ZenithOptimedia, over Achieving strong brand and supplier 400 profiles of the world’s leading advocacy is not easy, and is a long-term brands, advertisers and agencies goal. However, it can be the most power- ful tool in a brand’s armoury – moving customers up the ‘value chain’ without Latest additions include: compromising their independence, objec- ›Neutrogena J&J’s personal care megabrand tivity and personal integrity. It is also about nurturing customers for mutual ›Chanel the epitome of luxury and prestige benefit, not exploiting them. With Covers latest activities, market position, research showing that word of mouth is performance, structure and history, as well 42% more effective than advertising, can businesses afford to ignore it? ■ as links to related profiles and websites 1. From H.O.G. (Harley Owners’ group) website. 2. Forrester and Infoseek, 2004. SUBSCRIBE or take a twragg@nopworld.com FREE TRIAL now at mlowenstein@nopworld.com www.WARC.com © World Advertising Research Center 2005 January 2005 • Admap 41

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