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How to Capitalize on Advocate Marketing
Part 1: Finding Your Advocates
By Lee Marc Stein, President, Lee Marc Stein Ltd.
Advocate Marketing is the art of identifying your highest-potential customers, nurturing their potential, and motivating and empowering this “Golden 5%” to preach positive about your company. In this two-part series, you’ll learn how to capitalize on their work. Coming in January: Part 2: Converting and Empowering Your Advocates.
Who Are the “Golden 5%”?
Advocates are not necessarily your biggest customers in revenue or profit. They are your highest-share customers. They have a mission and passion. They possess what Jill Griffin in Customer Loyalty: How to Earn It, How to Keep It called the most leveragable of the four types of loyalty. It’s high repeat purchase and high level of attachment.
Length of relationship may not matter, either. You don’t always have to wait until the final stage on the evolution of a customer chart to employ Advocates. For example, my dentist, for whom patient referrals were critical, said that relatively new patients (within a one-three year span) provided the most referrals.
Advocate Marketing is a subset of loyalty marketing/relationship marketing—although loyalty programs don’t automatically beget Advocates. A frequent flyer program, for example, does a fair job at retaining customers, but a terrible job at making Advocates. More frequently than not, program members complain to others about the airline’s service.
Many loyalty programs include the goods and services of other firms trying to reach the same market. This, too, could be counterproductive to begetting Advocates. On the other hand, creative loyalty marketing programs – those which add unduplicated value (as defined by the customer) to the company’s product or service – can make Advocates out of even the most inner-directed customers. Loyalty programs that offer recognition as well as reward and that promote participation are usually the ones that produce the most Advocates.
Why Is Advocate Marketing Important?
There are a number of reasons not to ignore potential of Advocate Marketing.
- Branding is becoming more critical. But the cost of achieving branding through traditional means – primarily image advertising – is prohibitive for most direct marketers. In Advocate Marketing, effective branding is done at virtually no cost on a one-to-one basis.
- To combat overwhelming clutter. There are 30,000 products on grocery shelves. Every medium carries advertising messages. The average person gets 600 pieces of promotional direct mail a year. And that’s the average person. Upscale targets are asked to wade through even more clutter. E-mail inboxes may be 10-12 times more cluttered than their snail mail counterparts.
- To overcome suspicion and cynicism. Even if you break through clutter, consumers are more and more suspicious of advertisers’ claims. As Kirshenbaum & Bond put it, consumers have developed highly sophisticated hype-detecting radar. Almost no advertising can get through it.
- Focus. Frederick F. Reichheld, author of the seminal The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value, says “Building a highly loyal customer base cannot be done as an add-on. It must be integral to a company’s basic business strategy.” Another way to say this is: “Giving your customers something to brag about” is an objective that can carry your company a long way.
- Profits. Reichheld also says “The companies with the best retention rates also earn the best profits.” It generally costs 4-6 times more to attract a new customer than to keep an existing one. Advocates can outspend average customers 4:1. Multiply that out and you come to the conclusion that begetting Advocates can engender 16-24 times the profit of acquiring new customers.
Advocate Marketing doesn’t replace acquisition marketing. Rather, it enhances acquisition efforts by helping to:
The Making of Advocates
- Cut acquisition costs. Even if the Advocates don’t generate customers directly at no cost, you’re now targeting people who are just like your best customers, and your response percentages will increase. This lets you eliminate less effective sources for acquisition.
- Upgrade new customer quality. In most cases, these new customers will have mirror profiles of your Advocates. If the Advocate Marketing is executed right, they will not have been acquired through discount pricing or unaffordable premiums.
First, you have to find them.
You can’t find Advocates with traditional modeling. Or can you? Again, Advocates aren’t necessarily your biggest or oldest customers. In business marketing, the smaller customer may have as much motivation to become an Advocate. In consumer marketing, consider testing some “objective correlative” that indicates inner-directed vs. outer-directed people. The latter category is more likely to turn out Advocate candidates.
Most often, Advocates volunteer, for these reasons:
- Continued service from the marketer. Advocates think you’re the best. They want to keep you going so you’ll always be there to serve them.
- The Equity Theory: People constantly assess the relative equity of their involvement. Those customers who feel they are receiving more than they deserve from a transaction or relationship also experience a psychological need to restore balance.
- “You owe me one. ” When you perform well for referred customers, you make the Advocate look good. In some ways the referred customer “owes one” to the Advocate. There’s definitely an ego trip in it for the Advocate. He or she becomes the authority, the discoverer.
- Compensation from the marketer. If the compensation is held to a reasonable level, it’s worth considering.
You can also fish for Advocates. Keep these strategies in mind:
- Encourage testimonials. This can be done through Customer Service with any customers who have had something special done for them. Or in customer research with a question like: “If you had to describe the chief benefit of our services to a friend, what would you say?”
- Launch an “MGM” program. Be careful, because this can backfire in a number of ways. Music Clubs, for example, found that customers were just using other or fictitious names to get free music. When Intuit tried a formal program to solicit customer referrals, the results were disastrous. Customers said, “You don’t need to pay us or give us anything to recommend your product. You just need to keep building a great product. Why don’t you put this money into delivering better customer support, better product, lower prices?”
- Stage events. Is there a particular life style associated with users of your product or service? Consider staging your own event or hooking onto someone else’s. The people who show up will generally be good Advocate candidates.
- Form user groups and advisory panels. Some who volunteer will already be Advocates. Others may have specific changes in mind for your product or service. If these changes make sense – and you make them – these users or advisors will become even more fervent Advocates.
Coming in January: Part 2: Converting and Empowering Your Advocates.
- Convert candidates into Advocates.
- Capitalize on your Advocates.
- Industry-specific examples of using Advocates.