Customer advocacy: Overall value, actionability, application to multiple marketing decision areas, case studies

1. Linking
Performance Insights
and Metrics To
Advocacy Behavior:
The Customer Advocate and
The Customer Saboteur
Presented by:
Michael Lowenstein, Ph.D., CMC
Executive Vice President, Market Probe

2. 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 program
management
• Author of 150+ articles and white papers, and several
customer-centric marketing books, including –
– Customer Retention (1995); The Customer
Loyalty Pyramid (1997); Customer WinBack
(2001), One Customer, Divisible (2005)., and…
– The Customer Advocate and the Customer
Saboteur (2011): Linking Social Word-of-Mouth,
Brand Impression, and Stakeholder Behavior

3. Seven S Customer-Centric Direction
Structure Systems
Strategy Style
Shared
Values
Skills Staff

4. Customer-Centric Enterprise Examples

5. The Case for Customer Advocacy….
…in marketing and services decision-making
guidance 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

6. What is Customer Advocacy?
- Advocacy is the highest form of customer (client)
involvement in a brand (business). It is strong
emotional connection with the brand and
enthusiastic support of the brand.
- More specifically, customer advocacy can be
defined as the degree of kinship with a brand or
company and the favorability and trust of brands as
a direct result of personal experience. It is
measurable at the individual customer level.
- Principally, advocacy identifies both the sources
of brand affinity and the monetizing downstream
customer behavioral impact of offline and online
informal communication, by individuals on a peer-
to-peer basis (and as it influences their own
downstream behavior, i.e. the self-perception effect
as a result of personal experiences).

7. What is the Difference Between
Customer Advocacy and Customer Alienation or Sabotage?
- Advocacy, principally based on customer informal offline and online
communication, and impression of the brand or vendor, has tremendous
power and potential to create desired high-end customer behavior.
- Informal, voluntary, peer-to-peer interaction, however, is a double-edged
sword: Customers’ negative communication, as much as praise, can have
damaging effect on other customers and non-customers, as well as the
communicating 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 of
trust and openness between individuals, and between companies and
their customers. It also incorporates today’s critical related concepts such
as objectivity, authenticity, belief, credibility and expertise, honesty,
sincerity, reliability and originality in both the online and offline
communication methods that they, themselves, have created.

8. Why is this topic so important NOW?
- Every company has pressure on marketing, sales, and
customer service budgets; and they are being tasked and
challenged to optimize customer loyalty behavior through
whatever cost-effective means are available .
- There is increasing understanding that brand favorability,
combined with social media and word-of-mouth based on
experience can be leveraged to enhance relationships with
customers (and can also threaten them); however, most
information through presentations and other content is
very general discussion of functional value delivery basics, or
a focus on abstract theory.

9. … and linking strategic value
delivery planning with
implementation
Identifying the customer focus
“line of sight”…
Customer Centricity Line Of Sight Concept

10. Customer value and
insight is (almost)
all about the data
and analytics

11.
Order & billing details
Life, Pensions & Investments
Travel, Tourism & Leisure
Retail Banking
Energy Utilities
Telecommunications
% with “good”
data
Contact details
Contact history
Comments & complaints
3rd Party information
Demographic information
Lifestyle information
0%
10%
20%
30%
40%
50%
60%
70%
80%

12. • Grow Revenue
• Position Brand
• Increase Share
• Decrease Risk
The Impact of Customer Influence has Pushed the
Strategic Relevance of Advocacy
Assessing 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 does
not capture the influence customers have on “other”
customers and partners.
Advocacy captures the influence the
customer and partner base have, in
addition to measures below.
80s:
Quality
90s:
Satisfaction
Late 90s:
Loyalty
Current:
Advocacy

13. Business has been searching
for the “best” metric(s) to
identify drivers and manage
loyalty behavior of their
customer bases.
Since 1980, we have seen
businesses support at least
10 major metrics.
Contingent on the information
need, product sector and
customer base specifics,
there continues to be some
use for almost all of these
metrics.
Latest metrics movement was
Customer Experience
Management, circa 2005.
1980
1990
2000
2010+
Satisfaction/Baldrig
e
SERVQUAL
TQM/CVI/CVA
Conversion Model/
Secure Customer
Index/Dick & Basu
Retention/Loyalty
Engagement
Six Sigma/TQ
Upgrade
NPS – Net Promoter
Customer Experience
Management
Customer Advocacy
Customer Feedback Tool
Evolution

14. Source: CompuStat and ACSI
-100
0
100
200
300
400%
-30 -20 -10 -0 10 20 30%
Sales annual growth
ACSI annual growth
R² = 0.00
Satisfaction Scores Do Not Predict Revenue Growth

15.
Optimize
Action
Insight
Single View(s)
Stored Data
Raw Data
Storage
Consolidation
Analysis
Deployment
Learning

16. Key Points of Emphasis
Customer Feedback Programs,
Need for Accountability and Relevance,
and
Correlation of Performance to Customer
Behavior and Business Outcomes

17.  What is the return on
customer investment?
 Where is the brand’s
competitive advantage
based on enhanced
customer experiences?
 Are we measuring the
right customer attitudes
and behaviors?
 Can the metrics help us
make key decisions and
allocate resources for
our business?
Most customer satisfaction research programs today come
under two types of pressures:
Accountability and Relevancy

18. The BIG ‘How-to’ Question
Is it possible to demonstrate the impact of
enhanced customer product and service
experiences on business outcomes in
monetary terms, and then take action?

19. The Decline of Traditional
Advertising and “Push” Messaging
As Decision-Making Influence
and
The Rise of Personal Experience,
Proactive Trust-Building, Informal
Communication, and Customer
Advocacy Behavior

20. 2007: Personal advocacy valued/trusted far more
Personal Advocacy
Advertising
Editorial
92
50
40
1977: Personal advocacy valued/trusted somewhat more
Personal Advocacy
Advertising
Editorial
67
53
47
Key Customer Decision Influence Trends

21. Don’t believe that companies tell the truth
in advertisements.
76%
Source:
Yankelovich, 2005
Trust other people “like themselves.”
Up from 22% in 2003.
68%
Source:
Edelman Trust Barometer
People Don’t Trust Advertising
. . . People Trust Others
Personal Advocacy Has Trust and Authenticity

22. …find the advice at least
somewhat credible.
84%
Source:
TalkTrack TM
, Keller Fay Group, 2006
Advice makes a big
difference . . .
56%
35%
55%
38%
28%
17%
14%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Somewhat (7,8) Series4
Credibility/believability of
what was heard
Likely to pass along to
others
Likely to purchase Likely to seek out
additional information
Personal Advocacy Has Credibility

23. Decline in
trust and
confidence for
large
institutions
Decline in
power and
influence of
push
advertising
Increasing
role of
Internet as an
enabler for
customer
choice
Growing
importance of
social
networks/media
Increasing
informal
communication
among
consumers
2012
Marketing and
Relationship
Realities

24. Thought Leaders on Drivers of Advocacy

25. Advocacy Enjoys Strong Support
“ Leading companies want to build strong bases of loyal, profitable customers who
are also advocates for the organization. Advocates spend more, remain customers
longer, and refer family and friends, thus increasing the quality of the existing
customer 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 single
most important initiative that cutting-edge, forward-thinking, innovative companies
will adopt.
– Hitachi Consulting
“Word-of-mouth is the primary factor behind 20 to 50 percent of all purchasing
decisions. And its influence will probably grow…
– McKinsey (2010)

26. New Reality:
More Active Social/Community Engagement
Leveraging Persuasive Power of WOM
Estimates from consulting
organizations now show that online
social communication may influence
up to 90% of consumer purchases

27. What are the ‘How-To’ Benefits of Advocacy?
Advocacy is the most contemporary construct to help
understand customer behavior in today’s marketplace.
Advocacy provides the strongest linkage to a critical metric of
business growth that is often ignored in all customer
satisfaction research: new client growth.
Advocacy establishes the strongest linkage to organic growth
of a business: retention rates and share-of-wallet growth.
Advocacy meets the criteria of an effective market
segmentation tool: size, stability and business value.
Advocacy is an ideal metric for tracking studies for both B2B
and B2C situations, where other single question metrics fail.
Advocacy helps define priorities and action plans to
enhance customer experiences and drive future behavior.

28. Customer Advocacy as a Segmentation
Device, a Key Performance Metric,
and Organizational Management Model

29. What is an Advocacy Classification?
Based on the level of customer involvement in your
brand or company, your customers can be segmented
into four behaviorally distinct groups:
Advocate Strong customer
involvement
Highest levels of favorability and future
consideration, creates positive buzz for
the brand
Allegiant Moderate customer
involvement
Reasonable levels of favorability, future
consideration and brand support
Ambivalent Weak customer
involvement
Below average levels of brand
favorability and future consideration and
weak brand support
Alienated Weak to negative
customer involvement
Low brand favorability; prefer
competitive options and creates
negative buzz for the brand

30. Positive and Negative Things Said Past 6 Months
Total
Software
Positive Said 5.7 6.4 5.2 4.4
Negative Said 4.3 4.5 2.9 3.2
Total
Software
Positive Said 8.2 10.6 6.7 8.7
Negative Said 0 0 0 0
An advocating customer speaks positively about
their experience and perception of the brand.
Advocates
Total Population

31. Most satisfaction research deals with customer retention and/or
loyalty and ignores share of wallet and new client acquisition in
linkage research.
Advocacy impacts all three.

32. 0.40
0.50
0.60
0.70
10% 15% 20% 25% 30% 35% 40% 45% 50%
Percentage of Advocates
Impact of Advocacy Improvement Through Performance:
Case Study of a Client
Share of WalletShare of Wallet
RetentionRetention

33. What is Market Probe’s Advocacy Ladder?
The Advocacy Ladder is a pictorial representation of a
company’s customer base into Advocacy segments.
Advocate
Allegiant
AmbivalentAmbivalent
Alienated
The best customers of your
brand. You need to engage
them.
Implement customer
experience improvements to
move them to Advocates.
Implement customer
experience improvements to
move them up the Advocacy
Ladder.
Implement customer
experience improvements to
reduce the Alienated group.
Move up the
Advocacy Ladder
Project Deliverables of
Advocacy Analysis
and Modeling

34. Perceptual Levels: Advocacy Evaluation
DeclinedImproved
Remained
Same
Declined
Remained
the same
Improved
• Perceived improvement in
performance has a definite,
positive impact on advocacy
level.
Performance Change Over Time
Advocate Allegiant Ambivalent Alienated
%TrueAdvocacy/Unconnected

35. Advocacy Driver/Swing Voter Analysis
Swing up and swing down analysis identifies the service attributes that
will drive customers from Alienated to Ambivalent, Ambivalent to
Allegiant, Allegiant to Advocate.
Analysis repeated
for brand, product
and key touch
point attributes for
input into an
overall
improvement
action plan.
10%
14%
17%
15%
22%
5%
1%
6%
12%
Staff always takes
the time to talk with me
I have an open and
honest relationship with the
people at my bank
Staff proactively suggests products
and strategies that will help me
Staff suggests only those
products that are best for me
Staff follows up with
information as needed
Staff delivers service
in a timely manner
Staff are trained to offer
reliable services
Staff appears competent
and knowledgeable
Staff makes me feel like
a valued customer
24%
21%
14%
1%
 Alienated  Advocate
Critical to Reducing Alienated Critical to Building Advocates
13%
13%
9%
6%
1%
Quality of Staff Services

36. Relationship Attributes for B2B Services Company
Swing Up (to Advocate)/Swing Down (to Alienated)
25%
33%
10%
4%
9%
19%
22%
10%
0%
1%
12%
55%
Is considered an expert
in the employment
services industry
Is a company
I can trust
Always respectful
and professional
Is socially responsible
Finds creative and
innovative solutions
Anticpates your
future needs
Critical to Reducing Alienated Critical to Building Advocates

37. 55%
29%
15%
1%
Alienated Advocate
Critical to Reducing Alienated Critical to Building Advocates
Swing Up & Swing Down Analysis

38. Midwest Bank – SMB B2B Customers
Impact of Expressed and Unexpressed Complaints

39. Convergent Validity from Parallel 2010
UK/Singapore Surveys
B2C B2B
Advocate
(%)
Alienate
d
(%)
Advocate
(%)
Alienated
(%)
Percentage of Customers 12 19 12 30
Behaviors
Share of Wallet 73 37 91 44
Retention 98 1 40 8
Positive Word of Mouth 7.5 2.0 5.1 1.2
Negative Word of Mouth 0 9.5 0 5.5
Attitudes (Top Two Box Scores/10 Point Scale)
Trust and Confidence 81 2 75 2
Reliable Service From Staff 71 3 50 0
Breadth of Accounts 62 1 45 0
Problems
Reported Problems 3 33 0 35

40. Advocacy Segmentation: Profile of Attitudes
(Top Two Box Ratings)
Critical Attribute
(Scale: 1 – 10; 9 and 10 Are Top Boxes)
Advocate Allegiant Ambivalent Alienated
Brand
Has earned my trust and confidence 81 28 6 2
It is a pleasure to do business with them 78 22 5 1
The bank is definitely for people like me 79 26 7 2
Staff
Staff makes me feel like a valued customer 75 22 8 2
Staff are trained to offer reliable services 71 20 7 3
Staff follows up with information as needed 71 18 5 2
Value Proposition
Breadth of checking and savings accounts offered 62 13 4 1
Variety of cards with different features suitable to you 53 11 4 1
Communication of different products and their features 60 13 3 1
Word of Mouth: Online
I frequently express my positive and negative experiences
about products and services in social media (YouTube,
Facebook, Twitter, Blog, etc.)
28 18 14 20
I seldom express my views on products and services in
social media (YouTube, Facebook, Twitter, Blog, etc.)
36 39 39 33
I do not participate in social media 36 43 47 47

41. Experience Quality
Examples of Customer Advocacy
Research in Action

42. Capsule Case Study #1
National Health Club Chain
The Issue/Challenge/Opportunity:
Declining membership, more attrition
and passivity, fewer new members.
The Research
Advocacy research among members; staff mirroring research
The Learning/Insights/Recommendations
Performance and relationship diagnostics (group classes, personal training
involvement, feeling valued, etc.) had low rating scores but high Advocacy
leverage; scheduling and staff training had the first priority for improvement.
Unresolved problems causing alienation. Also, staff significantly out of touch with
customers.
Client Actions:
Staff relationship training, more
scheduling and training variety, better
handling and resolution of member
issues.

43. Capsule Case Study #2
B2B Computer Customer Service
The Issue/Challenge/Opportunity:
Mandate for customer service to become
world-class, drive downstream business
The Research
Initial twenty country, worldwide customer advocacy research based on service
experience; impact on customer service operations in sixty total countries
The Learning/Insights/Recommendations
To strategically differentiate service, defined need to proactively ‘take ownership’ of
customer service issue, not just show knowledge, friendliness, courtesy, and speed
of responsiveness. This was found to be true for all service channels, products, and
countries studied.
Client Actions:
Major overhaul of service and training
processes based on customer insights.

44. Capsule Case Study #3:
Brokerage House Small Account Management
The Issue/Challenge/Opportunity:
Handling of small accounts at FAC rather than
individual broker; clients seem unhappy with
depersonalization.
The Research
Client advocacy research
The Learning/Insights/Recommendations
- Strong monetization associated with advocacy (current/future investable assets);
alienated unhappy with financial performance, lack of personal attention and
communication, not feeling valued
Client Actions:
Personalization at all touch points, delivering on
promises, more regular communication, advisor
training in personalized contact and expectations
management. Fee-based advisory services.

45. Customer-Related Publications…

46. Concluding Advocacy Value Message
“The benefits of building advocacy can’t be ignored.
Satisfaction and loyalty are important, but they’re old
news. It’s a new dawn in customer experience strategy,
where the customer controls over 50 percent of the brand
message. Forward thinking companies will be the ones
that identify and work with their customer advocates to
genuinely build trust in the brand, the customer base, and
the bottom line.”
Cultivating Customer Advocates: More Than
Satisfaction and Loyalty
2011 Peppers & Rogers Group White Paper

47. Customer Advocacy
and
Customer Sabotage
Q & A

48. To learn more - -
• About Market Probe’s work –
– Check out the book: The Customer Advocate
and the Customer Saboteur
– You can find the book on ASQ’s Store, at
www.qualitypress.org – item H1410
– Look for 2010/2011 advocacy articles on
CustomerThink (www.customerthink.com)
• Or connect via -
– T: 414-530-5422
– m.lowenstein@marketprobe.com
– www.marketprobe.com
• About the topic through ASQ –
– Search ASQ’s Knowledge Center
@ http://asq.org/knowledge-center/
Thank you!