Study: Loyal Customers Are More Effective Advocates in Social Marketing
The more authentic the endorsement, the more effective it is in increasing sales for your brand. New research I presented with our social marketing group, BzzAgent, at this year’s ARF Audience Measurement 7.0 Conference shows how important loyal customers are to the success of advocacy marketing programs. Our study found that targeting people based on their purchase behaviors — along with social influence scores and demographic profiles — drives higher levels of in-store sales than using social scoring or demographics alone. In fact, advocacy programs focusing on loyal customers increased sales by an average of eight percent. This is 19 percent higher than previous studies using demographic targeting.
But it appears the benefits don’t end there. These advocates have a more authentic and personal connection to the brand so it’s likely they will keep talking long after their involvement in a program ends. The shopper-targeted campaigns in our study saw sales lifts continue at levels averaging 50 percent of their peak as long as six months later.
Today, advocacy marketing is big business. While trust in traditional media has plummeted, trust in earned media has risen 18 percent since 2007. According to Nielsen, 92 percent of people today trust earned media, including recommendations of their friends and family, more than traditional media. One national retailer estimates that improving advocacy among their customers can be a $5.3 billion opportunity.
It seems obvious to focus on loyal customers for advocacy marketing, but most marketers are not doing so. Many don’t even know which of their customers are active in social networks. Their customers are anonymous online and the conversations they have about the brand aren’t connected to in-store purchase activities. Those with the potential to be persuasive advocates are not recognized or engaged in a personal way.
Instead, many marketers target based on demographic profiles (collected by surveys), the brand’s Facebook/Twitters followers or by scores measuring their social influence. These consumers may be social-savvy, but they don’t have a strong connection to the brand. Their advocacy can lack in-depth personal experience and be short-lived, limiting their influence on sales of the product.
Our study indicates strongly that targeting customers based on their purchase histories (collected by retailer loyalty card programs), makes a big difference in the quality of the advocacy created and, thereby, the impact it has at the cash register. It’s the difference between asking them what they like to buy and seeing what they’ve actually bought. The ultimate goal is finding those customers in the right demographic target, with a relevant purchasing history, who have active social media followings.
Discussion Questions
Discussion Questions: As social media continues to transform how brands and retailers engage with their customers, do you see advocacy becoming a more solid component of the marketing mix? What programs or activities have been effective at driving high-quality, meaningful advocacy in social media?
I believe we’ve heard before that there is a better opportunity to increase revenue among existing positive relationships than to go out and develop new customers. I think that is the point of the article.
Absolutely. The Internet and social media allow for a dialogue between marketers and customers in which other customers can also engage. Social media represent the digital version of the back yard fence with the added advantage of the marketer being able to listen in on and participate in the conversations. The key is to listen and engage and avoid the temptation of using this media in the same way as traditional media, namely, to sell something.
Listen, engage, and avoid interruptions designed solely to sell. The transparency of social media both limits and expands its usage.
You don’t target to get advocacy. You don’t look at demographics and then push to gain the advantages that result from referrals, blogs, product reviews, etc. Advocates are the same thing as loyalists, fans and, ultimately, best customers who live and breathe the brand.
What today’s marketers need is a plan on how to identify their customers to then uncover who their advocates are or can be in the future. The breaking point is not having the process/methods in place to initially identify or encourage self-identification. In turn, you need to source technology partners that have the capability to accept information on an omni-channel basis in order to match purchases, social behaviors, store/event visits, product reviews, etc., so that you have a single view of the customer.
We are at the beginning stages of giving back to the advocates for “soft” non-purchase behaviors as part of a recognition/reward program.
The goal of building the number of advocates should be part of any retail strategy. The tactics for achieving this strategy should cut across marketing vehicles, customer service and management. When a retailer focuses on pleasing consumers at every level of interaction, it builds advocates. Advocates, in turn, become part of that retailers support system, by telling friends and family about their positive experiences.
There is advocacy and there is advocacy. And as I think about it, there is also advocacy.
Level 1 Advocacy is that I buy the brand repeatedly because I like it, it’s cheaper or whatever. I might click “Like” on a brand’s Facebook page but the truth is I don’t really care if you buy it or not. Like ‘talk’ social media is cheap.
Level 2 Advocacy is that I tell you about the brand’s advantages and benefits IF the occasion makes it opportune to do so. E.g. I’m hanging out in your garage while you failingly try to get the blade off your rusty lawn mower and I suggest trying my Liquid Wrench because I love this stuff.
Level 3 Advocacy is when I actually take a risk and go out of my way on behalf of a brand I’m loyal to. E.g. As I notice you pulling into your driveway I say to you, “Bob I couldn’t help but notice that your lawn sucks compared to mine. Why don’t you try this MiracleGrow fertilizer I use all the time?” Of course if you want to be invited to the neighbor’s BBQ you’d do it a little smoother than that, but you get the idea.
Having customers who will actually take a risk and fight for your brand is, I believe, the holy grail of loyalty.
To answer the first question, advocacy marketing is the new direct marketing — with an extended reach and far greater impact. As for the second question, I’m still looking to find one that is effectively capitalizing on the opportunity.
Advocacy is always there in retail marketing, though the channel has changed. Used to be that advocacy came from customer testimonial letters posted on the front door and letters to editors in the local paper. Now it is posting on Twitter, Facebook, YouTube, etc. The key today is that retailers need to loop back and promote the advocacy where the shoppers are back to their own brand locations online.
Advocacy has always been a key component of a smart loyalty marketing strategy. Traditionally, advocacy was manifest in “referral programs.” Social media only enhances this element and provides an amplifier that is scalable, digital and thus more easily measured; and of course, more real time.
“The more authentic the endorsement, the more effective it is in increasing sales for your brand.” Agreed. And the more you “target” someone, the less authentic their endorsement will be…this sounds like a self-defeating exercise.
With Coca-Cola topping the “Interbrand” Global 100 Brands with a brand value exceeding $71 billion in their latest report (http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2011.aspx), I would look at how the very few CPG and retailers made this list and what they are doing in social media. The majority of brands listed in this report truly engage their customers, to say the least. The challenge is to find those precious few aspects of the brands that are repeatable in your own organization. I.e., what does Coca-Cola, Apple, etc., do to transform social media activity into “social business”?
Good comments and discussion. Thanks!
Although not picked up in the discussion much, I wanted to call out a key highlight to me … which was the power of connecting advocacy and shopping data (plus demographics) at a customer level. Very few brands have been able to link these assets.
The Shopping data was really powerful in a couple of ways that profile or segment data can’t achieve. First, it could “close the loop” by measuring the sales impact and accountability of this kind of marketing. Second it allows you to really focus who you reach out to in the first place for effective social marketing.
While we all know that not all customers are equal and that not all fans/followers are equal, it’s quite another to …
(1) know exactly who your best customers/shoppers are
(2) overlay who your best fans/followers are
(3) be able to reach them personally
(4) be able to measure the sales and loyalty impact of the marketing campaign to these individuals in the short and long term
(5) measure the impact of their influence on others over the short and long term
(6) lock-in learning by creating new data on response and impact and do it even better next time
I’d be interested in comments on this side too and hearing about results others may have seen in this kind of work.
I’m 100% in support of targeting those who already are buying the most of your product. However, I’m very leery of calling these people loyal, given the massive amount of data on movement of shoppers between “loyalty” buckets with apparent abandon. That is, those who are loyal today are very unlikely to remain loyal tomorrow.
The principle of focusing on those who buy the most (recently,) is founded on two ironclad facts: any increase in sales among this group will far outweigh the impact of lesser “segment’s” increases; and those who buy the most have the greatest unfilled acceptance/desire for even more.
This last fact is HUGE, because the reason they are already buying a lot is because the product is meeting their needs in a huge way, on emotional and every other level. Do you think you could sell more sex? End of argument.