The Business Case for Referral Marketing

Considering referral marketing for your business? Smart move.

Referral marketing is a proven, highly cost-effective tactic to generate highly qualified leads, get customers, and boost awareness.

Plus, referred-in customers are proven to be 37% more loyal than other customers.

Gigaom Research sums it up this way: “Brands that invest in referral can gain a competitive advantage over those investing elsewhere.” 

Top 10 Facts about Referral Programs

Here are the top 10 facts about referral marketing programs:

1.     People are 4X more likely to buy when referred by a friend. Did you know that 2 out of 3 Millennials block ads? Most people don’t trust or even pay attention to ads, but referrals get people to buy. (source: Neilsen.)

2.     Referrals are the most effective form of lead generation for B2B marketers. Fifty percent of B2B marketers said referrals delivered the largest number of qualified leads for their company ahead of email (48%), live sales visits (46%), direct marketing (25%), and white paper downloads (20%). (source: Chief Marketer)

3.     Customer referrals can drive stunning profits. A study published in the Harvard Business Review showed that referred customers are 18% more loyal, 16% more profitable, and that companies earned 60% on referral rewards. (source: “Why Customer Referrals Can Drive Stunning Profits,” Harvard Business Review.)

4.     Referral marketing is a proven customer acquisition tool. In a study, 27% of marketers said they get more than half of their new customers from referral marketing. (source: “Workhorses and Dark Horses, digital tactics for customer acquisition” Gigaom Research.)

5.     Referral marketing provides multiple marketing benefits. In the same study, marketers cited four key benefits of referral marketing: acquisition (31%), conversion (31%), retention (26%), and awareness (23%). (source: “Workhorses and Dark Horses, digital tactics for customer acquisition” Gigaom Research.)

6.     Referred-in customers are more loyal. Referred-in customers have a 37% higher retention rate than other customers. Depending on much customers pay for your products or services, and how long they typically stay, this means that referral programs can generate millions in dollars in revenues for your company. (source: Deloitte)

7.     When friends refer, people buy. Word of Mouth is the primary factor behind 20%-50% of all purchase decisions (source: McKinsey)

8.     Referral marketing is one of the lowest-cost lead gen channels. B2B marketers rated “referral/advocate marketing” as the third lowest-cost lead gen tactic, behind only social media (not paid ads) and email marketing (house list.) (source: “Cost-per-Lead by Channel, according to B2B Marketers”, Software Advice.)

9.     Referral marketing also delivers among the highest in quantity and quality leads. In the same study, B2B marketers rated referrals as “very high in quality and quantity” along with trade shows and events and email marketing (house list.)

10.  Conversion rates for referrals are almost 4X higher than any other marketing channel. In a Marketo study of its customers, B2B marketers said the average conversion rate (lead to opportunity) was 11% for referrals. Following referrals are partner-generated leads (4.5%), inbound leads (3.8%) and paid marketing (about 3%.) The lowest-converting channel was email (.55%.) (Source: Marketo.)

 

 

 

How to Create Brand Advocates

Many CEOs and marketers ask me this question: 

"How do we create Brand Advocates?"

Here's the answer:

Surprise and delight your customers. Go beyond the expected. Create memorable, "WOM-worthy" experiences they'll tell others about. (Like I'm about to do now in this post.)

Hotel Mokara Creates Advocates

Hotel Mokara, a lovely hotel/spa on the San Antonio River Walk, knows how to create Advocates. 

My wife Debbie and I stayed at the Mokara last week while I was in town to speak at an American Marketing Association (AMA) San Antonio luncheon.

Early one morning, Debbie went to the lobby to get some work done when she realized she didn't have her "readers" with her. So Debbie asked the front desk reception person if the hotel had a spare pair.

("Readers" are reading glasses that correct close-range vision and sell for about $10. I've bought about 63 pairs of readers in the last couple years. I have readers everywhere...in my car, in my desk at work, in my tennis bag, in the bathroom. I once had to buy a pair of readers to find the readers I misplaced.)

Doak Walker to Debbie's Rescue

Doak Walker, Hotel Mokara Manager

Doak Walker, Hotel Mokara Manager

Doak Walker, Hotel Mokara's manager, overheard the conversation between Debbie and the front desk receptionist. He gladly offered to go to the local CVS and buy Debbie the readers.

Mr. Walker returned about five minutes later with a new pair of readers in hand. (He even called the front desk while he was in the CVS to make sure he bought the right magnification.)

Amazingly, Mr. Walker refused Debbie's offer to pay him for the readers. "Oh no," said Mr. Walker, with a smile. "Absolutely not."

Mokara Means Mo-Caring

Many brands try creating Advocates by showering customers and other influencers with swag, gifts, points, and coupons.

There's really nothing wrong with treating your customers well. (Debbie and I really appreciated the complimentary champagne and chocolate-dipped strawberries on our second and final night at Mokara.)

But it's remarkable service experiences and caring professionals like Doak Walker that earn genuine loyalty and advocacy.

Debbie can see that clearly, thanks to Doak Walker.

PS: Doak was named after Doak Walker, the famous Southern Methodist and Detroit Lions football player. There's an annual college football award called the "Doak Walker Award" that goes to the nation's top collegiate football running back. However, there's no family relation between Doak Walker the famous football player and Doak Walker, the hotel manager extraordinaire.

 

 

 

 

 

 

Checklist: Are You Following Referral marketing best practices?

Referral marketing can deliver “stunning profits” for your company, according to a study published a few years ago in the Harvard Business Review.

The study found that referred customers for a bank are 18 percent more loyal and 16 percent more profitable than non-referred customers.

https://hbr.org/2011/06/why-customer-referrals-can-drive-stunning-profits

Banks aren’t the only types of company that have benefitted from referral programs.

DropBox, the online file sharing service, is considered one of the most successful referral programs of all time. The company’s referral program helped DropBox grow from 100,000 to 4 million users in less than 18 months.

Is Your Referral Program Missing the Mark?

Despite these tantalizing numbers, your referral marketing program may not be delivering desired results.

This checklist of five referral marketing best practices will help you determine if you’re following referral marketing best practices:

1. Are you promoting your referral program effectively?

Like most marketing programs, the success of your referral marketing campaign depends a lot on effective promotion.

Are you using all of the promotion tools available to boost awareness of your referral marketing program and invite people to refer friends?

Here’s a list of 10 ways and places you can leverage to promote your referral program. How many of these are you using?

1.     Dedicated emails

2.     Email newsletters

3.     Reminders including footers in other emails

4.     Banners and buttons on your website

5.     Social outreach via your Facebook, Twitter, LinkedIn, plus other social channels

6.     In-product reminders. Invision is a good example of a company that does this well. It seems like about every 10 times I log in to Invision, I get a request to refer friends.

7.     Paid media including Facebook custom audiences

8.     Messages from all customer-facing employees like account managers plus your business partners to promote the program.

9.     Invitations to referral friends in post-purchase messages like Thank You pages

10.  Create a contest or sweepstakes. TiVo generated over 100,000 referral actions in a referral sweepstake managed and powered by Zuberance. http://zuberance.com/case-studies/

2. Is your referral reward and/or incentive compelling?

Rewards and incentives boost referral results but only if they’re compelling. Here’s what I mean by “compelling.”

·      Valuable: The rewards and incentives are viewed as valuable by your potential referrers and prospects. By the way, valuable doesn’t always mean money. DropBox gave referrers and their referred friends free storage.

·      Relevant: Your rewards and incentives should reflect the price of your offering. Tesla gave referrers $1,000 for each referred-in customer. That may seem like a lot. But the average price for a Tesla is about $70,000.

·      Timely: There should be adequate time for referrers and referred friends to promote your offer and receive incentives and rewards. This is especially the case for considered purchase decisions like travel. For example, a referral reward of $500 off for a trip to Europe if you book and take your trip in the next 30 days doesn’t make a lot of sense. That is, unless you’re on the run from the law.

3. Are you inviting everyone to refer friends?

Referral programs shouldn’t be limited to current customers and Advocates. Are you inviting all of these types of people to refer friends to you?

·      Current customers

·      Past customers

·      Prospects

·      Partners

·      Employees

Invite Detractors to Refer Friends?

We’re often asked this question: Should we invite Detractors (people who respond 0-6 to the 0-10 likely to recommend question) to refer friends?

You probably don’t want to send referral offers to customers who responded 1 or 2 to the 0-10 question. It may just irritate them more.

However, you may want to invite customers in the middle range of the Detractor category -- like 3-6 – to participate in the referral program.

Keep in mind that the Net Promoter scale is unforgiving. Only customers who answer 9 or 10 (highly likely to recommend) are considered Promoters. Many Passives and even some Detractors would refer friends especially if there is a compelling incentive.

4. Are you making it easy for referrers?

I’m an advocate of Bill.com, the online bill paying service. But I’m not an Advocate of the user experience of Bill.com’s referral program.

Bill.com does a good job of promoting the referral program on the home page of its website. The “refer a friend” call to action is right there in the upper right-hand corner of the site.

But the referral form doesn’t follow best practices:

·      It only gives me one way to refer friends

·      There is no social sharing capability

·      I must put my friend’s phone number on the form

·      I can only refer one friend at a time

Check it out for yourself: www.bill.com and let me know what you think.

Review your user experience for referrers and referred friends. Making it easy is super-important.

5. Are you personalizing the referral experience?

Lastly, here are several ways you can personalize the referral experience. Are you using all of these:

·      Putting the referrer’s name in the subject line of the email to the friend. Example: “Rob has an offer to share with you”

·      Putting the referred friend’s name in the body of the email. Example: “Debbie, I recommend this product to you.”

·      Enabling referrers to choose from a couple or three offers to share with friends.

If You Don’t Succeed at First…

You’d love to have the kind of success that DropBox did. Who wouldn’t?

Truth is, very few referral programs achieve success immediately. Here are the key questions to ask yourself:

1.     Are you carefully analyzing data from every element of the referral program flow and user experience? Where are the “drop off points” occurring? Are certain types of your customers participating at a higher rate in the program than others? Why?

2.     Have you tested other referral rewards and incentives? I know of brands who tried over a dozen different rewards and incentives before finding the right formula. Don’t over-react. Give rewards and incentives adequate testing time.

be patient and persistent

Your customers are inundated by marketing messages – about 5,000 each day – including referral offers from other vendors. Ongoing promotion is critical if you’re going to break through this communications clutter.

Feel free to reach out to me at rob@zuberance.com if you’d like to discuss your referral program.

 

 

 

How to Turn Passives into Promoters

Looking to boost your Net Promoter Score*?

One of the best ways to do this is to convert Passives (customers who answer 7-8 on the 0-10 likely to recommend question) into 9s and 10s (i.e., Promoters or “Advocates” as we call them.)

Passives are the “low-hanging fruit” on the Net Promoter scale. It’s much easier to convert Passives into Advocates than Detractors (customers who answer 0-6 on the 0-10 likely to recommend question.)

Here's why:

Many Passives actually like their overall experience with your product, service, or company. Making slight improvements to your products or customer experiences can “tip” Passives into the Promoter category, turning them into likely recommenders.

The 4-Step Process

Here’s a step-by-step approach for transforming Passives into Promoters:

  1. Ask Passives for their feedback. Ask Passives how you can earn their recommendations. For example, a full-service hotel might find that a common complaint among Passives is that its fitness center needs improvement. A consumer electronics company may find that Passives actually enjoy the product but find the set-up process difficult.

  2. Analyze Passives’ responses. This will allow you to spot trends. For example, you may find that Passives make certain suggestions most often. You may also find that Passives tend to be a certain type of your customers. For example, your hotel may have a high percentage of Passives among guests traveling on business vs. those traveling for pleasure. This can help you zero in on issues and customer types that require your attention.

  3. Take action. Actions do speak louder than words. So fix what is keeping you from earning Passives’ recommendations. Put new equipment in the fitness center. Improve service in your restaurant. Or offer free phone support for customers who need help installing your product. If more Passives are business travelers than consumers, focus on improving business travelers' experiences.

  4. Track results. Go back to Passives after you’ve made the suggested improvements. Ask the “likely to recommend” question again with the same Passives to see if they are now likely to recommend.

Tough Scale

Lastly, keep in mind the Net Promoter scale isn’t very forgiving. Only customers who are “high likely” or “extremely likely” to recommend are consider Promoters or Advocates. 

Customers who choose 7 or 8 on the 0-10 scale can be “somewhat” likely to recommend. (Or maybe they’re just tough graders.)

Show your Passives a little love and you could turn them into Advocates.

*Net Promoter, Net Promoter Score and NPS are registered trademarks of Fred Reichheld, Bain & Company, and Satmetrix.

 

How Brand Ambassadors can Boost Your Brand & Business

Brand Ambassador programs are a great way to nurture relationships with your most passionate Advocates and get more positive Word of Mouth or even sales.

Are you thinking about launching a Brand Ambassador program? Here's some info and insights:

What’s a Brand Ambassador?

A Brand Ambassador is an enthusiastic person who agrees to participate in a structured, ongoing program to recommend your company, brand, products, or services to others. Ambassadors may be:

  • Customers
  • Employees
  • Partners
  • Influencers

In most cases, Ambassadors receive perks like free or discounted products or services in exchange for their time and effort. Some Ambassadors receive pay, although I don't recommend this approach. (More on this below.) 

Ambassadors are “Power Advocates”

I like to think of Ambassadors as “Power Advocates.” These are Advocates who formally agree to help build your brand and business. (Of course, like any healthy relationship, this isn’t a one-way street. You need to love on your Ambassadors. More on this later.)

 

 

Benefits of a Brand Ambassador Program

A Brand Ambassador program can help you:

  • Increase awareness of your company, brand, product, or service at a fraction of the cost of paid media
  • Generate qualified leads, boost sales, and increase revenues
  • Drive advocacy, positive Word of Mouth, and social reach
  • Generate authentic, high-value content like reviews, stories, testimonials, blog posts, and more 
  • Get valuable product feedback and money-making ideas
  • Deepen relationships with valued customers and others
  • Defend your brand's online reputation from haters and detractors

Brand Ambassador Profiles

Brand Ambassadors are typically people who exhibit these characteristics:

  • Very enthusiastic about your brand, product, or service and eager to recommend to others and spread enthusiasm
  • Viewed as credible and trustworthy
  • Moderate to heavy users of social media
  • Often create and share content
  • Hundreds or even thousands of friends and followers online
  • Outgoing, personable, articulate

For Love or Money?

Some Ambassadors will engage with you simply because they love your brand, product, or service. 

But Ambassadors usually receive some form of compensation in exchange for their participation. This may be perks, free products, tickets to events, special access to premium content, etc. The rewards you provide Ambassadors generally reflect:

  1. The commitment (time, effort) you’re asking for from Ambassadors.
  2. The level of influence of Ambassadors. The more influential they are, the more you’ll need to reward them. 

5 Steps of Building an Ambassador Program

Here are the five key steps in developing an Ambassador program:

  1. Create your Ambassador plan. Clarify your goals, objectives, strategy, Ambassador profiles, programs, timeline, and budget. As part of this, create your Ambassador program terms and conditions (T’s and C’s.)
  2. Identify potential Ambassadors. Build a target list of segments and people within these segments you would invite to become Ambassadors. (See “How to Find Potential Ambassadors” below.)
  3. Begin recruiting Ambassadors. This can be as simple as sending an email to potential Ambassadors with links to a sign-up form and T’s and C’s. 
  4. Start engaging Ambassadors. Ask Ambassadors to participate in an activity. This could be giving you feedback on a new product, creating content, or sharing content you provide to them. (See the list below for ten ways to leverage Ambassadors.)
  5. Re-engage Ambassadors. Ambassador programs are usually ongoing programs, not one-time events. Re-engage your Ambassadors in other ways. (See the list below.) 

How to Find Potential Ambassadors

If your company is a small one, you probably have an idea of who may be willing to serve as Ambassadors. They’ve probably already recommended you countless times to their family, friends, or business associates.

However, you may need some help finding potential Advocates. Here are some ideas:  

  1. Look for customers who post highly positive reviews, stories, or other content about you online.
  2. Ask your sales team and other customer-facing employees for suggestions on who might be effective Ambassadors.
  3. Invite customers and others to apply to become Ambassadors.  Make sure to be clear about the qualifications and requirements.

Top 10 Ways to Leverage Brand Ambassadors

Here are ten popular ways to leverage Ambassadors. You can encourage and enable Ambassadors to:

  1. Create and share content such as reviews, testimonials, blog posts, tweets, and more.
  2. Share your brand content like videos, infographics, white papers, etc. plus special offers
  3. Refer friends and peers to you
  4. Serve as references for major deals
  5. Give you feedback on new products
  6. Provide ideas for improving your customer experience
  7. Help recruit other Ambassadors
  8. Launch new products
  9. Participate in company-produced videos, case studies, testimonials
  10. Represent your company at offline events like trade shows, seminars, and at online events like Google hangouts, webinars, and tweet chats

Measurement & Tracking

Here are some of the key metrics you’ll want to track for your Ambassador program:

  • # Ambassadors
  • # Ambassador actions
  • # content pieces created
  • # content pieces shared
  • # referrals
  • # impressions generated by Ambassadors
  • # re-Tweets, re-posts by Ambassadors friends
  • # clicks back to your website, landing pages
  • # conversions
  • Value of conversions

Keep in mind these are sample metrics. Measure what matters most to you.

Examples of Brand Ambassador Programs

  • Lulu Lemon is one of the best-known examples of a Brand Ambassador program. I like how Lulu Lemon shows photos and profiles of their Ambassadors on the company's public website. I recommend this approach in most cases. (Some of their Ambassadors are shown in the photo above.) The sportswear company has recruited thousands of athletes, personal trainers, yoga teachers, group exercise leaders, and others to become Ambassadors. Lulu Lemon groups its Ambassadors into three categories:
    1. Global yoga Ambassadors
    2. Elite Ambassadors Ambassadors. These are "elite athletes.
    3. Store Ambassadors. Ambassadors get free apparel. Here’s a page of one of Lulu Lemon's Ambassadors.
  • Maker’s Mark Bourbon has created a thriving Ambassador program with over 100,000 members. They reward Ambassadors with Christmas gifts, a personalized barrel of bourbon, inside information and discounts, plus invitations to special events, and more. Here’s a video created by Makers Mark Ambassador.
  • SolarCity has created a “Solar Ambassador” program aimed at generating referral leads. SolarCity pays Ambassadors $200 for each referred customer. (Referred customers also get one month service free.) The company also has run contests where Ambassadors get a chance to win “solar for life” or $15,000 for referrals. SolarCity has enrolled over 100,000 Ambassadors in the program. I think of this as more of a glorified referral program than an Ambassador program. Let's see if SolarCity evolves how it engages with its "Ambassadors."
  • Hootsuite, the social marketing platform company, has 1,400 Ambassadors. The company has grown the program from 55 Ambassadors only three years ago. Ambassadors, who are required to commit to the program for a minimum of three  months, are encouraged to provide product feedback, create and share testimonials, share Hootsuite content, and more. Hootsuite gives Ambassadors discounts on social media training and certification; online recognition; plus swag. Here's something cool: Hootsuite holds "Hoot-Ups," offline meetings where Ambassadors can celebrate their Hootsuite love.

 Here are a few other companies with Brand Ambassador programs:

  • Lyft
  • Uber
  • Fiskars (scissors) This is of the best-known and most written-about examples of Ambassador programs.  Fiskateers, as the company's Ambassadors are called, helped turn scrapbooking into an obsession and drove massive sales increases for Fiskars. The program has changed a lot over the years but it still is a "best-in-class" example of how to grow a passionate Ambassador community.
  • Footmark (workout bags)
  • Microsoft (More of a technical support community. Check it out at mvp.microsoft.com

Top 10 Ambassador Best Practices

  1. Set clear goals and measurable objectives for your Ambassador program
  2. Communicate clearly what your expectations are of Ambassadors
  3. Educate your Ambassadors about your company mission and values
  4. Make it easy for Ambassadors; give them tools that make it easy for your Advocates to spread positive Word of Mouth about you
  5. Make sure that Ambassadors are transparent about their relationship with you when they recommend you to others. When in doubt, disclose, disclose, disclose.
  6. Build relationships with your Ambassadors. Encourage their feedback. Listen, learn, and act. 
  7. Choose Ambassadors carefully. Make sure they will represent your company and brand well. They should reflect your company or brand's mission, value, goals, culture.
  8. You may want to gamify your Ambassador program. Create friendly competition that boosts participation, engagement, and results. Think leaderboards, badges, and fun titles for your top ambassadors. 
  9. You may want to consider creating an online community where your Ambassadors network with each other, learn about new ways to engage with your, view leaderboards, or more. 
  10. Give back to your Ambassadors in ways other than money. Promote your Ambassadors by following them and sharing their content or help promoting their careers and businesses.

Getting Started

I recommend that you don’t try to bite off more than you can chew. Start small with your Ambassador program. This allows you to learn and adopt. 

If you are a SMB, you may want to start with a handful of Ambassadors – like 10 to 25. You can always add more Ambassadors later.

A basic program as shown below is a good place to start.

"basic" Ambassador program:

Here's what you'll need for basic Ambassador program:

  1. An Ambassador gameplan
  2. T's and C's
  3. FAQ
  4. Someone to manage the program (estimate about 25% of one person's time.)
  5. Online tools for Ambassadors and analytics (can be provided by a third-party like Zuberance.)

"DELUXE" AMBASSADOR PROGRAM

Here's how you can step it up:

  1. Feature Ambassadors on your public website
  2. Create private online community for Ambassadors 
  3. Add an online forum within community
  4. Points, leaderboards, swag
  5. Create tiers and/or categories of Ambassadors
  6. Special, "Ambassador-only" online and offline events

Note that "stepping it up" means increasing Ambassador program costs. This typically includes devoting more people to manage the program plus additional software costs.

 

Tesla Referral Program Drives $28 Million+ for Car Maker

Tesla recently launched a referral program. Here’s an update on the initiative:

According to an article in Business Finance News, the top referrers in Tesla’s refer-a-friend program have referred 327 friends who purchased Teslas.

At an average price of $85,000 for a Tesla car, the program has generated $28 million for Tesla in revenues. (Keep in mind this is just the revenue Tesla got from the top referrers. The article doesn’t discuss how much $$$ Tesla got referrals from others who weren’t top referrers.)

As the article also points out, the referral program also enabled Tesla to increase awareness and acquire customers for far less than traditional marketing methods.

It appears that even brands like Tesla that enjoy very positive organic Word of Mouth advocacy can benefit significantly from a structured referral program.

A Smart & Inexpensive Approach to Customer Loyalty

Is your company struggling to keep customers? 

If so, you're not alone. Customer churn is a widespread problem costing business billions of dollars per year. 

  • Annual churn rates in the telecommunications industry are between 10 percent and 67 percent, according to the Database Marketing Institute.
  • Credit card companies suffer an annual churn rate of about 20 percent, studies show.
  • About 30 percent of people cancel their gym memberships each year, according to IHRSA, the fitness industry association. In some gyms, the churn rate is more like 40 or 50 percent.

Is Your Loyalty Program Betraying You?

The number of companies with loyalty programs and the dollars being poured into these programs is eye-popping.  

In the US alone, companies spend a staggering $2 billion on loyalty program every year, according to Cap Gemini.

While loyalty programs can be effective, many companies are still losing too many customers. Sometimes, it seems like customers are going out the back door faster than they're coming in the front.

Advocates to the Rescue

Did you know you have a powerful and untapped weapon in your loyalty arsenal?

This weapon is more effective and dramatically less costly than traditional loyalty approaches.

The loyalty weapon I'm talking about is your enthusiastic customers, i.e., your "Brand Advocates."

As your most enthusiastic customers, Advocates will gladly share with other customers the compelling benefits they're getting from your products and services. This bolsters loyalty by reminding customers why they purchased or subscribed to your product or service. 

They'll also happily educate customers about product/service features they may not be using and about new products and services. This helps increase product/service adoption and usage -- keys to retention. 

Three Ways Advocates can Help

Here are three example of how Advocates can help boost loyalty:

1. Make sure current customers see positive reviews, testimonials, and other favorable content created by loyal Advocates

Look at this authentic positive review by Virginia Leach, a loyal DISH subscriber. Virginia and her family are "very happy" with DISH and "would never switch."

DISH's opportunity is to showcase this positive review and reviews like this by other loyal subscribers to existing subscribers in email newsletters, customer emails, and other email communications.

2. Get Advocates to educate customers about value-added products and services

Value-added products and services can help keep customers from churning. But customers may not be aware of these products and services or their benefits.

Since Advocates are highly trusted and influential -- about 2X to 3X more than brands -- you should be encouraging and enabling Advocates to tell current customers about value-added products and services.

We managed and powered a program where Advocates for a fitness company told members about yoga classes, personal training, group exercise classes, and other ways people could get more value from their memberships.

This program helped the fitness company reduce churn by more than 10 percent.

3. Get Advocates to invite customers to join your loyalty program. 

A leading fast casual restaurant spends lots of time and money trying to get customers to join its loyalty club. 

The restaurant found that one of the best ways to boost loyalty program memberships was to encourage loyal Advocates to invite their friends.

Over time, Advocates became the #1 source of new loyalty club members. About one-third of all new loyalty club members were referred by Advocates. 

Not Just for Acquisition Only

Most Advocate marketing programs like reviews and referrals are aimed at getting customers.

But you should be leveraging your Advocates to help you keep existing customers. This is a powerful way to extend the value of your advocacy program and a smart approach to driving loyalty. 

 

 

Quick Quiz: Should Advocate Marketing be in Your 2016 Plans?

Are you creating your 2016 marketing plan and budget?

Here are five questions that will help you determine whether Advocate marketing should be in your 2016 marketing mix:

1. Do your prospects typically search online first before contacting you to see what customers say about your company and its products?

a. Yes

b. No

c. Unsure

2. How influential is online Word of Mouth (customer ratings and reviews; customer testimonials, etc.) on your prospects' purchase decisions?

a. Very influential

b. Somewhat influential

c. Not influential

d. Unsure

3. How much of your business comes from WOM and/or referrals?

a. 50% or more

b. About 25%

c. About 10%

d. Less than 10%

e. Unsure

4. Which of the following ways do you think your Advocates may be willing to recommend your brand(s) or product(s), assuming you make it easy and rewarding for them to do so?

1) Product reviews

2) Testimonials

3) Case studies

4) Referrals

5) Answering prospects' questions

6) Sharing your content with others

7) Sharing your promotional offers with others

8) Inviting others to join your loyalty program

9) Telling others about your new products and services 

10) Giving you ideas on how to improve existing products and services

5. Do you think your customers would be willing to publicly recommend your brand, products, or services (assuming you provide opportunity for customers to use screen names, if they want to)?

a. Yes, they would publicly recommend

b. No, they would not even if we allowed them to use screen names

Score your Answers

"Strong fit" for Advocate marketing:

Question 1: You answered "a"
Questions 2 & 3: You answered "a" or "b"
Question 4:  You picked three or more ways Advocates may recommend
Question 5: You answered "a"

Need Guidance?

Feel free to contact us if you're still unsure whether Advocate marketing should be part of your 2016 marketing plans.

rob@zuberance.com

debbie.nogawa@zuberance.com

How to Measure the Value of Advocacy

In the age of empowered consumers, most marketers agree that advocacy (getting highly-satisfied customers and others to recommend their brand and products) is valuable.

But how can you measure the value of advocacy?

Here's our formula:

Direct Sales Value

The direct sales value of advocacy can be measured by tracking the number and value of the following items:

  • Sales leads including referral leads generated by Advocates
  • In-bound traffic from Advocates' friends (clicks and traffic to landing pages, websites, etc.) 
  • Conversions that occur from Advocates recommending  brands and products (customers acquired, revenues, sales; new members enrolled in loyalty programs, etc.)

At Zuberance, we can measure all of these items via unique tracking codes.

Example

The direct sales value of an Advocate referral program for a consumer electronics manufacturer was $350,000:

  • Value of referral leads. The company generated 10,000 referral leads. The company valued each referral lead at $15. Thus, the value of the referral leads is $150,000. 
  • Value of sales. The company got a 10% conversion rate on the 10,000 referral leads, generated 1,000 sales. Each new sales was valued at $200 and so the sales value was $200,000.
  • Total direct sales value = $350,000.

"Customer Lifetime Value"

In the example above, the value of sales is actually higher than $200 per sale. On average each new customer acquired by the company remains a customer for five years. During this time, the customer pays an annual service fee plus typically buys add-on products. So the gross lifetime value of each new customer acquired via the referral program is more like $1,200. Make sure to take this into account when assessing sales value if your company uses a product + subscription-based services model.

In addition, by getting Advocates to share information and offers for the new product, the company also received media value from the program. The media value of referral programs often outweighs the sales value. So to calculate the total value of the program, the company needs to factor in the media value.

Media Value

Many advocacy programs are aimed at getting Advocates to recommend brands and products by creating and sharing/publishing product reviews and testimonials plus other content.

How do you place a value on these recommendations? WOMMA and others have spent years trying to figure this one out.

Our approach leverages the methods marketers use to measure other online media.

Advocate Media

Advocate content like reviews and testimonials are a form of media. Since user-generated content is 2X-3X more trusted and influential than brand content and/or paid media, Advocate content is the most valuable form of media. 

The media value of advocacy can be broken down into two categories:

  1. Content value
  2. Reach value

1. Content Value

How much would you say this story from an Advocate for Rubio's is worth to the restaurant? This Advocate loves Rubio's so much she named her daughter Ruby.

$10? $50? $100? More?

Brands and their advocacy partners should work together to agree on a fair value for Advocate content.

2. Reach Value

The second way of measuring advocacy's media value is by estimating and assigning a value to the reach of Advocate media:

  • # people reached when Advocates share content and offers with others online
  • # impressions as a result from this sharing (each person reached by an Advocate may view the item shared by the Advocate more than once)

Example

In the example of the referral program for the consumer electronics brand, over 100,000 Advocates shared information about the new product and a promotional offer. 

The average Facebook member has 350 friends, according to the Infinite Dial 2014 report by Edison Research and Triton Digital. If all 100,000 Advocates shared the info and offer with their Facebook friends, the brand would reach 35 million people on Facebook alone.

(The brand also enabled Advocates to share on Twitter and via email. In addition, the brand would reach more people when Advocates' friends re-post and re-Tweet Advocates messages.) 

Anytime Fitness Reaches Millions of Prospects via Advocates

Anytime Fitness, a leading fitness company, reached millions of prospects via a highly successful Advocate stories program powered and managed by Zuberance.

Danyeil, an Anytime Fitness member, shared her inspiring story of how she lost over 230 pounds with her several hundred friends and followers on Facebook and Twitter. Here's Danyeil's amazing Anytime story:

Danyeil's story struck an immediate nerve with her friends, followers, and other people. They re-posted and re-tweeted it hundreds of times, enabling Anytime Fitness to reach thousands of prospects via a single Advocate:

Anytime Fitness Reaches 10M+ Prospects

Over 3,500 Anytime Fitness members like Danyeil shared their inspiring stories. Anytime Fitness reached over 10 million people and generated over 30 million impressions from this one advocacy program. 

How much would you say this reach is worth? Is it worth at least as much as a paid ad, which most people don't trust or even ignore?

Inferred Sales Value

If Anytime Fitness included a promotional offer with Advocates' shared stories, it could measure the sales value of this program.

But even if Anytime didn't, they can be certain that Advocate stories like Danyeil's help Anytime acquire members. 

Research proves conclusively that Advocate content like reviews and stories positively impact purchase intent and purchase decisions.

Other Ways to Measure Advocacy

Depending on your program goals, you may also want to use other metrics that assess advocacy's positive impact on:

  • Online ratings and reviews
  • Engagement
  • Loyalty/retention
  • Customer or subscriber acquisition costs
  • Brand reputation
  • Advocacy score

Get more information about measuring advocacy's value in my book Brand Advocates.

How to Get a 35% Sales Conversion Rate

Does being a marketer ever feel like being the parent of a teenager?

It does to me.

Very little of what we say gets through to teens. And many times teens don't do what we ask them to.

Like folding that pile of clothes on their beds that is now reaching the height of The Matterhorn.

"Whatever"?!

Most consumers and business buyers are like teens.

They tune out our messages and don't do what we want them to, like buying our products or signing up for our webinars.

Is Anyone Listening?

Most people ignore, skip past, or mute ads. No wonder why online conversion rates are less than one percent.

In fact, studies show people are more likely to birth twins than click on a banner ad! 

Advocates Spur Friends to Action

While people may ignore ads, it's dramatically different when Advocates recommend brands and products.

Here are the actions that friends take when Advocates recommend brands and products:

  • 69% go directly to the brand's website to learn more about the recommended brand or product. (This means Advocates are driving large amounts of traffic to your website.)
  • 66% research the brand or product by using other online sources
  • 52% ask their friends about the recommended brand or product
  • 44% follow the brand on social channels
  • 35% buy the recommend brand or product

Mobilize Your Advocates!

The message in this data should be clear:

Given that Advocates have so much clout -- much more than ads, emails, billboards -- you need to activate your Advocates now.

35% Sales Conversion Rate?

Will you get a 35% sales conversion rate by mobilizing Advocates? 

That depends on many factors, like how compelling your products and offers are. But there is no doubt: when Advocates speak, prospects listen and buy.

I wonder if they could get teenagers to pick their clothes up off the bathroom floor?

 

Here's a press release about the Ogilvy study.