This article was originally posted on McKinsey&Company's Chief Marketing and Sales Officer Forum.
In this interview, Rob Fuggetta, the founder and CEO of Zuberance, discusses the role of brand advocacy in driving growth at the end of the customer decision journey.
In search of the holy grail: authentic recommendations
“In the social media age, the holy grail for marketing leaders is getting customers to authentically recommend you. Or as Antonio Lucio (Global chief marketing, strategy and corporate development officer, Visa Inc.) recently said, ‘recommendations have become the new advertising.’
The most critical element of brand advocacy is authenticity. That’s why we (Zuberance) strongly recommend to brands that they never pay or reward their advocates. The moment someone knows you’re being paid to advocate for something, it immediately devalues their recommendation. From our research, we know that the number one reason people recommend is that they want to help others. If you have a good experience, you want to tell others. Social media multiplies that effect. You just have to make it easy for your brand advocates to do.”
CMOs have fallen behind their customers
“There certainly are plenty of challenges in developing brand advocates. Some brands and industries just don’t attract passionate buyers. In other cases brands don’t have a direct relationship with their buyers. But the most critical issue in my experience is that many marketing leaders don’t fully understand social media and its potential for driving brand advocacy. They’re still trying to get their minds around SEO. But the customer is way ahead of them.
Many consumers ignore paid and owned media, and instead turn to earned media. But up to 70 percent to 90 percent of marketing spend still goes to advertising and promotions. Marketers are setting up Facebook pages and spending a lot of effort and money trying to followers. Or they’re using Twitter for customer support but they’re not thinking in terms of advocacy and harnessing the power of their customers.
But I really think this goes beyond the CMO. The question of brand advocacy should be at the top of the CEO agenda as well. Advocacy is strategic. Advocates drive profits. Companies with happy customers grow faster than those without. It just makes sense to me. You have to evangelize evangelism.”
Converging media help conversions
“Any marketing leader launching a new product needs to figure out how to integrate earned media into their mix of owned and paid media. There is no question that consumers trust earned media significantly more than paid or owned media. In a Nielsen survey from 2009, 90 percent of consumers said they trusted recommendations from people they knew. What’s really interesting, however, is the convergence of these three media mix types, and how that can help drive conversion rates.
We tried this with Tivo, a client of ours. We found brand advocates – those who were passionate about Tivo – and provided them a way to easily share a video about a new product, Tivo Premiere, with their friends. There was no offer, no cash reward – we just made it easy.
Based on our tracking, 5 percent of the people who received the video actually went to Tivo and purchased Tivo Premiere. Many marketing programs have sales conversion rates of less than 1 percent. Not only did Tivo see a good transaction rate, they also earned higher margins because they didn’t have to sell through 3rd parties because consumers go straight to their site.”
Creating a culture of customer obsession
“Often times I see companies act to optimize short-term profits at the expense of advocacy. They cut back on services or maintenance, or provide fewer checkout people. In their desire to generate profits, companies are often destroying the very thing that made them a great company.
People at Virgin, Nordstroms, Jet Blue get that. Intuit has done a great job of creating a culture of customer obsession. They’ve been asking their customers for years ‘how likely will you recommend this product to a friend?’ In the past, companies could get away with bad service. But today, word of mouth spreads like wildfire with social media. It’s not like what happens in Vegas stays in Vegas anymore; today it’s what happens in Vegas stays on Facebook.”