The movement of executive KPIs from customer satisfaction to customer advocacy reflects the desire of businesses to achieve a deeper level of engagement with their customers in order to achieve a greater share of wallet and loyalty.
But should we be prioritising advocacy as a key business measure? Are there any downsides to encouraging advocacy?
Fifth Dimension conducted independent research to measure the impact of advocacy on the purchase decision process of 1,000 people across 30 different product categories and found the greater the levels of advocacy that exist in a market the weaker the long term relationship between brands and consumers.
There is a tipping point, above which, the influence of advocacy provides greater benefit to the consumer than to the brand as the brand’s level of direct influence on decision making is reduced.
By encouraging consumers to make recommendations for your brand you are putting them in an environment where they are more likely to receive recommendations of your competitors. Nurturing advocacy as a channel increases your brands competitive set. We can see that as the level of advocacy in a market increases the more consumers choose or purchase brands they have never dealt with before. So advocacy has not only increased their competitive set their trust of that advocacy has increased their likelihood to trial new brands.
We are creating a situation where as the level of advocacy grows, traditional mass marketing, which we can control, is decreasing its share of voice, and advocacy, which we cannot control, is increasing in voice and level of influence.
Jagermeister is a good example of how this market dynamic works. In 2006 Jagermeister was the fastest growing spirit in Australia despite having virtually no marketing activity. Our research at the time showed the growth of the brand was inextricably linked to the geographic spread of strong consumer recommendations. The brand had been hijacked.
While Jagermeister is a classic case study of how you can benefit from consumer advocacy when you are looking to enter a market it also demonstrates the pitfalls.
Today, despite significant investment in marketing activities, Jagermeister sales are below what they were several years ago as consumer advocacy has moved to other brands and experiences. Customers did not have a direct relationship with Jagermeister to maintain a connection with the brand. Their trust lies in the advocacy channel itself.
Customer advocacy is here to stay, and while we cannot control advocacy, with a greater level of understanding of the dynamics of how advocacy works we can develop strategies that can take advantage of advocacy as well as protect our brand from it.
Lyndall Spooner is managing director at Fifth Dimension
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