Customer Advocacy is a strategy for responding to the challenge of the empowered customer by assisting customers to find and execute their optimum solution in a given market. In doing so, - so the logic goes - it will be easier for companies pursuing advocacy strategy to earn a customer’s long-term trust, purchases and loyalty..
I have written the following four papers on the subject of customer advocacy, each of which can be accessed free from The OMC Group Knowledge Centre (registration now required except where stated) Alternatively, just click on each the links below:
Customer Advocacy in Financial Services
Building Trust and Relationships through Customer Advocacy (no registration required)
How to build brand value - become an advocate for your customers
How to harness the power of customer advocacy
Here is an excerpt from "Building Trust and Relationships through Customer Advocacy"
Defining customer advocacy
I define customer advocacy as an advanced form of customer-orientation that responds to the new drivers of empowered customer choice, involvement and knowledge. Customer advocacy aims to build deeper customer relationships by earning new levels of trust and commitment and by developing mutual dialogue and partnership with customers. Put simply, customer advocacy is doing what is best for the customer, even if that entails recommending a competitor’s product (see paper by Urban in Winter 2004 MIT Sloan Management Review for more on this). The hope is that this will earn greater levels of loyalty and spread positive word-of-mouth.
I identify four, interrelated market mechanisms for leveraging customer advocacy. Each can be illustrated by reference to companies that demonstrate innovative mechanisms for developing customer advocacy:
Focus on customer success
The main intent of organisations with a customer advocacy strategy is “customer success”. They aim to create more authentic customer relationships by providing expert levels of individual protection and support. In this respect, customer advocacy incorporates a customer consultant or market specialist role. As higher levels of trust, accountability and transparency build, customer advocacy is a means for organisations to resolve their customer’s problems, support their decisions and monitor the performance of their business partners. To achieve this successfully, they must step outside the firm-centric domain of "products and services" and into the customer-defined goal-oriented context of "outcome" and "success". As Prahalad and Ramaswamy note, these goals can vary in time and space for an individual customer so the need for the company to adapt its success-oriented offer to reflect this personal and flexible interpretation of value is absolutely critical.
Cisco Systems, the network solutions technology provider, has been developing customer advocacy for over a decade. Because customer satisfaction has been a core value of the organisation since its inception in 1984, Sandy Lerner, one of the founders of Cisco Systems, created a company specifically to accelerate customer success with Cisco network technology and applications that meet their business needs. Together with their partners, Cisco regards its overall purpose as helping customers improve their productivity, reduce operational costs, and get their applications and services to market as quickly as possible. More recently, with the creation of Cisco Services, the company has evolved from a product-based to a solution-based offer. In doing so, the company is responding to their customer’s demand for more proactive thought-leadership, increased knowledge transfer, tailored offerings, and consistent quality. Now, Cisco not only supplies the network, but also provides the support necessary to ensure that customers make the most of their networks. This allows them to build more integrated relationships with their customers and their partners. Uniquely, Cisco stages annual customer advocacy awards for business partners whose performance and behaviour is most aligned with Cisco’s advocacy principles.
Achieve greater marketing context
Customer advocacy firms seek to incentivise and involve customers in their marketing and branding efforts. They support customers with marketing strategies and tactics that help them to proactively and voluntarily convey their experiences to friends, relatives and colleagues. To do this effectively, they must integrate new marketing techniques into the overall customer experience by creating and facilitating environments and contexts for customers to become involved with the brand and its marketing. In this way, customer advocacy-based marketing avoids the overt “push” strategies characterised by most relationship marketing efforts.
For example, owners of Harley-Davidson motorcycles who are members of H.O.G. (Harley Owners Group) clubs around the world are very visible advocates for the brand (as discussed by Lowenstein, 2004). They not only buy the motorcycles, but also they actively accessorise their machines with Harley-Davidson equipment, wear Harley-Davidson clothing and participate in Harley-Davidson events. Since is foundation in 1983, H.O.G. has grown to more than 800,000 members, many of whom attend regular Harley Davidson events. Unusually, Harley-Davidson does almost no advertising or marketing itself. Instead, it relies upon its community of H.O.G. advocates to purchase both motorcycles and logo gear - and spread the word to others. Customer advocacy has an impact on virtually every area of company activity.
Foster knowledge-creating partnerships
Traditionally, firms have focused on gathering extensive data about their customers and then use the information to segment and personalise their offer and marketing communications. However, customer advocacy firms pursue alternative forms of customer knowledge. They recognise that by facilitating the creation and sharing of knowledge and competencies held by their customers, they are more likely to sense emerging market opportunities and to “unlearn” established assumptions and practices through open-mindedness, shared vision and an enhanced commitment to customer learning.
Firms practicing customer advocacy provide knowledge products for their customers to manage important projects and key purchases. Then, through a continuous process of customer knowledge co-creation and management, firms distribute their knowledge assets to generate mutual value-for-knowledge. Responding to the new customer value drivers is a process of perpetual learning and requires constant sensitivity and adjustment to the gaps that develop between customer requirements, their values and the firm’s offer. Such market-sensing is highly valuable and capable of providing enduring competitive advantage.
By supporting the creation and delivery of customer value, especially knowledge partnering, employees in a customer advocacy organisation can develop and apply advanced skills in servicing and resolving customer problems. They can reach outside the organisation to co-create solutions with their partners and customers. They can share knowledge with other team members and partners, enabling specialist and empowered communities of expertise to thrive; communities that can often define the external perception and experience of the brand. Such organisations provide their employees with the freedom to develop relationships with their customers to correct their problems and create knowledge. In fact, the positive impact of employee empowerment on customer relationships and the firm’s performance has been empirically validated in a study by Gremler et al. (2002).
Alaris Medical Systems, a leader in products for the safe delivery of intravenous medications, is also a pioneer in customer advocacy solutions. Through its two customer advocacy teams based at its San Diego, Ca. headquarters, Alaris actively solicits customer knowledge, turns it into fact-based insights and then applies the learning to address user issues and needs as well as to prioritise new business opportunities and product/service solutions. One of these teams, Clinical Support, is staffed by full-time professional nurses who provide 24-hour clinical resources for Alaris users. This support includes user feedback, assistance with product performance issues, clinical research help and answers to clinical questions. For Alaris, customer knowledge has been a catalyst for deepening the relationship between the company and its users.
Enable choice transparency
The fourth and final component of customer advocacy concerns the transparency of the firm’s offering and its willingness to do what is best for the customer, even if the recommended solution is provided by the competition. This may seem counter-intuitive to normal laws of market-based competition yet by emphasising positive partnership and support over traditional selling-based relationship strategies, customers are more likely to grant the firm their trust – and tell their friends and colleagues.
Choice transparency can be achieved through either online tools such as price comparison services, choice boards and personal decision-making guides or simply through employee recommendations derived from their own or the company’s knowledgebase. It may also be provided by other customers in communities operated by the customer advocating company.
Consider U.S. auto insurer Progressive. It has a long tradition of innovation through customer advocacy. One initiative that has been well received is its recent move to offer a price comparison service on its web site. Previously, U.S. customers’ ability to compare rates across insurance companies was both time-consuming and complex. Now, by entering their personal information, driving history, vehicle details and other data on the Progressive web site, the company enables its customers to undertake a simple and direct market comparison of rates from Progressive and its competitors.
E*TRADE, an online financial services company, provides a similar tool. Its online mortgage shopping service lets consumers objectively compare E*TRADE's offer with another lender's before applying. E*TRADE delivers on customer advocacy by telling the shopper when its offer isn't as good as the competition's.
The Cisco, Harley Davidson, Alaris, Progressive and E*trade examples all illustrate how customer advocacy is capable of unlocking new customer value. They each understand that there are mutual benefits to be realised by improving on their customer’s time, involvement, knowledge and access to markets whilst providing new forms of positive context and customer relationships. For example, although it sometimes loses out to its lower-priced competitors, Progressive’s customers often remain loyal simply because the service reinforces their trust in the business; this is underwritten by its corporate brand values of openness, transparency and “maverick” change aimed at constantly finding ways to do things better, faster and cheaper for its 12 million customers.
Yet these are not isolated examples. Recent research demonstrates that customer advocacy can have a positive impact on a firm’s performance. In 2003, Forrester Research asked 6,000 US consumers to assess the customer advocacy of their financial providers. They discovered that the firms with the best advocacy scores share a number of common characteristics, such as being customer-owned (eg. USAA, State Farm, and the credit unions), and that high scores strongly correlate with higher satisfaction and deeper customer relationships.
Feel free to download the papers at The OMC Group Knowledge Centre and let me know if you have any questions.
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