WATERTOWN, New York- Customer advocacy is revolutionizing the way that businesses and customers interact. The classic marketing model goes something like this: first you need to convince consumers that they have a problem and that your product offers the solution. This approach to selling a product has worked for a long time but the rust is starting to show on this outdated model.
Businesses face an increasingly savvy consumer base, which is destroying the efficacy of the old sales tactics. What worked for door to door salesmen hawking vacuum cleaners does not work when people are as well connected as our modern society.
The internet allows shoppers to compare prices, research dubious claims, get peer reviews and make the purchase from a dozen different sources. All this can be done between stops on a bus from a device that fits in a pocket. In other words, we are too smart to be sold the old song and dance.
So businesses are adjusting the old sales model. Customer advocacy is one of the more promising approaches. Customers are becoming increasingly immune to classic advertising. The amount of marketing the average person is exposed to has increased and the results have become deluded. It turns out that the majority of consumers now make purchasing decisions based on recommendations from trusted sources, i.e. friends and relatives.
These trendsetters are amazingly influential in peer groups. That’s right, one in ten people influences the purchasing decisions for any given product. Who these people are changes depending on what is being sold, so while a customer might not know much about shoes he might be a fount of knowledge on all things dishwasher related. Customer advocacy programs try to influence these trendsetters who then convert their friends into paying customers.
It is a tricky proposition for businesses but the logic is that when companies focus on the actual needs of their customers and practice responsible business they are more likely to generate customer loyalty. These die-hard customers then become walking advertisements for the products they purchase. If you have ever known someone who only buys their tech products from Apple or only drinks Starbucks coffee you have met a customer advocate. The most successful companies where customer advocacy is concerned are those that offer more than just a product, they offer an experience to go along with the sale.
The customer-business relationship can go so far beyond the simple seller-buyer relationship. Companies that put an emphasis on working beyond the point of purchase have been seeing huge returns on investment. These are the companies that put extra effort into helping customers find what they want. It means recommending a product that might not be the most profitable but will best satisfy the customer’s needs. When something goes wrong, the best businesses will put time and effort into fixing the problem, even if it means doing so at a loss.
That single sale will make the company less money but the customer will leave much happier and is more likely to return to that business. Even better, they will recommend the company’s products to friends. The alternative, of course, is to have that customer leave unhappy never to return and take their nine friends with them. The added value of selling something for maximum profit is not worth the loss of nine sales in the future.
The companies that experience the most benefits from a customer advocacy program often have a strong responsibility program as well. Results have shown that a so called “ethical” company gains customer loyalty better than those businesses only concerned with profit. These are the companies that pay a fair wage, invest in ethical sourcing and put up sustainable practices.
Companies that take a long term approach also qualify. Those companies that focus on building up rural markets through investment in local people see strong returns in customer advocacy because it is a message that customers align with. Customers usually respond well knowing that the products they enjoy come from an ethical company.
This all seems amazingly simple now. Of course companies will get more loyal customers when they treat people better. Remember; though, that up until recently the main determining factor was most often price. As long as the product worked as advertised the best thing to do would be to sell at a lower price than the competition. Sometimes, even if the product didn’t work as advertised it could still turn a profit as long as it was cheaper.
If a company offers terrible service any customer that complains has a theoretical audience of millions. News reports about scandals and poor treatment of employees are becoming increasingly common place not because they are happening more often, but because the information age has made it increasingly difficult to hide these sorts of practices. A serious fear for corporations is that some underhanded practice will come to light and embroil the company in scandal or that a customer complaint will go viral.
Just take it from Bank of America, which had to change charging policies on debit cards after a customer complaint led to a 300,000 person strong petition. Netflix’s plan to spin DVD rentals into a separate business was quickly scuttled by an angry backlash from consumers. The power that consumers wield over companies is astonishing and it is changing the way that the business world works.
Walmart is undergoing a massive rebellion in its workforce due to unfair employment practices, as are many fast food giants. Mansanto has become synonymous with unsound practices and venomous litigation policies. The examples are endless and are having a very real affect on the business world.
So what will we see going forward? Expect to see more companies compete more fiercely in the realms of customer service, ethical behavior and overall consumer experience. Businesses will adapt to pay back into the communities where they operate. This new approach will benefit customers, who will have a better experience.
The advantages of a strong customer advocacy program are clear. Companies will seek to out do each other by aligning themselves with customers to gain the highest number of advocates.
Everyone from the impoverished third world factory workers all the way up to the retailers that feature a company’s products will benefit from the new approach. Happy customers will sell the company’s products with great enthusiasm. Unhappy customers who are internet savvy can cost a company literally millions of dollars in lost revenue. The best and brightest companies will be refining their customer advocacy programs or else risk falling behind the competition.
– Dylan Spohn