Why is customer advocacy becoming so important? What are the benefits of effective customer advocacy? Identify three key reasons customer advocacy is becoming increasingly important: including evolving customer expectations, the interrelated nature of functions and departments, and limited time and resources. Identify the downside of not having an effective customer advocacy initiative, and the upside of customer advocacy that resolves problems and improves customer experiences.
- 70% of Fortune 500 companies that existed in 1990 were gone by 2015. In many cases, there were dramatic changes and disruptions in markets. But too many were also a matter of companies losing focus on adapting and doing what was best for their customers. Let's explore why customer advocacy is so important and some of the benefits it brings. There are three developments that create the need for customer advocacy. One is that customer expectations are evolving rapidly.
Ideally, the organization's products and services are keeping pace if not leading the way. But even in the best circumstances, there are sometimes gaps between what customers expect and what actually happens. These are opportunities to preserve those customers' good will. This is also the chance to prioritize solutions and innovations that potentially impact many other customers. The second development is the interrelated nature of functions and departments. In a simpler day, products were produced by one area, and marketed, sold and supported by others.
But in today's socially connected world, customer reviews and customers who are influencers are a vital part of healthy marketing. Product design, marketing, and customer service are more intertwined than ever. And customer advocacy is essential to ensuring that we are focusing resources and capabilities on what really matters to customers. A third development is the importance of using time and resources wisely. Changing markets and new ways to reach and serve customers mean that any organization needs to use time and resources well to keep pace.
Without an effective approach to customer advocacy, customers and problems making the most noise will get the attention on a case-by-case basis. But that doesn't mean there aren't other issues that are just as important. You could be misapplying resources and allowing damage to your brand. In his book, Customer Experience 3.0, John Goodman refers to what he calls the iceberg effect. Research reveals that most companies only hear from a small percentage, often just 1% to 5% of customers who encounter problems.
So for every 10 complaints, there are anywhere from 200 to 1000 customers you don't hear from. And since there's commonly a 20% drop in customer loyalty when there's a problem not brought to the organization's attention, those ten complaints could represent a loss of anywhere from 40 to 200 customers. Consider the average value of a customer to your organization and you'll likely see a very compelling financial case to support customer advocacy. There's also a powerful upside to harnessing customer advocacy into better customer experiences.
Some of the benefits include repeat business, positive word of mouth, lower marketing costs, reduced service costs as root causes of problems are addressed and others. Net Promoter Score, created by Fred Reichheld, is a popular survey methodology that could be considered a proxy for customer loyalty. It's based on the question, "How likely is it you'll recommend us to others?" In their book, The Ultimate Question 2.0, Reichheld and his co-author, Rob Markey, point out that companies that have the highest net promoter scores in their categories grow at over twice the rate of the category average.
Customer advocacy is essential to effectively resolving problems and creating better experiences for customers. And the research is clear on this point. Better experiences lead to big returns.
- Benefits of customer advocacy
- Taking action to learn about your customers
- Evaluating results
- Turning customers into brand advocates
- Keeping momentum
- Developing a culture of customer advocacy