5 - Valuing Advocacy
The author feels that while there is value in attention, participation, and loyalty, they are less important than advocacy, because of its reach and credibility as a channel for brand communications.
Net Promoter Score
The Net Promoter Score asps participants one question: , "How likely are you to recommend the company to a friend?" Anyone who answers 9 or 10 is a promoter, 7 or 8 is a passive, and 6 or less is a detractor. The scores are compiled by subtracting the percentage of detractors from the percentage of promoters..
This was a popular metric for a few years, then fell out of fashion. It became popular when someone identified a statistical correlation between NPS and financial growth, and fell from grace when the correlation failed to hold true.
The NPS is a metric that gauges the sentiment of customers toward the brand, which seems far more logical than others metrics that attempted to do the same - and even though it is not linked to financial performance, the author feels it's good at doing what it was designed to do (and what the company does with the information has the potential to be used in a manner that grows the firm).
Valuing Word of Mouth
Another measure called "word-of-mouth equity" that is designed to identify the volume of conversation on a topic. The fundamental version of equation multiplies the volume of messages by the impact of those messages.
The volume is fairly straightforward (a count of messages), but the impact became rather convoluted, with a quadrant diagram considering the credibility and influence of the sender and network, the relevance of the content, whether the message was speculative or based on actual experience, etc. While this was a useful tool in measuring the success of advocacy campaigns, it does not provide an adequate assessment of the financial value.
One such metric is the customer referral value (CRV) which considers "the value of customers who joined because of a person's referral (divided by a discount rate) plus the value of customers who would have joined anyway (divided by a discount rate)"
While it has been a general assumption that a loyal customer advocates for the brand, the analysis found no correlation between the two. That is, a person who has a favorite brand does not necessarily advocate for it. However, there is some evidence the opposite is true - people who advocate for a brand tend to use it more frequently themselves.
Loyalists Aren't Advocates
The author describes a "doing-saying" gap in which customers with the highest lifetime values are not those with the highest referral values - they are loyal in their purchasing behavior, but are not the most vocal advocates of your brand. Those customers who are the most vocal are "solidly in the middle" ranks of TCV.
In her study, she found that there was absolutely no overlap between loyalists and advocates. Admittedly, her study was based on a service rather than a good, and was narrow in its focus, so there may be significant variation by product.
She imagines that premium brands have implicit referral value, though generally in a passive sense. A person who uses a premium brand as a means to achieve social status is likely very interested in having others notice the brands they are consuming, though generally by passive observation (they want others to see them using the brand) rather than by a vulgar declaration (telling other people is status-grubbing that often has the opposite effect).
This is contrary to the assumption that the most frequent users are the best advocates of the product. Nor does she agree with the notion that heavy users should be encouraged to advocate - it is not their natural inclination. Instead, take your advocates such as they are, provide them with better tools to spread the word and recruit more users. The loyalists are to be handled differently: up-sell them and cross-sell them, but don't expect them to become your salesmen. Doing so risks alienating them from your brand.
Making it Work
For most businesses, calculating the referral value of customers has been a challenge. The main issue is anonymity online - there is no certain way to connect the activity of advocating (or being advocated to) and purchasing. While various techniques have been used to recognize the behavior of individuals on the merchant site, it is channel-specific.
There can be a manual process, taking a sample of customers and using human investigators to discover their social media profiles, but the preference is to find an automated tool for doing so. To date, there is no such tool that does an adequate job.
The author describes a "Conversion Buddy" tool, which is the best of what's out there, which attempts to identify and track the behavior of customers on social media channels - but it's a significant trade-off of accuracy for the sake of simplicity.
The problem of coordinating activities in other channels (brick and mortar, catalog, voice, etc.) remains. Firms may use a sampling methodology or request shoppers to provide information about their online identity. The author makes the assumption that those who are heavy advocates or buyers will happily surrender this information. (EN: This is a dangerous assumption, but also implies that you cannot consider a convenience sample of people who provided that information to be representative of all customers.)
Identifying, communicating with, and offering incentives to current brand advocates is fairly straightforward, but a more difficult task is to identify prospective advocates to motivate.
There are a number of services (Peer Index, Twitter Grader, Klout) that will identify individuals who are active and influential in social media. The author considers Kloout to be dominant, as it rates influence on some of the more popular networks (mainly Facebook and Twitter) and considers not only the volume of posts, but interaction by others.
This score, or something similar, can be used to identify potential advocates and give priority to both prospects and current advocates who are more influential, as their advocacy is of greater value. It is also likely that influential people will eventually become aware of their value, and (justifiably) demand better compensation for their advocacy.
Advocating by Category
Customers do not advocate for all product categories equally, nor do shoppers seek reviews and ratings for all product categories.
There is also no correspondence between the degree to which a person will advocate or listen to advocates for a given product - that is, just because people are advocating doesn't mean anyone is listening, so the volume of advocacy on a given brand is not an indication of the degree to which advocacy influences shoppers.
For Love or Money
The "holy grail" of advocacy is to have a corps of "brand evangelists" who are so aligned with the brand that they advocate for free, and who have significant power to attract others to the brand. These individuals are not motivated by want of material compensation, but by their passion for the values and mission of the brand.
Evangelism is seldom accidental or short-lived: the people in this category know the reasons for their advocacy - and the reason motivates this action. With this in mind, the reasons people will tattoo logos on their bodies is understandable: the brand is a representation of their personal values, much as the symbol of a religion is adopted to suggest the values of its adherents.
The author provides the example of Lululemon, a maker of athletic gear and apparel, who has created an "ambassador" program for their enthusiasts and evangelists. Inclusion in this inner circle of customers puts them in a community of like-minded individuals, which includes Olympic athletes. The company does not pay for sponsorship, but their inclusion effectively gains that level of endorsement.
There's a sidebar about Pepsi's social vending machines, which enable people to treat their friends to a beverage. Users pay for the beverage, record a personal message or video, and provide information about the recipient at the machine, which would send a text message to their friend with instructions on how to redeem it. (EN: Looking into this, it was a concept prototype shown at a trade show, and has not been put into production. The technology media is quite impressed with the gimmick, but comments on articles suggest consumers are unimpressed and find it a bit absurd.)
Pretzel Crisps launched a Facebook page and sought to build audience by offering a coupon to anyone who would "like" them. The promotion gained them about 7,000 fans in two weeks and had a coupon redemption rate of 87% (no indication of how many printed the coupon). The offer was improved and the firm gained about 15,000 more fans and a redemption rate of 95%
The author points out that the practice of buying fans is considered distasteful by bloggers, but there is a difference between getting someone to write a flattering blog post and merely asking them to "like" your product on social media. There's also a note that this was a boost only to the firm's short-term revenue - and it is concluded that paid fans don't translate into regular customers, whereas legitimate fans (who like or blog without being paid) have a higher conversion rate and greater CLV.
Another case study is Carnival Cruises, who recognized that a cruise vacation is an experience that their customers would likely want to share, and created a number of features to facilitate this, such that the company name was mentioned when people shared their vacation stories and photos with friends in social media. The company considers this effort to be "a big success", growing its Facebook fan base from 45,000 to 335,000 in the past two years.
(EN: I don't mean to detract, but it's worth nothing that Facebook itself changed during that time, taking away the ability to become a "fan" of a brand to merely "liking" it, which made people more casual about becoming involved with brands. More recently, it kicked brands out of the "news feed" and makes people go to a separate "pages feed" to see messaging brands - a clear indication that users wish to separate their social activity with people from getting corporate marketing messages. As a result, "liking" a brand is less meaningful, and less valuable, now than before.)
Carnival is also instituted an "onboard credits" system that provides an incentive for customers to mention the brand in social media, a point system that earns discounts on booking or promotions they can redeem while onboard. There's some speculation about how they "would work" as an incentive for other behaviors.
Interview with Michael Lazerow, CEO, Buddy Media
The author presents some QA content from an interview with the chief executive of a media tracking firm that attempts to coordinate social behavior to buyers for their clients.
- Ultimately, the value of advocacy is in referrals. Getting "likes" and shares is a step toward that goal, which are valuable only when sales result.
- He has found that an increase in "conversation volume" is highly correlated with business results: when there's positive buzz about a brand, its sales and stock price trends upward.
- His sense is that technology is not encouraging behavior, merely channeling existing behaviors. People have always chatted about brands in social interactions, and this activity is moving online, but its nature has not changed.
- Timing is a problem: advocacy is random, determined by the advocate's desire to express appreciation rather than their own audience's need for information at a given time. A shopper looking for advice must be proactive in searching it out for himself.
- Net neutrality is also an issue. Companies seek to override other sources of information about their brands, still struggling for control of their image. It's futile.
- Advocates value reputation and community. They share because they gain esteem for sharing, and are influential when they have earned trust from their community. For the true advocate, it's not about getting something for themselves, other than social capital.
- Not all buzz is advocacy. People talk about brands they don't buy and products they find absurd. Consider that there is a lot of buzz about Victoria's Secret's diamond bra, yet few sales. Arguably, this creates awareness and drives the sales of other products.
- One interesting approach a few clients are taking is to use buzz as a criteria for positioning on their home page - featuring the most shared or talked-about product rather than the one the firm would prefer to sell. The most prominent story on the NYT site is the one that is the most emailed, not the most recent or most important in the eyes of the editors.
Some random factoids:
- The average Facebook share generates $2.10 in incremental sales
- The average conversion rate for a share is 10.2%
- Sales from shares peak on Wednesday and Thursday
- Sales from shares peak from 12:13pm to 1:45 pm on weekdays
- Women age 27 to 33 are the most active "sharers" and drive the highest conversion rates
- Twitter shares have higher click-through but a much lower conversion rate than Facebook