Neural, informal communication on behalf of a preferred brand or vendor can have significant, far-reaching impact. If the communication behavior is positive, the resulting return on customer (ROC) effect can create a corps of advocates who can readily attract others to the brand or vendor. When communication is negative, this behavior reflects indifference, and even sabotage, where the brand or supplier is concerned.
Word-of-mouth. Commitment. Advocacy. These are words, as well as concepts, that are on the lips and minds of virtually every marketer and customer market researcher today. Achieving the highest customer loyalty behavior is the desired ‘holy grail’; and the reality is that it can be remarkably easy to reach. You just have to know the code.
The ‘code’ is quite straightforward. It consists of defining and understanding the emotional and rational bonds which make up a supplier’s value proposition, as well as defining and understanding a customer’s reasons, conscious and unconscious, for having a relationship with that supplier. The emotional bonding elements are based on trust, a customer’s sense of personal assurance in purchasing and using a company’s products or support, and related emotions. It is very much a function of touch point process effectiveness and the strategic, and tactical, result of experiences. Rational, or tangible, elements are those things that we associate with cost and functionality: original price, cost to maintain, accuracy, completeness, reliability, and the like.
The conceptual base of commitment is that these emotional and rational bonds are the foundation of customer relationships. Customer relationships with suppliers have a great deal in common with human relationships. We identify these relationships at four levels, based on the type and degree of involvement and personal ‘investment’:
– Acquaintance – Relationship that is fairly disconnected, shallow and impersonal, expecting little
– Contractual – Relationship based on ability to provide rational, tangible, and functional elements of value
– Romance – Relationship characterized by emphasis on emotional (trust, assurance, support, communication) elements of value
– Commitment – Relationship which combines both rational and emotional elements of customer value
So, commitment level can help identify the relative impact of each relationship driver: corporate image and equity, policies and procedures regarding customer transactions, service delivery levels and breadth of coverage, product performance (quality-based elements such as accuracy, reliability, completeness, timeliness, etc.) and costs, both actual and relative to competition. The sum of understanding relationship components often comes back to trust conditions, leading to commitment on a rational and emotional basis. Ultimately, customer relationship, through commitment, leads directly to desired customer marketplace behavior.
It would be hard to argue against the idea that word-of-mouth, as both a communication medium and method to leverage customer actions in the marketplace, is a hot topic. Early books like The Tipping Point, BuzzMarketing, Grapevine, and The Influentials have painted background scenery for a play in which the featured characters are the customers, their peers (friends, colleagues, and relatives), and the companies which are trying to influence their behavior.
Why has word-of-mouth become so central to marketplace success? Understanding societal change and hyper-marketing can provide some important clues. Marketers, whether b2b or b2c, are now bombarding customers and prospects with messages and impressions at the rate of more than several thousand per day. Of course, the role of the Internet as a communication, purchase and information-gathering mega-source has had a lot to do with this; but, it has also become clear that people simply can’t, and won’t, absorb much of what ‘push’ advertising and promotional clutter creates.
When they are making product and service, or supplier, decisions, increasingly customers and prospects turn away from traditional print and electronic advertising and editorial content. What do they believe? Whom do they trust? If you answered peers, give yourself an ‘A’.
Studies conducted over the past thirty years have shown that the level of trust and value in information received via word-of-mouth has increased by 50% to become dominant, while traditional marketer-driven communication impact has declined. Simply put, people don’t trust advertising and promotion. They believe it is supplier-serving and untruthful. People trust other people, especially those ‘like themselves’. Word-of-mouth information is considered more interesting, understandable, reliable, relevant, objective, credible, and engaging. Studies have shown that three-quarters of Americans, for example, talk about at least one brand a day – and average ten brands in their discussions! Another major finding is that 15% of every conversation in America includes something about a product or service.
Advocacy, which we define as the active expression of commitment, is seen in such attitudes and actions as narrowed consideration set, strong brand favorability, and most particularly, positive, frequent, and voluntary informal communication on behalf of the preferred supplier. Active commitment, i.e. advocacy behavior, is at the crossroads of where word-of-mouth is trending. When the emotional and rational relationship elements of the value proposition are extremely positive, conditions are ripe for advocacy to be created.
In addition to being strong purchasers themselves, advocates can ‘dial up’ brand awareness and momentum within the marketplace through their social networks and voluntary referrals. On the negative side, it must also be recognized that disconnected and disaffected customers can become saboteurs, undermining brand and supplier perceptions. Identifying, and acting on, the drivers of negativism is at least as important as leveraging the positive drivers.
We believe it’s important to understand that customer advocacy behavior can result in one of two ways. The first way, which we identify as ‘inside-out’ customer advocacy, is where companies endeavor to manage and influence attitudes and perceptions of customers (and prospects), as well as where, how, and when communication takes place. Glen Urban, professor of marketing at MIT, outlined this very well in his book, Don’t Just Relate – Advocate; and the role of private and public communities, a key word-of-mouth vehicle, has been spelled out in multiple books, white papers, and articles.
‘Outside-in’ advocacy occurs when customers informally influence the behavior of others (customers and prospects) on behalf of selected, i.e. strongly preferred, suppliers. This takes place through one-to-one or group communication, including direct or indirect recommendation. Our technique for measuring customer advocacy, which exists as an extension of our commitment model, enables clients to identify what is driving both true advocacy behavior, leading to high wallet share, as well as indifferent, or even sabotage, behavior.
To summarize, our research, and the research of others, into the underpinnings and drivers of customer loyalty behavior show that commitment and advocacy can identify the strength of a brand or company’s value proposition franchise. Commitment, with advocacy at the top end of commitment, is the most actionable method of understanding what steps need to be taken, and in what order of priority, for organizations to optimize both employee and customer behavior.
And, word-of-mouth, having taken center stage as both a major communication medium and method of customer decision-making influence, requires incorporation into any concept or model of understanding customer behavior.