In 2006, American Express became the first company to take on musician and activist Bono’s challenge to help the international fight against AIDS, tuberculosis and malaria. It introduced American Express Red, a credit card in the United Kingdom that would pay 1 percent of the credit card charges to a global fund. The donation would increase to 1.25 percent after charges exceeded £5,000 a year.
That’s one example of the ways businesses are responding to how customers actually make supplier and purchase decisions in today’s environment. Those of us who study loyalty behavior are finding that, when customers are considering alternative suppliers or making final purchase decisions, the intangible, emotional and relationship benefits must be actively considered. Tangible, functional and rational elements of the product or service, though also important, tend to be somewhat more one-dimensional and non-differentiating.
And it absolutely requires that the meld between the (emotional and relationship-positioning) messaging and the experience that companies create be as seamless as possible, totally supporting the value and brand promise. If companies want customers to advocate for them on the outside, they must, therefore, begin with the right impressions, the right media, the right processes, the right people with the right training and mindset and the right strategic experience coming from the inside.
When you’re marketing to customers, you must understand that customer commitment and advocacy behavior can result in one of two ways. In the first, companies endeavor to manage and influence attitudes and perceptions of customers (and prospects), as well as where, how and when communication takes place. We call this “inside-out” customer commitment and advocacy.
In contrast, “outside-in” commitment and advocacy occurs when customers informally influence the behavior of others (customers and prospects) on behalf of selected, (strongly preferred) suppliers. This takes place through one-to-one or group communication, including direct or indirect recommendation.
American Express Red is a good example of a company developing “inside-out” commitment. After studying the interests of its customer base for some time, and noting behaviors of an important segment that the company wanted to reach on a more inclusive, lifestyle-relationship basis, executives developed a value proposition specifically for high net worth “conscience consumers” (what some might call “cappuccino liberals”), people who feel strongly about social causes but have neither the time nor the real motivation to get directly involved. This market segment in the United Kingdom is estimated at 1.5 million and is projected to grow to 3.5 million by 2009. Thus, the company has created and sculpted a program expressly for a targeted, emerging customer niche; and the challenge is to make certain that every message and experience supports that concept.
‘Commitment and advocacy can identify the strength of a brand or company’s value proposition franchise.’
Another example of “inside out” is Commerce Bank, which calls itself “America’s Most Convenient Bank.” The fastest-growing financial services company in the United States has more than 400 “stores” in eight states along the Eastern Seaboard. It has a unique retail concept, built on an advanced service model (including seven-day branch banking, extended weekday and weekend hours and staff trained at WOW University).
Commerce Bank is a highly proactive, customer-centric culture, with programs including financial training for kids, aimed at building lasting, family-based relationships. Until recently, the company did almost no traditional media advertising; and this only changed because operations had moved into so many markets, and so quickly. The company’s model centers on small businesses and families, with a very localized, community-oriented focus, featuring the benefits of a proactive staff offering friendly, high-end service and convenience. Though Commerce Bank now uses Kelly Ripa (a South Jersey native) and Regis Philbin as spokespeople in its advertising, the emphasis is less on their celebrity than it is on building awareness of Commerce’s array of differentiated service features.
The way you measure customer advocacy (expressed as the active expression of commitment) enables your organization to identify what is driving both true advocacy behavior—leading to high wallet share—and indifferent or even sabotage behavior. If advocates can be ambassadors for a business through their positive word-of-mouth and other predispositions to behave, saboteurs can undermine a business through negative informal communication and other behaviors.
Our research at Harris Interactive into the underpinnings and drivers of customer loyalty behavior shows 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 this response to the rational and emotional components of value, 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. The following impact grid identifies the components of word-of-mouth communication, as well as each component’s potential impact on brand/supplier perception and customer actions.
If you want your business to successfully drive customer commitment and advocacy, the challenge is to create both inside and outside advocacy.
As good an example as Harley-Davidson (with its Harley-Davidson Owners Group: HOGs) might be of a business that has achieved this, IKEA is an even better one. Of all retail companies, IKEA’s combination of a unique selling concept, low prices and terrific customer service has yielded levels of customer commitment and advocacy unmatched around the world. At the same time, the company has balanced customer commitment with a peerless product sourcing, inventory management and staff training program.
Today, we are witnessing customer-driven marketing through empowerment and self-management; and companies have often found themselves in the back-seat of the new customer-supplier relationships. They must modify existing communication techniques, or create new ones, and rethink interactions between employees and customers so that they can be positioned to generate advocates among their customer bases.
How you use, or misuse, these new-age relationships and techniques, and how you assess the return-on-customer effectiveness, and level of monetization, of your initiatives will determine how well your company benefits from word-of-mouth.