Top 3 Ways to Turn Customer Feedback into Customer Advocacy

By Nancy Parra
on 7 November 2018

Positive word-of-mouth, customers and clients who advocate for your products and services, customers who stay for life and tell everyone they know about your company — this is what all businesses strive to achieve. It is also something companies struggle with day in and day out. In fact, we all want the magic bullet that drives the customer advocacy growth flywheel.

“Advocate Marketing is the art of identifying your highest-potential customers, nurturing their potential, and motivating and empowering this ‘Golden 5%’ to preach positive about your company.” ~  Lee Marc Stein, President, Lee Marc Stein Ltd.

Why Customer Advocacy?

Four Ways Advocacy Impacts Your Bottom Line
  • Win New Customers — Leverage word-of-mouth marketing to build strong acquisition campaigns and create brand loyalty through real-time customer feedback.
  • Increase Revenue —  Loyal customers spend 67% more than new customers. (Edelman)
  • Reduce Churn —  Loyal customers stay with you longer.
  • Minimize Cost of Acquisition (CAC) —  Less reliance on paid channels for new business.

In short, it makes the most business sense. Here is some math to prove it.

Lifetime Customer Value

The lifetime customer value can be measured and calculated. It’s the monetary value of a customer over the duration of their relationship with your company. (The key word here is duration. Clearly the longer the duration, the more valuable the customer.)

Bain & Co (of NPS fame) provide the framework for calculating LCV.

Lifetime customer value = (# of years a customer stays active x annual variable customer contribution) discounted + referral value.

Customer Advocacy Lowers Churn

Wikipedia says, “Churn rate, in its broadest sense, is a measure of the number of individuals or items moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support.”

Think of customers as sand in an hourglass. The less sand that leaks out the more growth for your company. In other words, you want to narrow your churn keeping most of the sand in the top of your hourglass. Happy customers are more likely to stick.

The Value of Referrals

Most companies, regardless of industry or segment, often fail to take into account the actual value of a positive or negative referral.

Here’s another handy equation from Bain & Co, the godfathers of NPS:

Referral value = (% of new, incoming customers via referral x # of new customers x customer lifetime value) / # of referrals

83% of consumers are willing to refer after a positive experience—yet only 29% actually doTexas Tech University. Why? Because no one is asking them for a referral.

Did you know that according to the  Wharton School of Business the Lifetime Value for new referral customers is 16% higher than non-referrals?

Customer advocacy leads to growth.

Advocacy-based Growth

Happy customers are returning customers, but they do more than return, they bring their family and friends with them.  Think of customer advocacy as a flywheel where multiple parts keep building momentum to drive growth. How do you ensure your customers are happy and become advocates?

Customer Feedback is the Key

How to Create Customer Advocacy

First of all, be consistent. “Customers want a consistent and predictable experience when they do business with a company,” says Shep Hyken, Author of The Cult of the Customer.

Think about it. Consistency can create confidence, which can lead to repeat business and that repeat business can lead to loyalty and ultimately advocacy.

“Periodic spurts of excellent customer service won’t make up for inconsistent service day in and day out,” Hyken says.

We are creatures of habit and when we find something that works, we don’t want to give it up.

“Advocates think you’re the best. They want to keep you going so you’ll always be there to serve them,” says Stein.

Second, create the experience your customers want/need, not what you think they want/need. How? By knowing your customers and understanding their needs at every point in your customer journey.

“People constantly assess the relative equity of their involvement. Those customers who feel they’re receiving more than they deserve from a transaction or relationship also experience a psychological need to restore balance,” says Stein.

Third, empower your customers to become the authority, the discoverer of your product by ensuring every customer receives phenomenal products or services.

“When you perform well for referred customers, you make the Advocate look good. There’s definitely an ego trip in it for the Advocate,” Stein says.

There’s nothing worse than recommending a product or service and then having your friend report a bad experience.

Action and Automate Customer Feedback

Building a customer feedback program can help ensure you are consistently giving your customers what they need, want and expect.

Segment and automate a simple NPS survey to go out via email or SMS after a targeted date or transaction to measure your customer experience. Ask “how likely are you to recommend us to a friend or colleague?” Then give the customer a chance to leave a comment.

Once you ask them — TAKE ACTION. Taking action creates consistency and a customer relationship. By addressing all the responders quickly, and with a cohesive plan, you can build relationships with your customers. Relationships create advocates.

Empower Your Advocates

There’s a famous story of the company Intuit trying a formal advocacy program to solicit customer referrals. The results were less than stellar. Customers reacted by saying, “You don’t need to pay us or give us anything to recommend your product. You just need to keep building a great product. Why don’t you put this money into delivering better customer support, better product, lower prices?”

In some cases, like Intuit, advocates have all they need to advocate for the company. They fully understand the benefits and can and do make referrals with no help. But sometimes your advocates will need something more to get them to talk about you. Giving them a story to repeat is a great way to empower them. How do you do that? It could be as simple as reaching out after you get a survey back. How many times have you heard someone talk about how one company reacted to a comment?

Here’s an example:

In Portland, they tested e-scooters from multiple companies as a way for commuters to get from one transportation hub to another. After every use, the companies sent quick NPS surveys. The people in my office were talking about this.

“There is one company with nicer scooters, but they do not have good customer service,” one said. “I had an issue with billing, sent them my comments but never saw action. So frustrating. While the company with my second choice scooters always takes action. For example, I once had a scooter with a sticking back wheel. I hopped off and grabbed a different scooter. When I got the survey, I let them know what happened and within the hour, they replied, apologized, and gave me back my money.”

“I had a similar experience with that company,” said another. “Once I got on a scooter and the accelerator was stuck. I had to jump off. So, I immediately sent them a note. I was worried it would hurt someone so I stayed close and they acted almost immediately by thanking me and disabling the scooter so that no one else could use it.”

This “second best” company gave both coworkers a story to tell and everyone in the office knew immediately which scooter company was actually better.

We’ve seen the value of customer advocacy and how customer feedback contributes to customer advocacy. Want to learn more about how NPS drives customer advocacy?  

Get the Book of NPS

 

Positive word-of-mouth, customers and clients who advocate for your products and services, customers who stay for life and tell everyone they know about your company — this is what all businesses strive to achieve. It is also something companies struggle with day in and day out. In fact, we all want the magic bullet that drives the customer advocacy growth flywheel.

“Advocate Marketing is the art of identifying your highest-potential customers, nurturing their potential, and motivating and empowering this ‘Golden 5%’ to preach positive about your company.” ~  Lee Marc Stein, President, Lee Marc Stein Ltd.

Why Customer Advocacy?

Four Ways Advocacy Impacts Your Bottom Line
  • Win New Customers — Leverage word-of-mouth marketing to build strong acquisition campaigns and create brand loyalty through real-time customer feedback.
  • Increase Revenue —  Loyal customers spend 67% more than new customers. (Edelman)
  • Reduce Churn —  Loyal customers stay with you longer.
  • Minimize Cost of Acquisition (CAC) —  Less reliance on paid channels for new business.

In short, it makes the most business sense. Here is some math to prove it.

Lifetime Customer Value

The lifetime customer value can be measured and calculated. It’s the monetary value of a customer over the duration of their relationship with your company. (The key word here is duration. Clearly the longer the duration, the more valuable the customer.)

Bain & Co (of NPS fame) provide the framework for calculating LCV.

Lifetime customer value = (# of years a customer stays active x annual variable customer contribution) discounted + referral value.

Customer Advocacy Lowers Churn

Wikipedia says, “Churn rate, in its broadest sense, is a measure of the number of individuals or items moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support.”

Think of customers as sand in an hourglass. The less sand that leaks out the more growth for your company. In other words, you want to narrow your churn keeping most of the sand in the top of your hourglass. Happy customers are more likely to stick.

The Value of Referrals

Most companies, regardless of industry or segment, often fail to take into account the actual value of a positive or negative referral.

Here’s another handy equation from Bain & Co, the godfathers of NPS:

Referral value = (% of new, incoming customers via referral x # of new customers x customer lifetime value) / # of referrals

83% of consumers are willing to refer after a positive experience—yet only 29% actually doTexas Tech University. Why? Because no one is asking them for a referral.

Did you know that according to the  Wharton School of Business the Lifetime Value for new referral customers is 16% higher than non-referrals?

Customer advocacy leads to growth.

Advocacy-based Growth

Happy customers are returning customers, but they do more than return, they bring their family and friends with them.  Think of customer advocacy as a flywheel where multiple parts keep building momentum to drive growth. How do you ensure your customers are happy and become advocates?

Customer Feedback is the Key

How to Create Customer Advocacy

First of all, be consistent. “Customers want a consistent and predictable experience when they do business with a company,” says Shep Hyken, Author of The Cult of the Customer.

Think about it. Consistency can create confidence, which can lead to repeat business and that repeat business can lead to loyalty and ultimately advocacy.

“Periodic spurts of excellent customer service won’t make up for inconsistent service day in and day out,” Hyken says.

We are creatures of habit and when we find something that works, we don’t want to give it up.

“Advocates think you’re the best. They want to keep you going so you’ll always be there to serve them,” says Stein.

Second, create the experience your customers want/need, not what you think they want/need. How? By knowing your customers and understanding their needs at every point in your customer journey.

“People constantly assess the relative equity of their involvement. Those customers who feel they’re receiving more than they deserve from a transaction or relationship also experience a psychological need to restore balance,” says Stein.

Third, empower your customers to become the authority, the discoverer of your product by ensuring every customer receives phenomenal products or services.

“When you perform well for referred customers, you make the Advocate look good. There’s definitely an ego trip in it for the Advocate,” Stein says.

There’s nothing worse than recommending a product or service and then having your friend report a bad experience.

Action and Automate Customer Feedback

Building a customer feedback program can help ensure you are consistently giving your customers what they need, want and expect.

Segment and automate a simple NPS survey to go out via email or SMS after a targeted date or transaction to measure your customer experience. Ask “how likely are you to recommend us to a friend or colleague?” Then give the customer a chance to leave a comment.

Once you ask them — TAKE ACTION. Taking action creates consistency and a customer relationship. By addressing all the responders quickly, and with a cohesive plan, you can build relationships with your customers. Relationships create advocates.

Empower Your Advocates

There’s a famous story of the company Intuit trying a formal advocacy program to solicit customer referrals. The results were less than stellar. Customers reacted by saying, “You don’t need to pay us or give us anything to recommend your product. You just need to keep building a great product. Why don’t you put this money into delivering better customer support, better product, lower prices?”

In some cases, like Intuit, advocates have all they need to advocate for the company. They fully understand the benefits and can and do make referrals with no help. But sometimes your advocates will need something more to get them to talk about you. Giving them a story to repeat is a great way to empower them. How do you do that? It could be as simple as reaching out after you get a survey back. How many times have you heard someone talk about how one company reacted to a comment?

Here’s an example:

In Portland, they tested e-scooters from multiple companies as a way for commuters to get from one transportation hub to another. After every use, the companies sent quick NPS surveys. The people in my office were talking about this.

“There is one company with nicer scooters, but they do not have good customer service,” one said. “I had an issue with billing, sent them my comments but never saw action. So frustrating. While the company with my second choice scooters always takes action. For example, I once had a scooter with a sticking back wheel. I hopped off and grabbed a different scooter. When I got the survey, I let them know what happened and within the hour, they replied, apologized, and gave me back my money.”

“I had a similar experience with that company,” said another. “Once I got on a scooter and the accelerator was stuck. I had to jump off. So, I immediately sent them a note. I was worried it would hurt someone so I stayed close and they acted almost immediately by thanking me and disabling the scooter so that no one else could use it.”

This “second best” company gave both coworkers a story to tell and everyone in the office knew immediately which scooter company was actually better.

We’ve seen the value of customer advocacy and how customer feedback contributes to customer advocacy. Want to learn more about how NPS drives customer advocacy?  

Get the Book of NPS

 


About the author

Nancy Parra

Nancy Parra, Content Manager at AskNicely, is the author of several best-selling books. When she's not thinking up new content, she's at home writing murder mysteries and making homemade candy.

Other posts by Nancy Parra

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