Another Day, Another Three Billion Recommendations
Another Day, Another Three Billion Recommendations
Rare is the marketing expenditure that can match the impact of a brand advocate's recommendation. Rob Fuggetta has witnessed this time and again.
A denizen of Silicon Valley for two decades, Fuggetta worked alongside Regis McKenna, the communications guru who helped Steve Jobs grow Apple. Fuggetta has witnessed firsthand digital technology's march from developers' suburban garages to business development war rooms and he believes he has stumbled upon the magic word for marketers: advocacy. So devout a believer is he in the power of Web-generated brand advocacy that, in 2008, he started Zuberance, a business dedicated to it. Direct Marketing News caught up with him in New York recently to explore some of the business-building concepts put forth in his new book, Brand Advocates: Turning Enthusiastic Customers Into a Powerful Marketing Force.
DMN: How many advocates can a brand hope to pull from its customer base?
Fuggetta: What we found is that about 50 percent of a company's customers are advocates, customers who are highly likely to recommend a brand or service. It's a stunning find. Equally stunning is the fact that once we give them the opportunity to recommend something, 30 percent of them do so immediately.
DMN: How many traditional media dollars would a company have to spend to create that level of word of mouth?
Fuggetta: Look at it this way. If a company has 100,000 end users, then about 30,000 are actively recommending. Our data shows they will recommend four times over a 12 month period. So that's 120,000 recommendations, but each recommendation will reach an average of 150 people, according to Forrester Research. So you're creating millions of impressions. But, unlike ad impressions, these are what we call trusted impressions, the ones you get from your best friend or your sister. These leads drive sales in a way that paid media cannot.
DMN: Who is Justin Dorfman and why is he more valuable to marketers than Justin Bieber?
Fuggetta: Justin Dorfman is a brand advocate of CDW, a client of ours that sells computer equipment. He is an IT administrator for a company in L.A. He's had three different jobs and wherever he goes he says, “Look,we have to use CDW. Their prices are good. They've never let me down.” Justin has generated about $400,000 of revenue for CDW as a result of his recommendations. Now Justin Bieber has a perfect Klout score, but he has no influence over IT purchase decisions.
DMN: How does a company find its own Justin Dorfman?
Fuggetta: Ask customers the ultimate question: “How likely are you to recommend this product or service. If one consistently answers “10,” you may have found him. We also have tried things like putting a banner on CDW's website asking, “Recommend CDW? Let us know.”
DMN: Are certain companies more attractive to advocates than others? Harley Davidson versus Comet cleanser, for instance?
Fuggetta: Advocates are highly influential in any business where word of mouth matters. But that covers a lot of categories: consumer electronics, travel and hospitality, entertainment, automotive, fitness. The hotels that are really succeeding in Las Vegas today are those that have a lot of word of mouth. All of this is a battle for word of mouth.
DMN: Share with us an unbelievable brand advocate story.
Fuggetta: There's a lady who goes by the online name of Bella Ruby, who is an advocate of Rubio's Fresh Mexican Grill. It's a Southwestern chain famous for its fish tacos. Bella Ruby wrote a story about her passion for Rubio's tacos. She got hooked on them when she was pregnant and was actually eating a fish taco when she went into labor. Guess what she named her daughter.
DMN: Not Ruby?
Fuggetta: Ruby. But that story she wrote...no copywriter could have written that story. Only a brand advocate. When someone like Bella Ruby writes a story like that and shares it in her social networks, the number of inbound leads and sales created is phenomenal. Let me give you two numbers I think will blow your mind.
First, for every 100 outbound shares made by an advocate, brands are getting 70 inbound clicks. When a brand shares something on its own, it'll get one or two. And these are not banner clicks, these are referral clicks. Second, for every active advocate it has, a brand gets three new customers. And you're not paying for them. In fact, you shouldn't pay them. If you do, the trust factor disappears.
DMN: What's the best way to attract them?
Fuggetta: Three steps: Listen, engage and advocate. Companies are now moving past the first two and into finding ways to get advocates to generate sales. The number one priority for CMOs now is driving advocacy. But once they've identified their advocates, they have to give them the tools to drive business.
DMN: Describe the tactics marketers should use.
Fuggetta: Encourage advocates to rate and review your products. Seventy percent of consumers read online reviews before they purchase. Encourage [customers] to create testimonials or stories. Tell us about your Kodak moment. And the third thing you can do is to encourage them to share content and offers. Advocates are twice as likely to share offers.
DMN: What's the best way for a company to lose brand advocates?
Fuggetta: Forget them.
You need to make them a part of your brand, encourage them to participate. One of our customers, Parallels, a software company, asked advocates to become beta users of their new products. The number one reason why brand advocates recommend brands is that they've had a great experience and they want to share that with other people. If you went to a great restaurant, you want to tell somebody about it. One research firm estimated that there are about three billion word-of-mouth recommendations made each day in the U.S. and the average American consumer recommends products 56 times a week.
DMN: What's the Z Score?
Fuggetta: The Z Score is the percentage of people you've identified as advocates who actually recommend you.
DMN: What's a decent score?
Fuggetta: Twenty percent is pretty good. The highest we've seen is 70% for a fitness chain called Club One.
DMN: And what about the average conversion rate for the people who have received the recommendations? Is it any higher than for prospects generated by a company's traditional marketing tactics?
Fuggetta: The conversion rates are staggering. We're seeing conversion rates of 10 to 15 percent on average. But Parallels is getting a 30% conversion on the promotional offers they share with their advocate network. That's about 60 percent higher than conversions made through traditional channels.