What Actually Generates High Advocate Marketing ROI

by Sean Ogino |

What Actually Generates High Advocate Marketing ROI

It is becoming increasingly difficult for brand marketers to make an indelible impact on consumers. It is mainly due to the changing roles that marketers now have to play. Until now, a marketing department’s role was restricted to delivering a compelling message to consumers through mass media. But now the current market has divided into multiple channels, often making the public tune out the bombardment of “buy me” messages. The rising amount of adblockers and the high-cost habits of traditional marketing channels are making the matters worse for marketers. Finally, they have to understand that the best marketers for their brands are their happy customers, as the brand is solely what your customers say about it. That’s why advocacy is a powerful solution for customer acquisition, conversion, and retention. Let’s examine advocate marketing ROI and strategy more closely.

The Real Power Of Advocacy:

Advocacy positively affects the revenue funnel of a company in three ways.

First, it creates the snowballing effect of recommendations. As ads can push people to traverse the purchase path–first brand awareness, then brand consideration and finally brand purchase–word-of-mouth advocacy eliminates the one- way nature of that path. Through recommendations, customers who have purchased from the specific brand bring new entrants on that purchase path It’s a classic case where advocates beget advocates. If you see it from a financial point of view, it ups the asset side by drastically reducing the cost per acquisition. Note that 77% of consumers are more likely to buy a new product when learning about it from friends or family and 90% of people say online reviews influence their purchase decisions. Clearly, the ease of acquisition that advocacy brings is largely due to the trust that people have on recommendations that come from known people and reviews written by the customers like themselves.

cover fx loyalty
Cover FX incentivizes advocate marketing actions with their loyalty program.

The second aspect that further bolsters advocate marketing ROI is the ability of advocacy to bring an alignment between sales and marketing efforts. According to Forester’s report, 74% of buyers go online for business purchasing, and more than half (53%) would rather research online than speak with a salesperson. This brings the efforts of salespeople to a dead end. With the help of their marketing team, a sales team can mobilize active advocates and target the best-suited customers who have been already contacted by advocates. If handled meticulously, B2B advocate marketing can maintain the equilibrium between sales’ and marketing’s visions.

Furthermore, advocate marketing data is extremely helpful for businesses. They can use referral data to target highly engaged and less engaged segments, while UGC analytics are valuable for merchandising and customer support teams. Social login, meanwhile, provides a treasure trove of data in the form of social graph information. You can read about the full rundown of social login data here.

Advocate Marketing ROI Generators

The power of advocacy is derived from the acts of individual advocates. Thus, at the micro level, they are the actual power units of advocate marketing ROI. The following list covers some of the acts through which they positively affect the revenue funnel.

A) Increased LTV For Each Advocate:

Advocates’ LTVs are characterized by their two-pronged ability to affect sales. First, as they are in love with your brand, brand advocates spend 2x more than average customers on favorite brands. Second, through their valuable word-of-mouth efforts, they bring more customers and thus they create an unending positive cycle of bringing in more committed customers into your network. That’s why experts say that a 12% increase in advocacy generates a 200% increase in revenue and growth rate. The life-time-value of a brand advocate, thus, forms the essential component of advocate marketing ROI, as it’s way higher than the acquisition cost.

B) Reduced Customer Churn:

Unless and until you work hard on alienating them, brand advocates don’t turn their backs on you. They remain retained. Plus, customers referred by them have a 37% higher retention rate. In a nutshell, by staying with you and by bringing more suitable customers to you, advocates work doubly in reducing your customer churn. It doesn’t need an extraordinary business acumen to establish a link between reduced churn rate and better-looking customer retention scenario. It automatically strengthens the advocate marketing ROI, as increasing customer retention rate by 5% increases profit by 25 to 95%.

C) Lowering The Cost of Branding:

Branding devours a large piece of any marketing budget. Coca-Cola recorded a total spending of $3.499 billion in 2014, $3.266 billion in 2013 and $3.342 billion in 2012 on branding. The pattern of increasing spend is visible here. Advocacy can severely bring it down. Understand that to be vocal about your brand is the basic nature of your brand advocates. That’s why they are 4 times more likely than non-advocates to share information about your products, brands, and sales. Naturally, through their activation on social media, your branding deepens with each passing day. The interesting thing that deserves a mention here is that 25% of people choose to engage with brands because they want to join the community of brand lovers. Therefore, brand engagement, as well as brand awareness, blinks brightly on the capacious screen of advocacy; that too through very frugal means.

It’s then easy to comprehend the findings of BCG’s research, which says that advocacy programs are gaining significant revenues- 10 to 20% for established products and up to 100% for new products. These staggering numerics, which prove the higher level of advocate marketing ROI, outweigh the cost that the advocacy’s functionality and maintenance incur. But despite such huge potential, not all marketers have pounced on it. It makes their ardent fans immobile and inactive. While over 80% of satisfied customers say they are willing to make referrals, only about 20% actually do so. An advocacy platform is an optimum outlet for the remaining 60% whose advocacy is dormant!

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