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The Advocacy Index is a customer survey technique developed by VIRTUATel Ltd that is conducted over the telephone. [1] The technique measures customer loyalty using a 3-point scale and is based on the Net Promoter Score (NPS) methodology developed by Fred Reichheld. [2]
The 3 point survey scale was developed as the traditional NPS survey scale of 0 to 10 was not always appropriate to be used during a telephone survey, as it is more difficult to understand aurally. In addition, telephones do not have a 10 on the keypad, so IVR systems would need to wait for a possible second digit, if the number 1 is pressed, causing delays in telephone based customer surveys.
As they had experience in the area of automated customer surveys, VIRTUATel incorporated the Net Promoter survey technique for driving up-sell, cross-sell and customer retention rates but simplified the 0 to 10 score to use a simple 3 option scale to determine if the survey recipient was an Advocate, Neutral or a Non-Advocate.
The Advocacy Index uses the survey question "would you recommend us..." to create a score showing Advocacy Index.
The value of the "Advocacy" question in customer a survey is confirmed in research by Dr Paul Marsden of LSE in "Advocacy Drives Growth" published in 2005. [3] This in turn, builds on extensive research in the US by Frederick F Reichheld, consultant to Bain & Co., who created the Net Promoter Score (NPS) methodology.
The research found that both word of mouth advocacy (as measured by net-promoter score) and negative word of mouth were statistically significant predictors of annual 2003-2004 sales growth: [4]
The report concludes by suggesting that asking a simple question; "Would you recommend this company?" the answer provides a measure of word of mouth advocacy that may be useful not only in predicting sales growth, but also in predicting share performance and employee productivity.
Market penetration refers to the successful selling of a good or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service. Market penetration is the key for a business growth strategy stemming from the Ansoff Matrix (Richardson, M., & Evans, C.. H. Igor Ansoff first devised and published the Ansoff Matrix in the Harvard Business Review in 1957, within an article titled "Strategies for Diversification". The grid/matrix is utilized across businesses to help evaluate and determine the next stages the company must take in order to grow and the risks associated with the chosen strategy. With numerous options available, this matrix helps narrow down the best fit for an organization.
Relationship marketing is a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions. It differentiates from other forms of marketing in that it recognises the long-term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. With the growth of the Internet and mobile platforms, relationship marketing has continued to evolve as technology opens more collaborative and social communication channels such as tools for managing relationships with customers that go beyond demographics and customer service data collection. Relationship marketing extends to include inbound marketing, a combination of search optimization and strategic content, public relations, social media and application development.
The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.
Mystery shopping is a method used by marketing research companies and organizations that wish to measure quality of sales and service, job performance, regulatory compliance, or to gather specific information about a market or competitors, including products and services.
Consumer confidence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. If the consumer has confidence in the immediate and near future economy and his/her personal finance, then the consumer will spend more than save.
Customer satisfaction is a term frequently used in marketing to evaluate customer experience. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals." Enhancing customer satisfaction and fostering customer loyalty are pivotal for businesses, given the significant importance of improving the balance between customer attitudes before and after the consumption process.
Net promoter score (NPS) is a market research metric that is based on a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague. The NPS is a proprietary instrument developed by Fred Reichheld, who owns the registered NPS trademark in conjunction with Bain & Company and Satmetrix. Its popularity and broad use have been attributed to its simplicity and transparent methodology.
Frederick F. Reichheld is an American New York Times best-selling author, speaker and business strategist. He is best known for his research and writing on the loyalty business model and loyalty marketing. He is the creator of the Net Promoter System of management (NPS).
The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the American Customer Satisfaction Index based in Ann Arbor, Michigan.
Customer attrition, also known as customer churn, customer turnover, or customer defection, is the loss of clients or customers.
Loyalty marketing is a marketing strategy in which a company focuses on growing and retaining existing customers through incentives. Branding, product marketing, and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not based on the integrated combination of the value they receive from each of these marketing disciplines.
Next-best-action marketing, as a special case of next-best-action decision-making, is a customer-centric marketing paradigm that considers the different actions that can be taken for a specific customer and decides on the ‘best’ one. The Next Best Action is determined by the customer's interests and needs on one hand, and the marketing organization's business objectives and policies on the other. This is in sharp contrast to traditional marketing approaches that first create a proposition for a product or service and then attempt to find interested and eligible prospects for that proposition. The practice, direct marketing, is typically automated in the form of a campaign management tool, is often product-centric, and usually always marketing-centric.
Product Planning, or product discovery, is the ongoing process of identifying and articulating market requirements that define a product's feature set. It serves as the basis for decision-making about price, distribution and promotion. Product planning is also the means by which companies and businesses can respond to long-term challenges within the business environment, often achieved by managing the product throughout its life cycle using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions. It involves understanding the needs and wants of core customer groups so products can target key customer desires and allows a firm to predict how a product will be received within a market upon launch.
Buzz monitoring is the monitoring of consumer responses to commercial services and products in order to establish the marketing buzz surrounding a new or existing offer. Similar to media monitoring it is becoming increasingly popular as a base for strategic insight development alongside other forms of market research.
Customer advocacy is a specialized form of customer service in which companies focus on what is deemed to be best for the customer. It is a change in a company's culture that is supported by customer-focused customer service and marketing techniques.
Word-of-mouth marketing differs from naturally occurring word of mouth, in that it is actively influenced or encouraged by organizations. While it is difficult to truly control WOM, research has shown that there are three generic avenues to 'manage' WOM for the purpose of WOMM:
Willingness to recommend is a metric related to customer satisfaction. When a customer is satisfied with a product, he or she might recommend it to friends, relatives and colleagues. This willingness to recommend can be a powerful marketing advantage. In a survey of nearly 200 senior marketing managers, 57 percent responded that they found the "willingness to recommend" metric very useful.
Customer delight means surprising a customer by exceeding their expectations and thus creating a positive emotional reaction. This emotional reaction leads to word of mouth. Customer delight directly affects the sales and profitability of a company, as it helps to distinguish the company and its products and services from the competition. In the past customer satisfaction has been seen as a key performance indicator. Customer satisfaction measures the extent to which the expectations of a customer are met. However, it has been discovered that mere customer satisfaction does not create brand loyalty nor does it encourage positive word of mouth.
EMO Index is a tool which aims to measure the feelings of a customer, a group of customers or stakeholders towards a company, product or service. It serves as an alternative to traditional customer satisfaction research.
Rob Markey is an American author, speaker, and business strategist. Often referred to as the Vince Lombardi of Customer Loyalty, he is perhaps best known for his research and writing on customer experience and loyalty marketing. Markey is also the co-creator of the Net Promoter System of management (NPS), along with fellow Bain & Company consultant Fred Reichheld.
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