Smart marketers have long understood that Word-of-Mouth recommendations from consumers—“ Brand Advocacy”—have greater impact on sales than any other source of information. And it’s not just that positive buzz moves the financial needle forward. Negative Word-of-Mouth from “Brand Critics” can push results in the opposite direction.
Despite the relevance of brand advocacy, companies have struggled to measure it in the marketplace, demonstrate its top-line impact, and develop tactics that improve word of mouth. To address these gaps, The Boston Consulting Group has created the Brand Advocacy Index (BAI), a strategic-metric that measures advocacy with much greater precision than existing approaches. Extending beyond those measures, BAI displays a strong correlation with Top-Line growth and helps identify concrete actions for improving Advocacy.
In fact, our research shows definitively that brands with high levels of advocacy significantly outperform heavily criticized companies. In the sample of brands studied, we found the average difference between the top-line growth of the highest- and lowest-scoring brands was 27 % points.
In addition to using advocacy to drive measurable growth, brands can also pinpoint the identities and motivations of often overlooked advocates, uncovering the relative influence of both customers and non-customers in driving recommendations, as well as the rational and emotional factors that motivate both groups to recommend a brand. Companies can determine who recommends a brand and who does not, helping them identify the most and least successful tactics for improving advocacy.
Although the level of advocacy varies widely by industry and country, we have not found a single category in which advocacy is irrelevant. In this report, we open a window onto the precise mechanisms for measuring and managing brand advocacy. By harnessing these insights, any brand can fuel growth.
Advocacy Drives Growth Across Industries :
BCG’s analysis shows that the revenue growth of the brands with the highest advocacy levels is far above the industry average. Over time, that difference separates the leaders from the laggards. (See Exhibit 1.)
A recent BCG study of more than 300 brands in 12 industries found a very strong positive correlation between BAI and top-line growth—81 percent, or double that of other measures of customer promotion.
It’s no mystery why advocacy both correlates with and drives growth. Measured accurately, advocacy provides a sense of the quality of a company’s operations and offerings. It also helps companies cut through the clutter in a world saturated with media messages.
Our survey of more than 32,000 consumers also shows that people are losing their trust in traditional mass media. When consumers are confronted with an important purchasing decision, they seek recommendations from sources such as friends, family, co-workers, and increasingly, other consumers. This is still a predominantly offline phenomenon, however: an estimated 90 % of consumer conversations about brands take place in the real world rather than through the much smaller but growing source of social media.
The importance of advocacy is evident in every industry. Across all the industries studied, we observed high levels of total advocacy, a measure that combines the number of people either recommending or criticizing a brand. At least 47 percent of consumers in our sample cared enough about a brand either to recommend or to criticize it.
Positive advocacy tends to be higher in industries whose products or services evoke consumers’ greater emotional involvement. People feel more closely connected to their smartphone than to their toothpaste, for instance. Positive advocacy is also higher for “aspirational” categories in which consumers associate a purchase with a desire to improve their social standing. (Think luxury versus non-luxury automobiles.) Finally, positive advocacy is much more common with very visible purchases and purchases that involve significant money or time. People are much more likely to have conversations with friends and colleagues about a car, a prominent purchase on which they spend a large percentage of their income and, in many cases, a lot of time researching.
In contrast, negative advocacy tends to be much higher in service businesses, such as retail banking and mobile telecommunications. Service-oriented brands have much more difficulty maintaining a consistent customer experience than product-oriented brands. In service industries, every customer touch point has the potential to create a negative impression, whereas the experience of a product remains largely the same with each use.
Study also shows the differences in spontaneous recommendations among industries. (Spontaneous advocacy comes naturally without prompting.) In our survey, the automobile and smartphone industries had the two highest levels of total advocacy. Compared with the other industries studied, both of those also had many more spontaneous advocates praising the brand and many fewer people spontaneously criticizing it.
In general, we have observed that criticism damages a brand much more than praise helps it, while spontaneous advocacy has much greater impact on positive word of mouth than recommendations that are prompted.
Revealing What Turns Consumers into Brand Advocates :
Because the BCG methodology asks explicitly for the reasons consumers recommend or criticize a brand, BAI uncovers the exact factors that drive positive and negative advocacy. Our methodology measures up to 12 industry-specific factors—both rational and emotional—that influence recommendations. Factors include performance, customer service, social responsibility, brand identification, design, and value for money—that is, the right combination of price and quality.
Our research shows that a small number of these factors have an outsize influence on recommendations across industries. In all five countries studied, value for money was consistently among the three factors that most influenced recommendations. Customer service was in the top three for grocery, mobile telecommunications, and retail banking, and both performance and design were in the top three for the smartphone and automobile industries. Some factors—such as assortment of products in the grocery business or network quality in mobile telecommunications—are primarily relevant to a subset of industries.
For many businesses, such technical or functional benefits are the “table stakes.” They remain the top drivers in every industry, and without outstanding performance on such factors, a brand is unlikely to earn consumers’ high recommendations. But we find that once companies in many industries master these rational drivers of advocacy, an emotional connection can separate the most recommended brands even further from the rest, particularly in categories such as apparel, in which an emotional connection remains a strong differentiator.
When consumers have a strong emotional connection with a brand and their rational needs are met, they are likely to recommend a brand spontaneously and without prompting, providing what is, by a wide margin, the most powerful form of advocacy. Take the case of two retailers that both deliver good value for money. The one that is differentially better at connecting with people’s emotions and treating consumers as individuals, in many cases, achieves higher levels of word-of-mouth recommendations—particularly, unprompted recommendations.
Even in industries that do not score as high in advocacy, some companies have found ways to far exceed their industry’s average, thanks to a combination of rational and emotional factors. Trader Joe’s, Mercadona, and USAA score particularly high on emotional factors, helping them outperform their industry’s BAI. For some companies, that comes by establishing a connection with consumers’ lifestyle, passions, or interests.
Besides these factors, brands can differentiate themselves in many other ways. Some brands have defied convention in their industry, driving recommendations on the basis of factors that did not initially seem relevant. For example, good customer service has driven advocacy in banking for many years. Although this factor is still important, it is no longer the only basis of competition.
Individual markets have their own nuances, of course. What works well in one may not work that well in another. Consider the case of the Samsung and iPhone smartphone brands in Germany. Samsung slightly leads on consumer recommendations for technical performance and slightly lags behind on design, but it is much farther ahead of the iPhone brand on value for money. Even though technical performance and design rank above value for money with the average smartphone buyers we studied, value for money ultimately matters the most to German consumers, contributing to Samsung’s lead on advocacy in Germany, while it ranks second in other countries we studied. For the past three years, sales of Samsung smartphones in Germany have exceeded sales of iPhones by nearly 70 percent, in part a result of that lead.
Uncovering Overlooked Sources of Influence :
In addition to explaining what drives advocacy, BAI also helps companies understand the motivation of everyone who recommends a brand. As we mentioned earlier, spontaneous advocates have a significant impact on recommendation levels. We have also found that critics matter much more than advocates, owing to the ability of negative messages to drown out those that are positive.
Our approach to measuring advocacy also sheds new light on the importance of non-customers in driving advocacy. We have learned that companies may have a blind spot when they measure word-of-mouth recommendations strictly on the basis of what customers say. Non-customers can be particularly influential in certain industries, such as those in which consumers purchase products and services infrequently or in which only a small number of consumers purchase. The luxury-automobile industry is an example: even though relatively few people own luxury autos, a large number of people feel entitled to share their opinions about the leading brands.
In some industries, such as those with high levels of churn, the non-customer population might actually include many former customers, which gives their criticisms extra credibility.
However, positive advocacy among non-customers can boost a brand’s overall performance. We have found two categories in which non-customers can be influential advocates: automobiles and smartphones. In both categories, the leading brands have invested heavily in creating an aspirational feeling around their products—to the point that, in many cases, even non-customers feel attracted to the brands. In addition, the products in both categories are heavily experiential: non-customers are easily able to see and feel their technical and functional benefits, and they often share their opinions about a product’s advantages with others.
Using BAI to Drive Growth :
With BAI data in hand, companies can make fact-based decisions as they identify and prioritize critical areas of brand strategy and customer experience as part of a larger effort of brand-centric transformation. More concretely, BAI can assist decision makers in their resource-allocation and advocacy-marketing efforts.
We have identified THREE Primary actions that brands can take after exploring advocacy using our metric :
1.For areas in which the brand is weak, executives should prioritize actions that have the highest potential to transform the business and drive advocacy – Retailers might develop programs, such as for lowering prices or improving product quality, on the basis of what drives advocacy. For brands that have low levels of consumer identification, companies can showcase innovation and burnish the company’s image. For those with weak results in terms of value for money, transformational efforts may be needed to improve the cost structure, use of assets, sourcing and procurement, and pricing. Structural weaknesses may require significant improvements in both the design and the execution of the customer value proposition. Chief marketing officers and chief financial officers can also prioritize brand investments that are likely to have the most positive impact on sales.
2. For areas in which the brand is strong, companies should build on specific brand advantages to drive advocacy – If a company’s brand is not being recognized by consumers for a particular strength, the company can find strategic opportunities associated with areas in which its brand already leads and with specific factors that matter in its industry. A brand can also involve its network of existing customers and, potentially, non-customers as advocates for its strengths in a way that can be more effective than other methods. A combination of targeting the right consumers, creating powerful and disruptive messages that strike an emotional chord with consumers, and building long-term relationships that are based on an understanding of the dynamics of advocacy has, in many cases, proved the key to success.
3. Decision makers should focus on the right segments – Getting a complete view of advocacy helps companies as they target specific brands, product and service categories, countries and regions, and groups of customers and non-customers. A detailed analysis using BAI can reveal areas that could be improved with digital marketing to under-penetrated segments. Or it may inform brand re-positioning efforts in which focused attention can generate significant value for a relatively small investment. The analysis can also help companies focus on increasing word of mouth among their most profitable customers.
In addition to guiding brand transformation, our approach to measuring advocacy offers unique insights into broader issues of, for example, operations, customer service, and loyalty programs that could be improved with a better understanding of the specific brand attributes that customers value.
In an environment of constrained resources, some smart companies are looking to add advocacy to their traditional marketing mix. These forward-looking organizations want to build long-term relationships, not just hits and buzz. But many still labor with obsolete metrics and struggle to discern which actions produce results.
BAI offers brands an efficient way to measure this vital leading indicator, while maximizing scarce resources and driving growth. For companies ahead of the curve, our approach to measuring advocacy confers a significant advantage.
For those relatively rare brands that can build an emotional connection with consumers in advance of the competition, that competitive position can be difficult to dislodge…