The Evolution of Advocacy Marketing

The Evolution of Advocacy Marketing | 2

Introduction to Advocacy Marketing.....................................................

The History of Advocacy Marketing......................................................

Affiliate, Loyalty, and Advocacy Marketing...........................................

Drivers of Advocacy Marketing..............................................................

The Power of a Brand Advocacy Program............................................

Conclusion................................................................................................

3

5

8

12

16

22

Table of Contents


Introduction to Advocacy Marketing

Marketing has undergone vast amounts of change over the last few decades. It seems as though the moment one tactic is conquered a new one takes its place. Outbound marketing efforts began with print advertisements, which quickly turned into radio and television ads. The rise of internet marketing brought us to digital ads, search engine optimization, and inbound marketing. Now we are in the middle of a massive upheaval of strategies we once saw as tried and true due to the growth of social networks and smartphones.

The Marketing Objective

The object of marketing has remained the same: obtain a customer and retain that customer long term. This has been the only constant among all of the changes that have happened in the marketing industry. Theodore Levitt, an American economist and professor at Harvard Business School, pointed out that marketing is to “get existing buyers to prefer to do business with you rather than your competitors.” This fundamental objective not only has been adopted by marketing professionals but has been enhanced upon in recent years.

Reward-based Marketing

Marketers have long determined that to keep their customers from giving business to competitors, they needed to make it worth their while. This is where the concept of rewards programs was born. Affiliate and loyalty marketing began to surface, and marketers saw the power in giving back to their customers. Fill-ing the basic human need to feel appreciated, reward-based marketing provided customers a positive experience.

The Need for Advocacy

As the marketing industry continues to shift due to the influx of smartphones and tablets, loyalty programs are falling short, and marketers are beginning to turn their attention to the next big thing: Advocacy marketing. Advocacy marketing identifies a brand’s most devoted fans and gives them the incentives and tools to evangelize the brand to their connections on mobile and social platforms. Brand advocates may be loyal customers, but that doesn’t necessarily have to be the


The Need for Advocacy (continued)

case. One person may love and advocate for a brand like Ferrari to all their friends and family, but not own one. Another person may drink Dunkin Donuts every day of the week and actively evangelize the company to their friends and family. Both of these people are brand advocates and deserve to be rewarded for supporting the brands they love.

The Benefits of Advocacy

Advocacy marketing not only gives brands a way to locate their advocates but to incentivize them to continue sharing the brand to their connections. This eBook will detail the events that have lead up to Advocacy marketing and show how a brand can begin to adopt it into their overall marketing strategies moving forward. There is no better investment a brand can make than in their most influential fans.


The History of Advocacy Marketing

“Listening is one of the most important things a brand can do online. If your brand is just broadcasting its own agenda, it isn’t truly

engaging in a conversation.”

- Jeremy Goldman


The Origins of Advocacy MarketingAdvocacy marketing has come a long way, the origins of which surfaced in the early 1900s. Marketing as a discipline can be argued to have existed since Egyptians used papyrus to create sales messages and posters. Then, in 1793, some of the first incentive-driven marketing tactics emerged when U.S. merchants started giving out copper tokens that could be collected and exchanged for items in the store. However, it wasn’t until 100 years later that companies began implementing programs to engage and reward customers.

S&H Green Stamps

In 1896 the Sperry & Hutchinson company, a customer -based retail solutions provider, began distributing S&H Green Stamps as part of a rewards program. At checkout counters in supermarkets, department stores, and gas stations, customers would receive the stamps in return for their business based on the dollar amount of their purchase. Retailers bought the stamps from S&H and then gave them away at a rate they could determine.

The Green Stamps could be redeemed for products in the Sperry & Hutchinson reward catalog, which was, at one

time, the largest publication in the United States. S&H understood the benefits of keeping customers happy and developing a relationship with them — they even offered customers collectors books to keep the stamps in. This is one of the first examples of a loyalty program, and it still exists today in an updated digital version.

Betty Crocker Rewards & BoxTops for Education

Betty Crocker kicked off one the first rewards programs in the 1930s. The brand began issuing coupons that were either on or in packages and could be redeemed for merchandise. Customers would purchase Betty Crocker products, collect reward points, and exchange them for dishes, silverware, appliances, and other decorative items in the Betty Crocker


Betty Crocker Rewards & BoxTops for Education (continued)

Coupon Catalog. The program was extremely successful and lasted for a long time. However, in 2006, General Mills decided to close the program in order to focus on BoxTops for Education.

Box Tops for Education actually started in 1996, just ten years before General Mills turned their focus away from Betty Crocker rewards. It is one of the nation’s largest school earnings loyalty programs, with over 250 participating products and over 90,000 schools involved. Through the program, schools can earn money for books, trips, facilities, or

anything else they may need. BoxTops for Education is one of the most widely recognized loyalty programs today, and it only continues to grow.

American Airlines AAdvantage

American Airlines developed one of the first frequent flyer programs with AAdvantage. It was launched in 1981 following the Airline Deregulation Act, which encouraged airlines to develop ways to reward repeat customers. After going through their database and finding recurring phone numbers, they put together their first wave of members.

The AAdvantage program allows members to use the miles they have accumulated to redeem tickets, upgrade their seats, or even receive discounted car rentals and hotel stays. Depending on activity levels, members are classified as either Gold, Platinum, or Executive Platinum elite. The program is one of many airline loyalty programs today, but it paved the way by being one of the first programs to offer more than just redemption.


Affiliate, Loyalty & Advocacy Marketing

“Advocacy is the highest expression of brand love and therefore, when nurtured, becomes influence.”

- Ekaterina Walter


Affiliate, Loyalty & Advocacy Marketing

When first hearing about Advocacy many marketers assume it is the same as affiliate and loyalty marketing. While they are based on relationships between brands and consumers, there are very distinct differences between the three.

Affiliate Marketing

Affiliate marketing was created on a performance-based model. At its core it is when an online publisher, or someone influential to a readership, drives traffic to a brand and is monetarily compensated for the traffic and conversions they produce. When the internet ballooned in the 1990’s due to the blossoming arena of search engines, publishers and influencers who were providing content and benefits to visitors wanted to be compensated for the work they were doing. Today, there are companies who offer affiliate programs to these people, and there are other companies who sign up to be another business’ affiliate.

What separates Affiliate marketing from Loyalty and Advocacy is that it relies purely on financial motivations to drive sales. Other types of reward marketing rely more heavily on trust and personal relationships to do the same thing.

An example of Affiliate marketing today is Amazon’s program, Amazon Associates. The program is free to join and encourages large networks, content sites and bloggers to sign up in order to begin monetizing their sites. It pays up to an 8.5% commission on sales that result from an affiliate’s advertising efforts. Amazon makes it extremely easy for affiliates to integrate the tool by simply cutting and pasting a link to the desired products, categories, or search results. They also have an advanced option involving a Product Advertising API that provides programmatic access to Amazon’s product selection and discovery functionality.


Loyalty Marketing

Loyalty marketing adopts a similar mindset as affiliate marketing, but gives back to customers in ways other than a cash return. It is an approach to marketing based on strategic initiatives in which a company focuses on retaining existing customers through incentives and rewards. Customers are inclined to continue giving their business to companies with generous loyalty programs because they know it will consistently be beneficial.

While the first loyalty programs incorporated tickets, stamps, and other point-based items that could be exchanged for merchandise, today’s loyalty programs are much more elaborate. As loyalty marketing has continued to prove a worthy tool in a marketer’s tool belt, brand loyalty programs have become more innovative, generous, and, ultimately, effective. Many brands have even given their loyal members their own names to incorporate the value of being a part of the program. AMD has the Red Team, Gilt has Insiders, Best Buy has the Reward Zone, Sports Authority has The League, and there are many more. Airlines, hotels, and credit card loyalty programs have been front runners in the loyalty marketing arena for the last decade, but lately brands across all different industries have caught up.

REI’s Membership program is great example of a modern day loyalty program. Knowing their audience on a deeper level than just their buying habits, the program appeals to lovers of the outdoors, adventurers, and dare devils. Members receive a 10% annual refund, in-store discounts and coupons, and discounts on travel and classes. REI supports their loyal members not just inside the store but outside where they know their audience wants to be. They offer an REI Visa card, the ability for members to get lower costs first, and, on top of all that, a lifetime membership with a 100% satisfaction guarantee.

Both affiliate and loyalty marketing have proven their value, but the changes in ways consumers engage with brands has made it difficult for traditional marketing strategies to keep up. Marketers have found themselves at a tipping point and are now turning their attention to more than just retaining existing customers.


Advocacy Marketing

Advocacy marketing is designed to do more than only retain existing customers with cash, incentives, or rewards, as is the case in affiliate and loyalty marketing. It is strategically designed to incentivize devoted fans to share the brand’s product or service to their friends and connections. A brand may have many loyal customers, but they might not be advocating for the brand. Advocacy marketing is a way for brands to turn their loyal fans into a constantly growing sales force.

Affiliate marketing puts an emphasis on publishers and influencers who have a large readership, narrowing down the audience significantly. Advocacy marketing puts the power in the hands of their entire devoted audience. To market for the brand, an advocate only needs to have a network of friends who they can influence through mobile, email, or social media.

Advocacy is the first marketing strategy that harnesses the power of word-of-mouth for mobile and social consumers. According to Nielsen, 92% of consumers trust brand recommendations from people they know, meaning friends and family members are the most likely to influence a consumer’s purchasing decisions. Brands can use advocacy marketing as a means of incentivizing fans to recommend the brand to their friends and family, essentially turning them into sales people.

While an advocate program can be added to a loyalty program, it is unlikely that every customer who is signed up for a brand’s loyalty program would qualify as an advocate. For that reason, an advocate marketing program can run within a loyalty program or completely separately. It is up to the brand which path to take. A brand’s advocate channel may be smaller than their loyalty channel, but is more powerful and influential.

Additionally, advocacy marketing rewards evangelizing fans in a variety of ways beyond cash payments for performance. It incentivizes advocates through discounts, exclusive deals, badge levels, giveaways and more. A win-win for the brand and the advocate: both are reaping the benefits of a positive relationship. Advocates feel valued through the incentives, and brands receive a constantly growing database of happy customers evangelizing their brand.


Drivers of Advocacy Marketing

“Brands should think of themselves not as storytellers but storybuilders. We plant seeds of content and let our

community build on it.”- Amy Pascal


Drivers of Advocacy Marketing

Advocacy marketing has emerged as one of the most important new marketing strategies for marketers to incorporate into all of their efforts. Gartner Research Director, Hank Barnes, called 2014 the “Year of Advocacy Marketing,” and the momentum advocacy marketing is seeing is propelled by a few crucial drivers.

Mobile and Social

Mobile devices and social networks have acted as a catalyst for change in the marketing industry. In previous years there was a large amount of consumer attention available, but a lack of information to fill the empty space. Today there is extreme consumer attention fatigue and an overload of information. No longer are brands in complete control — technology-empowered consumers now have the ability to determine where, when, and how they want to engage. If a brand doesn’t fit their needs, consumers will quickly move on to one that does.

The emergence of smartphones and tablets put all of the power a brand used to have in the palm of the consumer’s hand. 60% of smartphone owners go less than an hour without checking their phones, and 54% even check their phones while lying in bed. In 2014 alone there were 145.9 million U.S. mobile shoppers with nearly 70% making a mobile purchase. Forrester Research Inc. calls this change the Mobile Mind Shift, “the expectation that any desired information or service is available on any appropriate device, in context, at your moment of need.”

While many companies have recognized this change, they haven’t effectively made the shift to mobile in their marketing initiatives. Plenty of branded apps are being used to engage customers, but there is a lot of competition in the app store. Some companies with existing loyalty programs have begun the adoption of loyal member-specific mobile incentives, but not nearly enough. With 59% of people say they would be more likely to join a loyalty program that offers a smartphone app, brands need to be answering this need at lightening speed.

Then we have social media, which has taken word-of-mouth to an entirely new level. Social media users are more likely to respond to product offers shared by


Mobile and Social (continued)

friends and family in their networks than to offers in sponsored posts and social display ads. 68% of Facebook users say a recommendation from a Facebook friend would make them more likely to buy a specific product or visit a certain retailer. What it all boils down to is that customers trust themselves more than companies, no matter how familiar they are with the brand. It is now imperative that brands give consumers positive things to talk about on social, as social sharing has become inevitable.

Marketer’s New Focus

Moving into the mobile-social shift, marketers have no choice but to change their high level strategies and concerns. Over the last few years, brand awareness and audience engagement were often top priorities for high-level marketing executives. Creating a marketing plan for a new year involved the creation of new ways to get their brand name to reach a bigger audience. Now, 34% of CMOs say the creation of sustainable and engaging customer relationships and improving the customer experience are their top concerns.

Recognizing the importance of improving customer relationships has moved it to the number one thing marketers are focused on. As customers’ interests and consumption habits continue to move to their mobile devices and social networks, brands must continue to shift their efforts to the same places. If consumers are using mobile and social as forums to engage with brands, brands have to use mobile and social as a place to answer.

More and more companies are hiring customer satisfaction teams to manage their social media accounts so that they can be there for their customers in real-time. There is no hiding a brand’s interaction activity on mobile and social either — if a brand doesn’t answer unsatisfied Tweets or messages, customers will spread the word about the bad service. But if a brand responds promptly, they are rewarded with happy customers who tell their friends and family about the excellent experience, and often times keep that customer in the long term. Senior U.S. retail executives said in a recent survey that they believe customer retention will be most significant driver of revenue growth in the next 1-3 years.

Loyalty Programs are Falling Short

As mobile devices and social networks continue to drive marketers to switch their focus to improving their relationships with the customers who are going to talk


Loyalty Programs are Falling Short (continued)

about them, existing loyalty programs are in the hot seat. Loyalty programs have brought marketing a long way. There are 430 million loyalty memberships in the U.S., and 69% of people say their choice of retailer is influenced by where they can earn customer rewards program points.

However, despite the strides loyalty programs have taken, marketers are dissatisfied. Only 16% of businesses believe their loyalty programs are meeting their priorities. This is why many brands are beginning to make a change — advocacy marketing brings loyalty programs to a new level of customer engagement and retention, creating a mobile sales force out of a brand’s most influential fans.


The Power of a Brand Advocacy Program

“Your brand advocates are more valuable than any advertisement you could ever buy.”

- Dave Kerpen


The Power of a Brand Advocacy Program

Now that Advocacy marketing has been explained, it is important to take a closer look at brand advocates and advocacy programs themselves.

Brand Advocates

A brand advocate holds more weight than any SEO, paid media, digital advertising or email marketing efforts. Advocates are already posting and sharing on behalf of a brand, and advocacy marketing taps into that reach. While not all loyal customers may be brand advocates, all brand advocates are loyal fans. Here is a look at the power behind a brand advocate’s influence:

Spend 2 times more than average customers

Recommend or share 2 to 4 times more than an average customer

83% more likely to shareinformation than the average Internet user

90% more likely to write a positive review than non-advocates

70% more likely to be seen as a good source of information by people around them

Offers shared by advocates convert at a 4-10 times higher rate than offers sent by brands

Reach 150 people in social media every time they advocate for a product or service

92% of consumers trust brand advocates


The ROI of Brand Advocates

The value of a brand advocate is second to none. The sharing and posting done by an advocate are free to the brand, already saving marketing dollars. On top of that budget saved, an advocate’s posts receive higher engagement rates because of the higher trust consumers have in their friends and family over those directly from a brand. A 12% increase in brand advocates, on average, generates a 2 times increase in revenue growth rate, and boosts market share, for brands.

The implementation of a program to identify and give incentives to advocates also builds a greater loyalty between the advocate and the brand. Brand advocates who are being rewarded for their reach and influence feel they are valued by the brand they love. This increases the lifetime value of the advocate as a customer. Brand advocates spend 3 times more than average customers over the lifetime of their relationship with a company.

A great example of the ROI of implementing a brand advocacy program is a campaign J. Hilburn generated. The retail brand was already receiving referrals from existing customers who were satisfied with their purchases, so they decide to give back to those customers. They offered advocates $50 for each friend or family member who made a purchase, encouraging advocates to share the offer using social and mobile. Any new customer who was referred and spent over $100 got a $50 discount on their first purchase. After 45 days of running the program, 1,000 advocates had made referrals, an average of 12 shares tracked per advocate. J. Hilburn saw 10,000 social shares, 600 transactions, and over $250,000 in sales. Overall, the program was a huge success, and the retail brand continues to implement deals and discounts for new customers.

Marketers looking to prove the importance of finding, encouraging, and rewarding brand advocates don’t have to look very hard. The value of a brand advocate, once identified, speaks for itself with one positive share.

Features of an Effective Brand Advocacy Program

A Brand Advocacy Program has a slew of benefits for marketers to take into consideration before implementing. In order to build a successful program, it’s important to understand the functionality available. Spendsetter’s Mobile Advocacy Platform features the following:


Targeted Campaigns

Through the Spendsetter platform, brand marketers can build customized campaigns that go hand-in-hand with their overall marketing efforts, or even on a one-off basis. There is an array of campaign types to choose from that encourage advocate sign-ups, promote new products or services, and drive in-store traffic.

Native Applications

Spendsetter gives marketers branded iPhone and Android applications in order to increase audience engagement. The app provides advocates access to a mobile marketplace where rewards can be redeemed, and allows brands the ability to drive traffic using push notifications. Bringing a brand-consumer relationship to mobile ensures the ability to connect to brand advocates no matter where they are on mobile and social.


Dashboard & Reporting

Through the Spendsetter platform, brands can create a custom dashboard to manage all of their campaigns, advocates, rewards, and marketplace offerings. It is a one-stop-shop for marketers looking to manage their entire advocate relationship. Brands will also be able to understand their advocates’ behaviors and preferences through in-depth reporting and measurement.

Advocate Incentives

In this eBook we’ve covered the benefits of offering incentives through advocacy |marketing, and Spendsetter gives brands the ability to manage this tool. Brands can expand the reach of their campaigns by incentivizing advocates to share brand products and services with their friends and connections on mobile and social net-works. Advocates can redeem coupons in-store with Passbook coupons, or redeem points in the mobile marketplace for physical and digital rewards, such as discount codes, coupons, merchandise, and gift cards.


Advocate Profiles

The Spendsetter advocacy platform allows brands to develop a deeper understanding of their most influential customers by building a constantly growing database of advocate profiles. By running targeted campaigns, brands can collect data on brand advocates’ demographic information, interests, social reach, activity and device preferences. Being able to get an inside look at a brand’s most influential customers gives brands the ability to optimize future campaigns.

Location-based Communication

With mobile driving increased advocacy, being able to communicate with advocates based on their location is extremely important. When asked why they shared their location with businesses, 71% of US smartphone users said they did it in order to get offers and deals, and 67% said it was to get rewards. The Spendsetter platform lets brands drive geographic campaigns to engage advocates using location-based messaging. When an advocate is within a customized range of a store location, brands can notify them of real-time discounts or deals they may be interested in.


Conclusion

There is no greater investment that a brand can make than strengthening their relationships with their biggest fans. Advocacy marketing allows brands to focus on their greatest asset, and as a result, constantly expand their reach in a way consumers respond to best. In an era where mobile devices and social networks have handed over power to consumers, advocacy marketing is the most efficient way to create meaningful relationships with the devoted customers that matter most.

Spendsetter has created an Advocacy Marketing Platform that allows brands to identify and reward their most influential fans. It is designed to enable brands to interact with their loyal audience like never before, and incentivizes them to recruit their connections to engage with the brand. Brands can create campaigns, reward fans, and build a constantly growing database of advocates.

If you’d like to learn more about Spendsetter’s Advocacy Marketing Platform, call or email us any time:

[email protected]

615.620.8928


Sources

1. http://morethanbranding.com/2012/04/30/the-evolution-of-marketing/

2. http://www.ydr.com/remember/ci_13470567

3. http://adage.com/article/american-demographics/redeeming-qualities/42382/

4. http://generalmillshistory.tumblr.com/post/62407867827/betty-crocker-coupon-catalog-betty-has-been

5. http://savvymktinggroup.wordpress.com/2013/03/11/41/

6. http://www.boxtops4education.com/all-about-boxtops

7. http://thetravelinsider.info/airlinemismanagement/airlinederegulation2.htm

8. http://feedmoney.com/archives/2009/06/29/online-marketing-system-affiliate-marketing

9. https://affiliate-program.amazon.com/gp/associates/join/landing/tools.html

10. http://www.iclployalty.com/newsroom/insight-and-reports.aspx

11. http://bigdoor.com/blog/2013/12/11/top-10-retail-loyalty-programs/

12. https://www.rei.com/membership/benefits

13. http://blogs.gartner.com/hank-barnes/2014/01/28/will-2014-be-the-year-of-advocacy-marketing/

14. https://www.lookout.com/resources/reports/mobile-mindset

15. http://engage-forms.tibco.com/rs/tibcoloyaltylab/images/forrester-mobile-loyalty.pdf

16. http://www.emarketer.com/Article/Mobile-Affects-Purchases-Way-Before-Store/1011235

17. http://www.marketingprofs.com/charts/2014/25701/why-consumers-participate-in-loyalty-programs

18. https://www.morpace.com/Omnibus-Reports/Omnibus%20Report-Facebooks%20Impact%20on%20Retailers.pdf19. http://globenewswire.com/news-release/2014/10/08/671637/10101822/en/Survey-Finds-Social-Media-Offers- More-Effective-Coming-from-Friends-and-Family.html

20. http://www.marketingcharts.com/traditional/cmos-biggest-concerns-44653/

21. http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Financial%20Services/Latest %20thinking/Payments/MoP17_Making_loyalty_pay_Lessons_from_the_innovators.ashx22. http://www.marketwatch.com/story/maritz-loyalty-marketing-2013-survey-finds-holiday-shoppers-generosity-extends- beyond-friends-and-family-to-themselves-2013-11-2623. http://www.marketingcharts.com/traditional/retailers-say-customer-retention-will-be-key-revenue -growth-driver-45664/24. http://www.retaildive.com/news/report-less-than-16-of-loyalty-programs-meet-their-potential/317284/

25. http://www.lithium.com/pdfs/infographic/lithium_nine_big_reasons_for_serious_WOMM.pdf

26. http://www.marketingprofs.com/charts/2014/25701/why-consumers-participate-in-loyalty-programs

27. http://branderati.com/the-age-of-advocacy-and-influence-26-stats-marketers-should-know/

28. http://business.talenthouse.com/the-power-of-brand-advocacy-and-how-to-create-it/

29. http://barnraisersllc.com/2013/12/case-studies-prove-roi-brand-advocates/

30. http://www.emarketer.com/Article/Millennials-Top-Target-Loyalty-Programs/1010935

The Evolution of Advocacy Marketing

Documents

Transcript of The Evolution of Advocacy Marketing