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Customer Reference Programs and New Marketing

Posted by Bill Lee on December 5, 2012 at 05:05 PM

From Reference Point (our Newsletter)

First of a two-part series

 Evidence is growing--and drawing more and more attention from the C-suite--that marketing is dramatically changing. It's critical for customer reference programs to keep up with this. 

We're assembling a battery of initiatives this year and next to make sure you do so. This two-part newsletter series is one. Others include:

- Presentations & workshops at the 2013  Summit.

- The Master Class Series on Customer Reference Programs.

- Exciting research we're doing with Sirius Decision and the CMO Council (stay tuned). 

- My book, The Hidden Wealth of Customers and articles I'm publishing on HBR's Blog Network.

Two of the most popular are:

Customer Reference Programs At the Tipping Point (Read why reference programs are becoming increasingly important. Share with your sr. leaders.)

Marketing is Dead ("Marketing is Dead" haa profoundly impacted how our marketing leadership views the work I do." Deena Zenyk, Marketing Manager, Customer Advocacy Programs, SMART Technologies)

How Marketing is Changing--And Why Customer Advocacy Will Be At the Center of It

 For now, let's take a look at the most influential research that's out there on New Marketing, and its implications for reference and advocacy programs. Following is a collection from Gallup, Nielson, McKinsey and others showing this. You can use this--in your internal communications, in PPT decks and other communications with stakeholders and senior leadership at your firm--to make the following point:  we know a great deal how New Marketing will look, because it's already here. (I'm making this case myself to audiences ranging from the AMA, Forrester's Tech Marketing Council, Satmetrix, the International Association of Advertisers, and others).

 Marketing's new focus can be summed up succinctly: "The way buyer's purchase has changed dramatically. We need to stop trying to persuade buyers to purchase. Instead we need to  get our customers to persuade them for us." It's not  just about bringing customer references into traditional sales and marketing processes--it's about increasingly replacing those processes with customer advocacy. 

The Research 

Let's look at key research indicating this change. First, CEOs are increasingly disenchanted with traditional marketing-as evidenced by their disenchantment with their CMOs. In a pair of studies by the Fournaisse Group in London (here and here), over 70% of CEOs believe CMOs lack business credibility, can't explain how they'll grow the business, and can't link their efforts to recognized financial metrics. 

 Of course, what matters most is how your CEO views your firm's marketing efforts. If he or she is one of those 70%+, then it's time for a different approach. You can help guide this conversation by showing what New Marketing looks like. 

Studies by McKinsey, Sirius Decisions and the Corporate Executive Board have uncovered profound changes in the "buyer's decision journey." Key finding: buyers increasingly rely on sources other than corporations to gather information and make purchase decisions about products and services. This doesn't mean that traditional advertising or marketing will entirely disappear - but it's safe to say they're not driving growth like they once did. 

 Who might those new sources be? Primarily, the buyer's peers. 

Implication: Your company has exactly one set of resources that are peers of your buyers: your customers, of course. And they should be the ones doing your marketing and sales for you, according to studies from some of the top research firms in the world.

For example:

Nielson: The source most trusted by consumers when it comes to advertising is, "recommendations from people I know." (92% of respondents named this source). Ads in magazines were about half as trusted. Ads on social media sites, even less so. (2012 Trust in Advertising Report)

McKinsey: A recommendation from a trusted friend conveying a relevant message is up to 50 times more likely to trigger a purchase than is a low-impact recommendation. ("A new way to measure word-of-mouth marketing," McKinsey Quarterly, April 2010)

Gallup: Your best bet to acquire new customers through social media is to engage your existing customers, then align your strategy with the wants and needs that encourage [existing customers] to engage their social networks on your behalf. (Making the Most of Social Media, 2011)

Sirius Decisions: Senior leaders ...consider information from peers important resource at every stage of buying. (Sirius Decisions Blog, June 29, 2012) (summarizing Sirius Decisions' research on the topic)

Implications for Customer Reference Programs  

The research--as well as actual company case studies I'll describe in the next issue of Reference Point (which will be posted to this blog in a couple of weeks) is pointing to an increasingly expanded role for customer advocates. Key elements of this new role include: identifying your top advocates (sometimes called Rockstars, MVPs, Customer Champions)--the ones who can dramatically increase revenues and profits; rolling them in to customer communities; helping them build their social capital (which is often much more effective than rewards, points, discounts and the like); and getting advocates increasingly involved in a broader array of solutions for your marketing, sales and even product development efforts. I'll expand on these in the next issue. 

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