The IBM Institute for Business Value recently conducted an extensive study analyzing the business impact of customer centric retailing strategies and their ability to create customer advocates. Almost 20,000 shoppers were surveyed to determine if being customer focused can drive financial benefits.
We already know that 79% of customers will commit to a deeper relationship with a brand after a satisfying experience, but how do we create customer advocates that consistently spend more and have a meaningful financial impact? Do customer centric strategies create advocates? To find out these answers and learn more about customer advocacy I recently interviewed Maureen Stancik Boyce Associate Partner of the Institute for Business Value and the team leader on this study.
Errol: Welcome and thank you for joining us today. Let me start by asking what exactly an advocate is.
MSB: An Advocate is a customer who 1) recommends their retailer to others 2) would stay with their primary retailer if another competitor opened and was equally convenient and had similar prices and 3) purchase more product if their primary retailer started carrying new items which the customer currently has to buy elsewhere. In short , the three criteria are 1) likelihood to recommend, 2) Staying rate and 3) Purchase intent
Errol: Well, based on that response I think we'd like all our customers to be advocates. What is the financial impact of creating advocates?
MSB: Advocates have a bigger basket size than Antagonists, spend a greater share of that wallet with their primary retailer, and are more likely to increase spending over time than Antagonists. Put together with the staying rate - a longer customer life time, and you get far more valuable customers.
Errol: So how do retailers turn their customers into advocates and what characteristics of the shopping experience drive advocacy?
MSB: (note this is the cross segment answer) Our studies across five different retailer segments, which surveyed nearly 20,000 US consumers found that the Store Experience and Convenience were the top two most important factors. Each retail segment varied slightly, though.
Errol: Many of our readers are primarily focused on the online channel. How do we drive advocacy online?
MSB: For online retailers, consumers told us it was Convenience ie "Online retailer makes it easy to shop" and Customer Service ie "Happy with service from online store employees" that were the top 2 most important attributes. Store Experience, and Assortment came in as the third and fourth most important attributes. We were a bit surprised that Store Experience was that high for online retail; the exact wording consumers rated was "My online retailer is pleasant and enjoyable to shop." We are guessing this includes hassle free logistics, a pleasant interface, logical flow of website, few screens, etc.
Errol: Can you give us an example of a retailer who has successfully turned their shoppers into advocates?
MSB: Barnes and Noble.com actually had the most Advocates of the online retailers with survey data, even more than Amazon. They've made huge advances in the last few years, with big investments in their web presence and triple digit growth over the last year. Focusing more on serving their customer online, as well as in the store, is starting to pay off.
Errol: Maureen, thank you for your time and we look forward to having you join us again in the future.
Join IBM's webcast on February 19th at 2 ET as we take a deeper look at "Why Advocacy Matters to Online Retailers" and explore actionable strategies to turn your shoppers into advocates.