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  Reference Point
  a newsletter for customer reference professionals
  August 2011
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IN THIS MONTH'S ISSUE:

  1. Will Customer Advocacy Be The Next Demand Generation?
  2. Save the Date: Summit on Customer Engagement 2012
  3. Information About Workshops
  4. Links to job openings, local reference meetings

Will Customer Advocacy Be The Next Demand Generation
An Interview With Eloqua Co-Founder Mark Organ

Ten years ago, demand (or "lead") generation was a marketing backwater. Basically, people who worked in lead gen were handed purchased lists and told to try and set up appointments with sales people. Then a few visionary entrepreneurs like Mark Organ saw that the Internet would open up tremendous opportunities for companies to cultivate and qualify leads, and build demand. Mark was one of those who founded firms that helped businesses revolutionize demand generation and build it into one of the most exciting, and best funded areas in marketing. In this issue of Reference Point, I'm delighted to interview Mark, who co-founded one of the most successful of those pioneering demand generation companies, Eloqua. And now Mark believes that customer advocacy will be "the demand generation of the 2010's," becoming perhaps the most important marketing tool of this decade. And he's started a new firm, Influitive, to help lead the charge. Money quotes by Mark

"I believe that as the demand generation function has become the highest impact, and often best paid function within marketing, we will see the same rise in impact for the people who know how to recruit, manage, motivate and analyze advocates to generate dramatic benefits for their companies."

"Advocate managers will need to develop the kind of "experience building" skill that you might see with a high-class casino VIP customer program that tailor custom experiences for their high rollers."

"The most forward thinking firms will focus on providing advocates with a terrific experience, as opposed to just managing their advocates."

"Forward thinking companies will integrate their customer advocacy programs into all of their other marketing programs, from demand generation, to inbound marketing, physical and virtual events, even teleprospecting."

"The best companies will use advocacy metrics as some of their most important, top-level metrics for gauging their strategic success. If customer advocacy is increasing, it can only mean that the company has a powerful value proposition that is delighting customers. That is the magic elixir that builds tremendous wealth for all company stakeholders." FULL INTERVIEW WITH MARK ORGAN

Q. Mark, welcome to Reference Point. For clarity we should probably start by defining "customer advocacy."

A. Thanks Bill, great to be here. I define customer advocacy as willing and enthusiastic non-purchase support for companies, in the form of references, testimonials, referral leads, and positive word of mouth, along with input and feedback for your products, operations and strategy.

Q. Mark, you were cofounder of Eloqua, one of the firms that revolutionized the demand generation industry from being a bit of a marketing backwater to one of the most important, best funded areas of marketing today. Now you believe that customer advocacy is at a similar inflection point: on the verge of similar explosive growth and increase in importance. Why is that?

A. From my reading about innovation adoption, ideas need to wait for their time to come--for the right mix of core technological innovation, complementary technologies, technological disruption and market penetration to occur.

Here's a quick overview of how demand gen automation has followed this familiar path. It's somewhat of a guide for how I think customer advocacy will take off in the coming decade. In the late 1990's, the rapidly increasing penetration of voicemail massively increased the cost of sales prospecting, forcing companies to manage scarce customer prospects carefully and to look for more cost-effective ways of reaching them. At the same time, the commercial web and business email hit a critical mass, with qualified customer prospects spending time on company websites and responding to emailed information. The technology of cloud distribution then enabled the reduction in cost and deployment time necessary for the mass market to adopt an integrated web and email approach to nurturing prospects. Companies did so with tailored content, and very importantly, a new class of demand managers that stretched across the divide between the sales and marketing organizations in companies.

Q. And you think we're on the verge of a similar explosion in customer advocacy, right?

Yes. Today the disruption of the demand gen technologies I just mentioned is now creating the need for a new function in companies: advocate management and motivation, together with associated technologies to make it effective. That's because many prospects are now inundated with tailored messages delivered electronically, causing a similar crisis for sales and marketing departments as the advent of voicemail in the late 1990's. At the same time, social media is hitting critical mass, with qualified customer prospects spending time interacting with their peers on social sites when they are researching their needs. Prospects want to hear from relevant advocates, and that requires a constant stream of advocates to provide these messages, whether delivered in the form of a 1 on 1 reference or a video testimonial that can be watched 24/7 by millions of people.

Just as the web-email combo cut through the noise a decade ago, social communications cut through the noise today. I believe that the enabling technology today is pervasive application interfaces of cloud-based technologies, allowing an application completely and inexpensively integrated with social platforms like LinkedIn, Twitter and Quora, marketing automation technologies like Eloqua and Marketo, and CRM systems like salesforce.com and SugarCRM.

Q. So do you see parallels between the way that demand generation changed and grew over the last ten years, and how customer advocacy will change and grow in the next ten?

A. It's hard to forecast the future because technological change is so rapid now - for example, who was forecasting how radically social media would change the demand generation landscape in 2005? I am sure that something new will come out of nowhere again that we will have to react to. But I think that I can safely forecast, from what I have seen in demand generation processes and technology, that we will see more automation of advocate management processes, the development of insightful metrics to measure advocacy success and its impact on company financial and strategic metrics, and the professional development of the advocate management function.

I believe that as the demand generation function has become the highest impact, and often best paid function within marketing, we will see the same rise in impact for the people who know how to recruit, manage, motivate and analyze advocates to generate dramatic benefits for their companies. Like demand generation, it's a cross-departmental function, integrating across sales, marketing and customer service.

And here is another forecast, that advocate managers will catalyze a tighter integration across these functions with advocate mobilization metrics as the common ground.

Q. Of course "customer advocacy" has been around for many years in some industries. We have well developed customer reference programs, referral programs, word of mouth marketing initiatives, user groups, customer advisory boards, executive forums, industry councils, and more recently, customer communities. It's a pretty rich landscape. How will these functions-and the managers and executives who are responsible for them-have to change?

A. That's true Bill, in fact you can make a case that "customer advocacy" is the oldest form of marketing, requiring no technology at all. What is changing now is both the importance and scarcity of customer advocates, requiring much better management of these valuable assets. The customer advocate experience definitely needs to change. Many advocates are reducing their activity, and sometimes dropping out altogether, because they are not being given the kind of recognition, feedback, and relationships that they value. Advocates are looking for more value from their activities, and want to have more fun doing them too. Another thing that has to change is integration of these different advocate activities into a single, common view of the advocate, whereas today it is typical to see referral programs, communities, social media campaigns and references managed by four different people, even in small companies.

Advocate managers will need to develop the kind of "experience building" skill that you might see with a high-class casino VIP customer program that tailor custom experiences for their high rollers; at the other extreme, will need to develop and use metrics to optimize their advocate operations to maximize productivity. This is a level of sophistication that I rarely see out there but I think will become commonplace in the years ahead, either through nascent advocate managers upgrading their skills, or skilled professionals moving in to the advocate management function from elsewhere in companies. I saw both of these trends in the demand gen function for my customers at Eloqua.

Q. Let's take a look at the future. How will the most forward thinking firms be building and using customer advocacy in five years? Where are the big opportunities in this space?

A. The most forward thinking firms will focus on providing advocates with a terrific experience, as opposed to just managing their advocates. At Influitive, we have identified three critical items that advocates want: First, VIP status - they want to be given special recognition, and social capital that enhances their reputation. Second, part of the team - they want a tribal affiliation, to collaborate with the company to advance the interests of the group. Third, move the meter - they want to understand how they are impacting their companies. At Influitive, we are leveraging the properties of social gaming - the same principles that make games like World of Warcraft and Farmville so engaging, to the point of addiction for some people - to help companies build these high quality experiences, at scale, for their advocates. Game designers are constantly tweaking their point systems, badges, levels , rewards and achievements to generate engagement, viral growth and monetization, and I think that you will see advocate managers obsessing about these details, experimenting with new ideas and using metrics to optimize their systems.

Part of a great advocate experience is in building new relationships. After all, that is why advocates participate in references, isn't it? Not just to build a better relationship with the companies they are excited about, but with new people, other advocates and prospective customers. Forward thinking companies will focus more on helping advocates build new effective relationships, looking not just at industry, title and situation which is common today in reference programs, but also matching people on social media profiles.

Third, forward thinking companies will integrate their customer advocacy programs into all of their other marketing programs, from demand generation, to inbound marketing, physical and virtual events, even teleprospecting. Nearly every interaction with a prospective customer is exponentially more effective when the right advocate is involved, and the best companies will excel at making this integration happen.

Finally, the best companies will use advocacy metrics as some of their most important, top-level metrics for gauging their strategic success. If customer advocacy is increasing, it can only mean that the company has a powerful value proposition that is delighting customers. That is the magic elixir that builds tremendous wealth for all company stakeholders. I think that this is a reason for the popularity of the Net Promoter Score over the past few years; forward thinking companies will do more than just ask companies if they would be willing to refer, they will be tracking it directly, along with all of the other amazing things that advocates do when they are truly motivated.

Q. What are customer reference programs doing now that they should stop doing?

A. Customer reference programs that I have seen seem to have an overriding focus on workflow, the production side of completing reference activites. They are often static and not interactive with the advocates themselves. I think that the people who manage customer reference programs would do well to spend more time with their advocates to identify how they can improve their experience, and give them what they want. Going forward companies are going to find that customer advocates are probably the most valuable, and scarce, assets that they have, and they should manage their customer reference programs accordingly.

Q. If you were a reference manager running a long established, traditional customer reference program, what's the first thing you'd do to prepare it-and yourself-for this new world of marketing?

A. The first thing I would do is select a sample of 10 to 20 advocates to dive deep on their experience to learn what they value, and how to improve the experience. Even without automation and metrics, just concentrating on the top one or two requirements will really move the meter. The next thing would be to put the program online, augmenting traditional reference items with important new activities such as social media contributions, and provide guidance to advocates on how they can improve their experience. Finally, introducing some gaming and matching elements, like we promote at Influitive, turbocharges the effectiveness of reference programs.

Great, thanks for a very provocative, thought provoking interview Mark.

All the best,

Bill Lee, President
Customer Reference Forum and Customer Strategy Group
Author of the forthcoming Harvard Business Review Book, The Hidden Wealth of Customers

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