Importance of Budget for a Customer Advocacy Program

“It’s about looking at consumer needs, looking at the consumer experience, going everywhere they are.” – Stephen McPherson

In the previous exposition, we spoke about measuring customer advocacy. As part of measuring this program, it would also be essential for a company to have a structured budget for a customer advocacy program. Setting aside funds and resources for any kind of business imperative is essential to its success, and a customer advocacy program is no different. To start with, a customer advocacy program is critical for any company since it is the way to provide marketing professionals and business owners to leverage the strength of loyal customers as brand advocates. This helps a company build awareness, increase reach, drive sales and growth, and in turn increase profitability. Brand advocates have a 50% higher probability of influencing a purchasing decision, as compared to a regular customer.

We have mentioned earlier that an increasing number of consumers now make purchasing decisions only post reading reviews and comments about a company. Research has found that at least 20-50% of all buying happens through word of mouth – in fact, word of mouth makes a greatest impact on a prospect or customer buying a product for the first time or when they set out to buy something expensive. In both such cases, the amount of trust and research required is greater, and positive word of mouth helps formalize a decision. With so many options today for customers, buyer’s remorse seems to have become more common – something bought may not be quite as what was expected.  This remorse can be avoided by taking into account the opinion or advice of friends, family, associates, or even existing users of the product. It makes sense then for companies to put in place a budget for a customer advocacy program, and begin such an initiative, to turn delighted customers to brand advocates and add an ‘army’ of marketing and sales personnel to your company.

The reason most companies may not have or been unable to allocate a budget for a customer advocacy program is because they would be unsure of under which cost centre it would fall. This means determining whether the initiative should be part of marketing or customer service. Industry experts seem to indicate that about 90% should be in marketing since this team usually has bigger budgets, and this team would be responsible to manage the most profitable customers and generate leads through them. The remaining portion would be part of customer service to ensure that the top customers of the company receive the best service possible. It really depends on a company to decide where they would like their customer advocacy program to lie, but it is certain that every company must allocate a budget for a customer advocacy program. Putting in place a structured budget displays a company’s commitment towards the initiative – without a budget the program could easily fizzle out and become obsolete.

What are the steps required before committing a budget for a customer advocacy program? The first step is to understand the current role of customer advocacy in the company. The fact is that acquiring new customers is a lot harder and more expensive, and most companies today are competing against several other players – some of whom could be big and established players. The problem when committing to a change is that it requires a shift in mind-set and everyone in the company must commit to being part of the change. Traditional methods and ‘regular’ customer advocacy programs might not work given the competition, hence companies must uncover and nurture new and an increasing number of customer advocates. In order to allocate a suitable budget for a customer advocacy program it would be imperative for a company to know which areas ‘advocates’ would add most value and the impact the program would have on marketing and sales.

As mentioned, with so much competition and pressure on the existing resources available, companies need to find and allocate a budget for a customer advocacy program that would be within the existing company budget. Given that most companies have a similar budget year on year, getting funding for a new initiative or program is usually a herculean task. The marketing professionals would therefore, need to know exactly what they currently spend and how best to incorporate the advocacy program within those spends. Careful planning would be required to reallocate spends and move some funds towards this critical to success endeavour. Getting happy customers to vouch for your company, and encourage others to become customers is no mean task, but the benefits and accelerated growth that come about, make the endeavour worth every dime and second spent.

Within marketing, the budgets include annual and costly events, meant to attract a large audience. However, very often most of these events attract the same people each year, without adding much value to the brand (even though value add is used as the reason for large spends on such events). Most often events are held repeatedly because ‘it has been done in the past, with good results’. However, unless an event is actually gaining new customers for the company, it would be necessary to re-evaluate the need and amounts spent on hosting events. Customer advocacy programs on the other hand, deliver tangible and easily quantifiable results such as referrals and raving reviews on digital media. It makes sense to divert focus and energy towards making existing loyal customers feel special such that they would become willing brand ambassadors, attracting a lot more business and customers, without any added investment or effort on the part of the company. The great part of gaining customers through this route is that the new customers enter the association sans the initial doubts and apprehensions, since the company and its products would be recommended from someone they trust and respect.

When making a business case for a budget for a customer advocacy program, it is imperative to highlight the endeavour as a critical to success investment that would help the company meet its financial and strategic goals. No company today would say it has too many customers or that it would not need to work on reputation management and marketing. For both these aspects, creating and sustaining customer advocates from the existing loyal customer base, becomes a critical need. It just makes more sense – as a customer you would know the influence of your comments or reviews of a product or company on others, and the effect a great review would have had on your buying decisions. This feeling of trust and dependability is not easy for a company to cultivate without help – today’s business environment is a lot tougher and a lot less trusting.

The bottom line for marketing and service teams is to remember value when trying to gain a budget for a customer advocacy program is the value. They must first believe in the value of the program in order to be able to convince decision makers to believe that a customer advocacy program is a sound and long-term beneficial investment. The fact is that a customer advocacy program does deliver tangible results, a high ROI, and a long-term robust relationship with a company’s top asset – the customers. Are you ready to allocate a budget for a customer advocacy program?

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