Now Is the Time to Advocate for Your Customers
What would you do if your customers knew everything about your company and your competitors’ products and services—even your disadvantages? The rise of the Internet enables your customers to find third-party information about your products, ratings of your products, people who was ever dissatisfied with your products or services, and the same full information on your competitors’ offerings. On the Internet, your company, your biggest competitor, and the smallest unknown upstart competitor are the same distance from the customer. Each is only an online search away. The Internet has enabled an unprecedented increase in consumer power!
Customer power is growing, and you must decide what to do about it! I propose that you advocate for your customers and earn their trust. In this book, I will show you why you should do this, how you can do this, and what other leading edge companies are doing in this arena. In taking my own advice and advocating for my readers, I will also explain how you can tell if trust and advocacy are not right for your company.
Already some forward-looking companies are pursuing customer advocacy. They are providing customers with open, honest, and complete information—and then finding the best products for them, even if those offerings are from competitors. In short, they are truly representing their customers’ best interests, essentially becoming advocates for them. The strategy is this: If a company advocates for its customers, customers will reciprocate with their trust, loyalty, and purchases—they will advocate for you now and in the future. Your firm can then command higher prices for its products and services because many customers will be willing to pay for the extra trusted value and the superior products you will offer. With trust, customers will increase the number and range of products they buy from you. Finally, when people trust your company, they will often tell others about it, helping to reduce your costs for acquiring new customers. The marketing paradigm is shifting, and you should too. Advocate for your customers to find business success in an era of customer power!
Watch Out for Growing Customer Power!
New technologies such as the Internet provide easy access to tremendous amounts of information, and people have been taking advantage of that to become smarter shoppers. They are using digital technologies to gather information, to find competing products, and to talk to other customers. Increasingly, they are using the Internet to avoid pushy marketers and to help them make their own purchasing decisions. The Internet is a great enabler of customer power. What many hoped would happen with the Internet is actually occurring, and it will change how you do business.
The five proven sources of increased customer power are
Increasing access to information: Customers now have access to information about a company and its products from a multitude of sources. From ConsumerReports.org for third-party information to Amazon.com for customer reviews and eBay for seller ratings, consumers now enjoy much greater access to independent information about a company’s products and services. For example, more than 64% of car buyers now use the Internet to research car models, features, and prices.1 Sixty-eight percent of new car buyers rate third-party sites as very or extremely important sources of information, and they visit an average of seven different sites, such as Kelly Blue Book, Autobytel, and Edmunds.2 Many prospective buyers start their online research months before setting foot on a dealer’s lot. And 6% go on to save an average of $450 per vehicle by using an Internet buying service.3 The implication: old-style marketing is less effective when customers have independent means to research a company’s claims and obtain cost information.
Access to more alternatives: Customers can find competing products more easily. Search engines, comparison sites, and online reviews all enable customers to find the best products at the lowest price. For example, travelers now enjoy a range of web sites (e.g., Expedia, Orbitz, and Travelocity) that help them find the lowest fares on flights. Over 63% of leisure travelers and 69% of business travelers utilize the Internet for research.4 Internet sales grew 37% in 2002 to $28 billion, even as total travel services fell 5%—indeed, 35 million people bought tickets online in 2003.5 Leisure and business travelers increasingly refuse to pay high fares, causing much financial misery for airlines.
The Internet has also impacted the real estate market by making wider-spanning and richer information available to homebuyers. Online real estate buying services (such as eReality and ZipReality) rebate up to 1% of the purchase price, thereby lowering commissions and saving customers thousands of dollars on the purchase of a house.
More simplified direct transactions: Customers can buy from anywhere, regardless of physical location. The Internet simplifies transactions for both consumers and industrial customers. Customers can connect directly with providers to buy goods and services. For example, online ordering and direct shipment make buying books and electronics possible at any time without leaving home. Electronic airline tickets eliminate the need to obtain paper tickets, thereby reducing people’s dependency on local travel agents. Simplified transactions also enable switching—the Internet gives customers the power to find and buy from a wider array of potential providers.
Increasing communication between customers: Prospective customers can find out if a company has mistreated former customers by consulting and collaborating with them through the Internet. In 2002, 110 million Americans looked on the Internet for healthcare information. An additional 48 million consumers in Japan went online for healthcare information, 31 million went online in Germany, and 14 million went online in France for health data.6 Active online communities exist for virtually every disease. Patients exchange information about the effectiveness of products and provide advice to each other about how to take control of their medical treatments. When a customer requests a specific prescription, 84% of the time that request is honored by the doctor.7 Sites such as epinions.com or planetfeedback.com make it easy for customers to submit their opinion of a company or product and for other potential customers to find these ratings.
Increasing communication between customers amplifies and accelerates word-of-mouth marketing. In the past, bad companies lost customers one at a time. At worst, the occasional exasperated ex-customer might convince a few friends to stop buying from the company. But now, the Internet provides global reach for the disgruntled. Web sites such as thecomplaintstation.com, rating services, and discussion forums accelerate the process of weeding out bad products, bad service, and bad companies. On eBay, customers give positive and negative comments on sellers, and even a few negative comments can immobilize the seller’s auction by reducing the number of bidders. Very visible star ratings summarize the seller’s reputation in terms of the quality and quantity of comments.
- Increasing control over contacts: Customers can avoid a company’s marketing efforts. Consumers have more control over the flow of marketing messages into their homes and lives. Consumers’ distaste for junk mail, telemarketing calls, spam, and pop-up ads means that these pushy messages are more likely to earn ire than profits. Technology empowers consumers by letting them mute or zap TV commercials, screen telephone calls, block pop-up ads, stop telemarketing, or send spam straight to the trashcan. For example, 94% of people "distrust" pop-up ads,8 over 20 million have installed pop-up blockers,9 and over 50 million people signed up for "no call" protection.
Customers are taking advantage of these five trends to become more powerful consumers. They are tired of corporate hype and corporate scandal. More than two-thirds (69%) of Americans agree with the statement, "I don’t know whom to trust anymore," according to a February 2002 Golin/Harris Poll.10 Companies tarnished their images through accounting scandals and product recalls. CEOs lost credibility with fat salaries, while workaday staffers lost 401k retirement savings in a market downturn. According to a 2004 Gallup International and World Economic Forum study, there is a dramatic lack of trust in global and large national companies, and trust is even lower when it comes to NGOs, trade unions, and media organizations across the world. Global companies and large domestic companies are not trusted to operate in the best interest of society—48% of the 36,000 respondents across 47 nations had little or no trust in global companies, and 52% had little or no trust in large national companies.11 The highest level of distrust of any institution was 52%. In 2003, two-thirds of Americans believed that "if the opportunity arises, most businesses will take advantage of the public if they feel they are not likely to be found out."12 Furthermore, customers are resentful of current marketing tactics. Sixty-four percent of consumers are "furious" about pop-up ads on their screens (96% were "angry" or "furious")—the same percentage as those who are furious over spam.13 Ninety percent of customers say "they think less of brands featured in pop-ups."14 These resentments make consumers fight back and exercise the increasing power granted to them by these five dimensions of customer power.
In an era of customer power, untrustworthy companies can be out of business. In a few short months, the venerable Arthur Andersen went out of business because a few employees broke the trust (shredded Enron evidence); over 100 years of tradition were gone, and 20,000 employees lost their jobs. In 2005, Merck is facing a major crisis because it is now evident that Vioxx increases the risk of heart attacks and stroke. Although legal damage suits will continue for years, the court of public opinion has already dealt a severe penalty to Merck stock value. The firm’s health itself is in question because of its failure to be completely candid with customers.
Untrustworthy companies may not all go out of business, but at least they will suffer a competitive disadvantage. Customers’ abilities to verify marketers’ messages make traditional hype a very risky strategy. This new transparent reality will weed out those companies that do not honestly deliver information and real value to customers. In the face of this Darwinian trend, companies have no recourse but to change their relationship with customers and build trust.
The point is that the Internet and other computer-augmented technologies enable consumer power, and companies’ pushy tactics and lack of trust encourage customers to use that power. Today’s consumers are more educated and more informed than ever before. With more tools for verifying a company’s claims, customers can seek out superior product and service options. There are no secrets any more! Companies must decide what to do in the face of this growing force.