Customer Advocacy: The Unexpected Growth Hack
Customer advocacy programs are an often overlooked yet powerful driver of business growth and retention of customers.
The startups that have robust customer advocacy programs have a cutting edge over their competition. Why is that?
B2B companies with referrals have a 70% higher conversion rate and a 69% faster close time on sales. Customers acquired through referrals have a 37% higher retention rate. This multiplier effect expands the customer base organically as satisfied customers become advocates and recommend the company's products or services to their network.
Exploring the Power of Customer Advocacy:
Maybe you find yourself asking around the company for customer references each time the need arises. If so, it’s worth it to ask yourself: Could we do this better?
A quick inventory by answering the following questions could produce big results.
How are you communicating the opportunities for customer advocates?
Do your CSMs know what to look for in their successful customers?
Do you have a place to share the stories internally?
Do your CSMs understand how it will benefit their customer and their company?
Are you celebrating your customer, or asking a “huge” favor? (positioning makes a difference)
You don’t have to start with a big program. Start with what you have. Assess, document and communicate your opportunities. Share how highlighting the customer’s successes shines a light on them, on the CSM, and the company.
Building a Robust Customer Advocacy Program:
The secret to a successful customer advocacy program is not to make it all about your company. That may seem counterintuitive. After all, aren’t your customer advocates your biggest fans? Take a moment to stand in the shoes of those who contribute to your advocacy program: Your customers and your team.
The secret to a successful customer advocacy program is to build it to be intentionally customer and employee-centric while aligning with your organization's strategic objectives. Then measure, track, compensate, and celebrate your wins.
WIIFM for Key Organizational Roles:
What’s In It for Customers: Referrals, panels, blog posts, case studies… When customers participate in these customer advocacy activities, they highlight their thought leadership and successes. Make it easy for them. Help them promote themselves. Other customers will notice and want to mimic their best practices, then you can highlight those customers too. Current customers inspire prospective buyers who will want to achieve that success– and they’ll want the product that helped them achieve it.
Customers are at least 80% more likely to trust a referral over an ad. This is true across all generations. No matter your customer base.
What’s In It for Employees (CSMs): When you have an organized process and a “Why”, your team is more likely to engage and get on board with building customer advocates. We all like to be a part of something, to know we are making an impact. When your customers participate in customer advocacy, they get to be a part of your success. When CSMs highlight their customers, they become a part of their customers and their company’s success. This also highlights the CSM and their role in helping the customer achieve success.
Also, keep in mind that some people respond to competition, and everyone appreciates compensation and acknowledgment for their work. SPIFFs or bonuses are a great way to encourage new behaviors. Once you have an established program, you can make CSQAs a part of variable compensation. Incorporating compensation reinforces company values and prioritizes the work involved in building customer advocates.
What’s In It for CS Leaders: For CS leaders, a successful advocacy program highlights your strategic planning and team management skills. More importantly, it demonstrates your program’s and your team’s contribution to the company's profitability and long-term sustainability. This is key. With today’s focus on profitability, you are either contributing to revenue or at the cost of delivering revenue. If you’re on the cost side, your team will face reductions, even if it has already. If you have more questions about this topic, download the free guide: 7 Steps for Customer Success Leaders to Become a Revenue Leader. The best way to show your contribution is to create goals and measure your CSQAs. More on this below.
What’s In It for Startup Founders: For founders, customer advocacy aligns with the goals of scalable growth and market positioning. It enables cost-effective customer base expansion, offers market insights, and fosters product innovation. In short, Customer Advocacy is your least expensive path to new logos and CLV: CAC ratios that increase your company’s value to investors.
What’s In It for CFOs: From a financial perspective, customer advocacy represents a high ROI strategy. It reduces customer acquisition costs and increases lifetime value, directly impacting the bottom line and justifying investment in customer success initiatives.
What’s In It for Sales Leaders: For sales, customer advocacy means warm leads and shortened sales cycles. Advocates generate high-quality referrals, leading to easier conversions and increased sales efficiency.
What’s In It for Marketing Leaders: Marketing teams benefit from authentic customer stories and testimonials, enhancing brand reputation and content authenticity. This customer-driven content is more cost-effective and significantly boosts marketing campaigns and outreach effectiveness.
What’s In It for Product Leaders: Feedback from customer advocates is invaluable for product development. Your champions know your products as well as you do and use them to achieve their business objectives. They can provide real insights into user needs across every persona, driving innovation and ensuring product roadmaps align closely with customer expectations.
Deep Dive into Building a Strategic CSQA Program:
Establishing and tracking CS Qualified Advocates (CSQAs) is crucial if you’re building a Customer Advocacy program that gets results. That’s not just because “what gets measured, gets done”. By measuring your activities, you also learn how to improve and which activities get the results that align with your business.
CSQAs represent customers who actively promote your brand. They serve as a measure of your Go-To-Market and advocacy success. Identifying these advocates helps you strategize engagement and reward mechanisms.
Measuring CSQAs allows you to do a number of things:
You can measure if your post-sales process is successfully creating advocates.
You can measure which CSMs are creating the most advocates.
You can identify if there are key activities that a customer should achieve or timeframes to model best practices. You can use those best practices to build proactive playbooks that you can encourage with digital or human intervention.
You can identify if particular customer segments and profiles are more successful than others. These could be Ideal Customer Profiles to double down on in Marketing and Sales efforts for new clients.
You can identify if there are particular customers that are bringing in more business for you than others. From that, you can learn how to build other successful customers, and you can reward those customers.
I’ve heard of a customer sent on a $15,000 trip to Hawaii with his family. Outrageous? What would you have spent on acquiring $300,000 of new business? Consider this new customer, who is likely a better match. Not only is the cost of bringing in the new customer via an advocate 1/50th the spend on CAC, but the retention of this new customer is likely 37% higher. Worth it.
Strategic CSQA Activities:
Strategic CSQA activities are not unlike any that you already know about. They include featuring customers in referrals, webinars, podcasts, conference panels, case studies, Product Advisory Boards, and Customer Advisory Boards. Maybe there are a few others you can think of. What makes them strategic is not the activity. It’s the intention.
Intentionally link the CSQA activities into a program from the customer's perspective. Why would they want to be involved in the program? What do they need to do to be involved? Are there levels? Could your program be gamified? Is there exclusivity? Are there networking opportunities that help their career? How do customers learn about the program?
Intentionally link the CSQA activities into a program from your employees’ perspective. How do they contribute to building customer advocates? Who has the lead responsibility? Are they recognized or incentivized? Do they know how to build advocates or how they will be rewarded? Can it be gamified? Do you follow through with the acknowledgment and reward?
Strategic Implementation & Optimization:
Keep in mind that customer Advocates do not just happen. Just because they purchased your product doesn’t mean they are instant champions. Advocates are a result of intentional customer journeys that guide your customers to achieve their business goals. They are the result of communication - they need to understand what the picture was before and after they started using your product. They are the result of nurturing and support - they feel successful because of your product and feel like they belong to your community.
When you build a Customer Advocacy program, it relies on everything that happened before it. It also relies on incentivizing and guiding your team to create customer advocates. Help them recognize best practices and give them the tools to track their customers so they can build champions. When your customers are recognized for their success, reward, and cheer on the team members who helped make them successful. Success breeds more success.
Initiate your advocacy program with a clear strategy and measurable objectives. Regularly assess and fine-tune the approach based on feedback and performance metrics. Continuous evaluation ensures the advocacy program remains aligned with business goals and market dynamics.
As you build your program, track and measure the numbers and revenue value. Consider ranking your customer advocates so you can reward them. Think about how gamification could add to your advocacy program for your customers and team members. Communicate the value your advocates bring to your company, not just as a one-off but as trends and cumulative. Include the number of webinar leads, percent of customers and revenue that close based on referrals, share what you’ve learned, what you’re trying, and why.
Beyond Tracking CSQAs: Second-Order Customers
Second Order Customers is usually a metric tracked by Sales, but it actually originates from Customer Success activities, and it’s worthwhile to track and claim your part in contributing to it. So, what is this metric, and why is it important to track?
As you build up your Customer Advocacy program, part of the process is identifying individual champions. But our champions don’t stay at that company forever. When our champions move to another company, we’re usually focused on how to build up another champion, asking ourselves if we are multi-threaded, Is our account at risk? We often forget about our champion who left. But that champion is an advocate who could buy from your company again and still advocate for your product and refer others. That champion and the people they refer are your Second Order Customers. And they are valuable.
Tracking Second Order Customers entails tracking how many times your champion at various companies, plus their referrals, purchases your products and the revenue it represents. On average, champions who leave repurchase about 10% of the time, and 1 in 3 of their referrals purchase your product. The customer acquisition cost is dramatically lower, and the retention rates and customer lifetime value are higher.
The power of a champion and their Second Order Customers is in contrast to customers who churn and become detractors. As a CS leader, showing the numbers and value of your increases in Second Order Customers and Customer Lifetime Value and how you’ve decreased churned accounts and revenue, illustrates the magnitude of the impact that your team has on the valuation of your company.
Second Order Customers also represent another way to work cross-functionally with Marketing and Sales. When you learn that your champion is leaving for another company, alert your colleagues and develop processes and campaigns to stay in touch with your champion. Make it easy and enjoyable for your champion to purchase your product at their new company and continue referring your products to others.
Conclusion:
Customer advocacy can transcend traditional marketing and sales strategies, and build upon and strengthen your post-sales motion. When you embed customer advocacy as a crucial component of your holistic business approach, your customers and your company can become more successful. By embracing and nurturing customer advocacy, organizations can achieve sustainable growth, enhanced customer loyalty, and a robust market presence. This strategy not only drives sales and post-sales revenues, it also fosters long-lasting customer relationships, positioning the company for ongoing success in a competitive marketplace.