Customer advocacy initiatives have increased in adoption significantly in the past year with analysts from SiriusDecisions emphasizing the impact of referral marketing and brand advocacy in their 2016 conference. But when researching advocacy and referral marketing initiatives, you might notice that there is confusion about the differences between general brand advocacy vs. referral marketing. So here it is:
Brand advocacy uses a few customers, employees or fans who are extremely passionate about a brand to advocate for them to groups of people, typically through social channels. Brand advocacy includes actions like testimonials reviews, sharing content and social posts. This type of initiative is often used interchangeably with word-of-mouth marketing.
Vs.
Referral marketing incentivizes customers (and partners) to advocate for a business or product through a personalized 1-1 connection between advocates and their personal and professional networks. These interactions, referrals, are a way to create a scalable channel for lead generation.
Or in other words, brand advocacy uses a few extremely loyal customers to try and influence on a group scale while referral marketing uses many galvanized customers and partners to influence individual peers on a personalized level.
The different roles brand advocacy and referral marketing play in an organization
Even after defining brand advocacy and referral marketing, the finer details that separate them can be blurry. As brand advocacy and referral marketing initiatives differ in result and execution, so do the roles that drive them in an organization.
Brand advocacy
Within an organization, brand advocacy can be very similar to storytelling. Brand advocacy often starts within an organization through the use of employees. This type of general initiative is encouraged or required by all departments by spreading the brand’s story and message through social media and content sharing.
When a dedicated brand advocacy program is undertaken, it often falls under PR, Communications or Social Media marketing with customer success providing significant support. The high involvement of customer success is due to the nature of brand advocacy. Since brand advocacy programs lean away from using incentivizes, but instead rely on a few highly dedicated customers to preach their story, it means that customer success needs have a strong nurture campaign in place in order to increase the number of brand advocates.
For marketing, brand advocacy acts as an awareness program for an organization. These responsibilities include:
Recruiting customers to become advocates.
Keeping track of the analytics.
Developing materials and content that can be shared by advocates.
Promoting the brand advocacy program to customers.
Creating materials for customer success.
When undertaking this type of brand advocacy initiative there are some challenges:
Brand advocates have a specific amount of reach that “dries up” over time.
It is difficult to scale brand advocacy activity beyond a small percentage of customers.
It is easy to “burn out” an advocate by asking for too much from them.
But don’t get me wrong, brand advocacy has a meaningful place in an organization if you can keep your customers passionate about your brand and actively advocating.
Referral Marketing
Unlike brand advocacy, referral marketing’s main purpose is lead generation with the benefit of building awareness. Since lead generation is the focus, marketing and sales takes on the majority of the responsibility within an organization.
For marketing, a referral marketing program creates an always-on channel for organic lead generation at scale. This has been shown to generate an increased number of high-quality MQLs and increase the chance of buying by 400% (Nielsen).
As with a brand advocacy program the management, content creation, analytic, and promotion are the responsibility of marketing. But as this acts as a lead generation program there is more to it than brand advocacy. Since incentives are used to galvanize advocates (customer and partner) updating incentives and creating special rewarding structures also fall under marketing’s responsibility.
Marketing’s responsibilities for running a referral program include:
Recruiting customers (or partners) to become advocates and make referrals.
Keeping track of the analytics.
Developing materials and content that can be shared by advocates.
Managing incentives and their fulfillment.
Enabling sales to help drive referral success.
When undertaking a referral program there are some challenges:
Ensuring referrals can be tracked from social media, email or a verbal referral to a salesperson all the way to a closed won opportunity.
Fulfilling on incentives and tracking for tax compliance.
Making sure referral functionality is in the CRM so sales can leverage.
Marketing can mitigate these challenges by investing in referral software for tracking, attribution and fulfillment of the referral and rewards. This takes the pressure off marketing and removes the chance of lost data or program breakage. The involvement of incentives also increases the need to offer real-time referral status updates to advocates in order to keep them engaged.
In regards to sales, they can play a significant role in driving advocate recruitment and referral activity if enabled to do so. After a referral becomes an MQL, sales needs the ability to view the data of the referral and advocate within the CRM in order to reach out to the advocate and qualify the referral. Once the referral is qualified sales can then can get a trusted introduction to the referral from the source that referred them. No matter how much passion an advocate feels for a brand, this added amount of nurturing the advocate undertakes requires added compensation which is why offering rewards is an important part of referral marketing.
Additionally, sales should be enabled to “own” advocates within the CRM so that objectives for recruiting new advocates and obtaining referrals can be measured and motivated. With advocate ownership also comes the ability to route leads made by an advocate to the salesperson responsible for the relationship. The outcome of this is a stronger relationship and engagement between customers and the brand.
What analysts are saying about referral marketing and brand advocacy
Referral marketing
“A referral program and referral software are concrete ways a company can actually show what customers have provided in terms of specific leads they’ve generated by being advocates. They help monetize something that’s pretty hard to monetize in specific terms.” – Megan Heuer, Vice President of Research, SiriusDecisions
“Referral deals move faster through the pipeline.” – Bob Peterson, Senior Research Director, SiriusDecisions
ADP found referrals are their top source of new leads. – SiriusDecisions, 2016 Summit
“Customer advocacy solutions can deliver significant business benefits by driving referral business and expanding wallet share among existing customers.” – Forrester Research
“Referral marketing is a channel that offers a high volume of excellent, low-cost leads.” – Gartner
Brand advocacy
“More and more companies acknowledge that if they don’t do a great job of engaging their customers after they buy, they’re not going to be able to keep them.” – Megan Heuer, VP & Group Director, SiriusDecisions
“Improvement in volume and quality of engagement with customers, improvement in retention, and a higher rate of customers who are active advocates.” – Megan Heuer, VP & Group Director, SiriusDecisions
“All opportunities supported by advocacy and other pipeline acceleration strategies benefit from quicker sales cycles.” – Bob Peterson, Senior Research Director, SiriusDecisions
Which initiative should you take on first?
There is no question that there is value in both brand advocacy and referral marketing. In large organizations these are handled by different groups within marketing so if you’ve got the resources, take on both. If resources are tight and you have to choose one, go for the initiative that brings the biggest impact to revenue growth – referral marketing.
With an average 35% conversion rate from referral to purchase (data from Amplifinity platform) it makes sense that referral marketing programs are dramatically increasing in adoption. Now that we’ve examined the differences between referral marketing and brand advocacy, discover why referral marketing program should be on your adoption list by determining your referral program ROI with the ROI calculator.