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How Retailers are Building Customer Advocates

The cover story in Stores Magazine outlines how more retailers are focusing on building customer advocates.

Shoppers become “active advocates” when they feel strongly enough to share their positive experiences with friends and family. An “active advocate” speaks well about your brand or store, but they also spend more.

So how do you measure advocates? One technique that has gained a lot of attention recently is Net Promoter Score (NPS), developed by Fred Reichheld, author of “The Ultimate Question”. Companies with a high NPS score also had exceptional revenue growth.The entire study boils down to one question that asks respondents to rank on a scale from 0 to 10 the following ƒ?ohow likely are you to recommend this company/store to a friend or colleague?ƒ?? The NPS score is achieved by taking the percentage of positive responses and subtracting the percentage of negative responses.

Stores Magazine tested this very question over the 2006 holiday season. Stores along with BIGresearch polled 8,000 consumers over the age of 18 and asked which store they had purchased the most of their 2006 holiday gifts. Then respondents were asked to rate, on a scale of 0 (lowest) to 10 (highest), how likely they would recommend the store or chain to friends. Amazon.com (60.7%) and Costco (55.6 %) earned the highest NPS results which compares with Fred Reichheldƒ?Ts findings, Costco (79%), Amazon.com (73).

If you would like to build active advocates, consider developing a customer advisory panel with Vision Critical. Customer advisory panels are groups of people (usually into the tens of thousands) who have agreed to participate in research inquiries. Since 2000, we've developed 150 panels for organizations such as Liz Claiborne Inc., RIM Blackberry, Cleveland Clinic, Nestle, Valvoline, Telus, Virgin Mobile, WestJet and Sirius Satellite Radio. If you would like to learn how we can help your organization, contact Julie Romas at julie.romas@visioncritical.com or call 604.647.3557.

Posted on March 6, 2007
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