Advocacy is the best way to attract new business

It’s a noisy world. Advertising on TV and radio, in newspapers and on line. Cold-calling is an industry, sponsorship is increasing and about half of an average day’s post is junk mail (or is that just me?). Add to that business email, personal email, phones, mobile phones, blackberries, and texts.

Given that level of noise and that volume of messaging, it’s some wonder how consumer behaviour is really influenced now.

There are a couple of problems with any approach that relies on high levels of advertising and marketing activity. For one thing, people just get overloaded with communications and pay less attention. More seriously, when people find that some of the services don’t quite match the spin, they no longer trust messaging.

In that environment, perhaps the best way to be sure of what product or service to buy is to get a recommendation from a friend or from a professional adviser. Someone you can identify with and whose views you’d trust. And so it seems that one of the most powerful influences may therefore - once again – be recommendation. How many people, despite (or maybe because of) all the advertising, still choose a holiday because it was recommended by a friend?

If all this is valid, then it has to have a big impact on insurance. There are various views on the cost of launching and maintaining a retail brand. Initial marketing budgets of up to £20m with an annual cost anything up to say £10m? And how much does it cost to screw it up? A few poorly trained or badly equipped or underresourced people in a contact centre? A few bad experiences that get passed on or publicised?

The idea that poor service results in a loss of reputation and a loss of customers is obvious and old hat. What’s new is the challenge of turning positive customer experience into active marketing.

Perhaps in the future, the most successful marketing strategies will be built on two things. First, spending less on advertising and more on resourcing, training and equipping front line customer service people to be able to provide the ‘optimum’ customer experience. To live the brand rather than just describe it.

Second, ensuring that good customer experience gets turned into active recommendations – or ‘advocacy’. Compared to advertising, I guess that all sounds like a slower, less exciting approach. It could just be a lot more effective though.

Lee Gladwell is director of general insurance markets at the CII

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