How Industries Are Already Using Advocacy Strategies

(15002)

The increased customer power that underpins customer advocacy strategies is now being felt in a number of industries. A number of new ideas are being tried to respond to the decreasing effectiveness of the traditional push marketing tactics. You need to take on board the lessons already learned in the marketplace and more forward rather than futilely attempting to retain the status quo.

The Travel Industry

In the 1960s and 1970s, business travelers were the mainstay of the airlines. This changed in the 1980s and 1990s when leisure travelers came to the fore and industry capacity grew. Airlines resorted to load management pricing that meant pricing became very complex and time sensitive. The entrance of discount airlines further intensified this trend this trend. At the same time, Internet-based third parties (Orbitz, Expedia and Travelocity) were established to help customers price-shop when if comes to planning their travel. This greater amount of information has meant many more customers:

Decide their own trade-offs between price and quality.

Do their own bookings rather than use a travel agent.

Can aggregate their travel expenditure to get better deals.

The travel industry itself is responding to this increased customer power by offering open and honest information via the Internet along with more options, better advice, simplified procedures and more personalized service for those who want it. It does appear the Internet-based third parties are here to stay, however, as these companies are profitable and some even have market capitalizations greater than many airlines. Consumers can now get better deals and can choose to use a travel agent, to use an online service or to go to each airline direct through its Web site.

The Automobile Industry

Long noted for pushy sales tactics, before the Internet the dealer’s sales representatives had greater power because they had more information about inventory levels, dealer costs and quality ratings. With the Internet, customers are much better informed, meaning they can make better decisions. They can walk into a dealership knowing the vehicle they want, what stock level the dealer has o hand ready to sell, what the dealer paid and which other nearby dealers they are willing to go to if negotiations at the first dealership don’t result in an acceptable deal. Research has shown that better informed customers now save on average $40 when purchasing a vehicle.

To respond to greater customer power, vehicle manufacturers are attempting to cultivate better relationships with customers. General Motors, for example, has created a Web site called AutoChoiceAdvisor.com in partnership with J.D. Powers, an independent third-party assessor of vehicle quality. They advisor asks a series of questions and then produces a ranked list of the top eight vehicles that will best fit the customer’s needs and preferences. The site advocates all models rather than just GM vehicles. Customers can then arrange to have a 24-hour test drive of the vehicles they are considering buying through the Web site. The industry’s approach to marketing to customers is now shifting significantly towards trust-based ideas and initiatives rather than push tactics.

The Health Industry

At one time, whenever someone had a health related question they had to go see their doctor to get advice. Today, customers have access to a vast amount of health information via the Internet. In addition, many drug companies now sell direct to the customer. Employees can often choose between a number of different health plans offered by their employers, even down to the level of whether they want generic brands or specifically branded health products when they go to a pharmacy. In all, consumers now have much greater power over their medical decisions.

Reflecting this increase in customer power, online community groups have sprung up for virtually every major disease. These allow people to share stories, exchange information with like-minded people and find the best treatments. Many customers then go to their doctors demanding specific treatments rather than asking what the doctor suggests.

In the health industry as a whole, it is not yet clear who will take the lead in responding to this increase in customer power. All members of the industry–pharmaceutical firms, hospitals, doctors, regulators, retailers, the HMOs–are trying different ideas that accommodate better informed and more demanding customers.

Stock Buying

When eTrade launched in 1996, this revolutionized consumer investing. As a number of other firms rushed to enter the market, the price of trading stocks dropped by more than 50 percent compared to the prevailing rate of commissions in the 1990s. To respond to these new market entrants, the traditional brokerage houses have tried a variety of approaches. Schwab emphasizes trust and customer advocacy because its brokers are not paid a commission and therefore can offer impartial advice. Merrill Lynch provides premium investor services at lower prices and personalized assistance. As a result, independent investors can now receive a level of research and personalized, consultative services that put them on a par with professional fund managers.

The Financial Services Industry

Consumers can now go to Web sites like BankRate.com and money-rates.com to find out daily interest rates for loans, mortgages, certificates of deposit and other financial services. At one time, banks would have preferred to keep this information confidential. Today, however, most banks and other lenders realize the customer is going to get the information anyway. Therefore, a better approach is to openly disclose what’s being charged and then find ways to justify the difference. Consumers now have a wide range of options where previously they had very few.

The Real Estate Industry

Getting around homes in person is very time consuming. Therefore, around 56 percent of home buyers go online first to develop their own shortlist of houses they want to see in person. Realtors initially resisted this but now have found they are better of pooling their listings and providing in-depth information to consumers. Other new intermediaries are also in the marketplace allowing people to list and sell their houses with out a real estate agent (ISoldMyHouse.com) or to compare the performance of the various real estate companies (Quality Service Certification).

Auto Insurance

Traditionally, it was very difficult and time consuming to compare policies and prices directly. Today, consumers can go to AllQuotesInsurance.com, fill out one form and then get a summary of all the various options available. This has forced many more companies to offer instant quotes online rather than forcing people to wait tor a quote to arrive in the mail weeks after making an inquiry. Many financial institutions are also offering insurance as add-ons to their products or services.

Job Finding

Around 20 percent of all working-age adults in the United States now have resumes posted online in Web sites like Monster.com, Jobs.com and Careerfish.com. These people are indicating that they are willing to change jobs at any time for more money and better conditions. This makes it easier for employers to find the people they need. Traditional recruitment agencies are responding by changing their focus from generating job offers to more of a screening service for job applicants.

Consumer Durables

There are now a host of new information providers who can provide consumers with unbiased information before they decide to buy anything. These would include Amazon.com, Dealtime.com, CNet.com, Bizrate.com and Epinions.com. These sites allow purchasers to provide feedback on what they have found in using the products in real world situations. They also make available peer group ratings and retailer ratings. Retailers, in turn, are responding to this avalanche of new information by using the Internet in some very smart ways. Wal-Mart and Circuit City encourage shoppers to start online and do their comparison shopping and then visit one of their stores for a hands-on demonstration. This also provides peace of mind about after-sales servicing. J.C. Penney has more than 9 million people on its opt-in mailer service where customers are e-mailed information about new products and the latest discounts. As time passes, retailers will find more and better ways to integrate the Internet into their business models.