● Retailing: Marks & Spencer,The Body Shop, Nordstrom
● Trucks: Scania, Mercedes
● Watches: Rolex
The area of advocacy and referral marketing is significantly under-
emphasized from the perspective of both corporate practice as well
as academic research. Few organizations have any formal processes
which focus on seeking to maximize the use of referrals from exist-
ing customers. Whilst many organizations recognize that customers
can be the most legitimate source of referrals to their prospective
customers, there is a strong tendency by most companies to simply
let referrals happen rather than to develop marketing activities
seeking to leverage the power of advocacy.
Virgin Atlantic is an interesting example of this. In a recent execu-
tive seminar in the UK 120 managers were asked to indicate whether
they were advocates of various commercial organizations. When
asked about Virgin Atlantic, about 20 per cent claimed that they were
advocates of the airline. This group was asked which of them had
ever flown on a Virgin flight. Five of them even claimed to be advo-
cates of Virgin despite neverhaving flown with them. When asked
about this, one of these members of the audience spoke at some
length about how he recommended Virgin Airlines despite having
never travelled with them. On a later occasion, one of the authors
asked Richard Branson to what extent he had sought to leverage this
advocacy. ‘It just happens and we enjoy the benefits of it,’ Branson
said. He believes a more proactive approach can be taken to leverage
the power of advocates and to attempt to get benefits beyond cus-
tomers’ ad hoc offers of advice and recommendations.
A relatively small number of organizations benefit greatly from
proactive efforts in creating advocates of their customers and
obtaining advocate-initiated customer referrals from them. First
Direct, a UK bank, who became the world’s first all-telephone bank,
has been a great success story through customer referrals. By 1996,
seven years after it commenced operations, it has over 640 000 cus-
tomers and has been highly successful in attracting high net worth
individuals. Despite less-than-successful TV advertising campaigns,
this bank has grown – largely through referral from its very satisfied
existing customers. Research conducted by First Direct shows that
around 85 per cent of its customers have referred new customers to
the bank, whilst the average for the other five major banks network
is around 15 per cent.
The referral and influence market domains 225