Other organizations have been able to grow to a strong market
position relying heavily on the process of referral from existing cus-
tomers whilst undertaking no advertising. Shouldice Hospital in
Canada, a highly focused hospital which specializes in hernia oper-
ations, undertakes little advertising and is a good illustration of the
power of such advocacy. Other organizations such as The Body
Shop (see Case Study 4.3) have achieved considerable success
despite spending no money on advertising. It has achieved this
through a combination of gaining referrals from advocates and by
building relationships with the media and other groups within the
influence market domain.
One of the best examples of advocacy referrals is Nordstrom, a US
chain of superior quality fashion department stores. This chain is
regarded by many as the best retailer in the USA. Despite its heavy
geographic emphasis, in terms of store location, on the west coast of
America, it has a strong following right across the USA. Many
people living in overseas countries are also advocates of this organ-
ization and travel to the USA specifically to visit a Nordstrom store.
Nordstrom has a high degree of advocacy amongst its customers
and formal organizational processes aimed at leveraging referrals. It
is also renowned for its superior recruitment and internal marketing
(see Case Study 5.3) which leads to outstanding customer satisfac-
tion and advocacy.
The practice of unconditional reimbursement for any merchan-
dise, whether used or unused, without a Nordstrom sales receipt
can be used to demonstrate how Nordstrom views referrals and
how they think about investment in word-of-mouth referral mar-
keting compared with advertising. Pascale^3 quotes an executive
vice-president who explains:
Nordstrom literally grinds up truckloads of shoes each year. These
are returned shoes that have been worn and cannot be sent back to
vendors. At face value, it seems nuts to have a policy like this. But if
we run one full-page promotional ad in the Seattle newspaper, it costs
us the equivalent of 500 pairs of shoes. And we don’t know if the ad
works. But give a customer a new pair of shoes with no hassle and it’s
a story that gets told and retold at parties and at the bridge table.
Word-of-mouth endorsement really works.We know it.Heskett, Sasser and Schlesinger^4 argue that such stories have
become more important to Nordstrom than the relatively low
226 Relationship Marketing