Win consumer confidence

If you are offered an air-ticket to anywhere in the country for one-rupee flat, the first thing you would do is to go through the fine print to figure out what the catch is. More often than not, there is a catch. If the company won't be upfront about it, there is the Internet which performs the word-of-mouth function quite efficiently, giving you information ranging from similar competitive offers of other airlines to sob tales of people who have been shortchanged by overhyped messages.

The fact that "people... certainly do not trust business" (think Enron or WorldCom or the IPO scams closer home) needs to change. Companies have to build a relationship of trust with the customer, possible only if a company works in the genuine interest of the customer "" if it advocates something of value to the customer. The Advocacy theory (Theory-A) is what MIT professor Glen Urban makes a case for in the 200-odd pages of this book.

"Under this approach, you provide customers and prospects with open, honest and complete information. You give them advice so that they can find the best products, even if those products are not your company's products," says the professor who has specialised in marketing. Now, that is a tall order"" say, a Maruti providing information about Hyundai cars. The rationale is that the consumer is busy collecting information about competing products anyway. Help the consumer, and gain some trust. That would""ultimately""translate into higher sales.

Of course, the product on offer has to be par excellence in a transparent and trust-driven environment. That is possible if spends are veered away from pushy promotions (which many find irritating) and advertising, to product design and quality. This transition may be eased by the predicted decline of advertising-effectiveness-per-dollar and of advertising budgets per se, as the wise customer of today seeks more reliable sources of information than a good old ad. One wonders how marketers, and traditional media like print and broadcast, will take this?

Urban expects advocacy to become the norm in the next 10 years and recommends creating specific resources (vice-president, advocacy) to manage this transition from the current world of push/pull marketing. There are some early starters in the advocacy race, though, and most of them are Internet-related. AOL has a chief trust officer of the rank of senior vice-president. eBay has a director of trust. Siemens Enterprise Networks established a customer advocacy programme in 2002, headed by a director, to help the company better understand the needs of its customers and respond to them more efficiently. Chip company AMD started its consumer advocacy initiative in 2001, headed by a vice-president who reports directly to the CEO. Networking giant Cisco, which believes that customer satisfaction equals customer loyalty, also has a Customer Advocacy Group headed by a senior vice-president.

There are some industries which are best suited to a shift to advocacy like automobiles, computers and home-electronics. "Trust based marketing works best for complex products where loss can be large if the customer makes the wrong decision," says Urban. This approach is not recommended for commoditised or low-impact products and also for monopolies"" "Companies that face no competition at all need not worry about trust."

There is a catch in Theory-A too. When a company embraces this philosophy, there will be a financial burden. Sales and related profits may decline in the short term as products are redesigned and repositioned. The time taken to woo a typical sceptical customer will also need to be factored in. I don't know of many companies who would have an appetite for that, no matter how enticing the long-term promises of higher sales, margins, market share and customer royalty with reducing new-customer-acquisition costs are.

Urban, however, is convinced that "companies have little choice but to pursue trust". The professor would know, having co-authored as many as six books on marketing, and created tools for simulating future sales of new products. The current book takes you through the end of the Duh-customer-era, the evolution of the Internet-powered customer, the demise of middlemen like travel agents, the downsides of push/pull marketing and advertising, the industries which will have to transform and the tools for advocacy.

With ethics and transparency in business being the flavour of this post-scandals season, Urban's theme "" "doing the right thing corresponds to maximising long-run profit""" backed by data, makes for a welcome read.

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DON'T JUST RELATE""ADVOCATE!
BLUEPRINT FOR PROFIT IN AN ERA OF CUSTOMER POWER

Glen Urban
Wharton School Publishing
Price: Rs 499; Pages: 234