Metrics to Help With Budget Justification
Advocacy is largely an intangible service, as customer relationships are at the crux of it. So how do you justify program costs to people who might not be familiar with advocacy?
Through Metrics.
Referential tracks various key business parameters for each of our clients on a monthly and bi-annual basis, which in turn provides the data they need to justify their advocacy programs’ budgets. One of the most meaningful and powerful bi-annual metrics that we have in our portfolio is Client Lifetime Total Revenue and Longevity (CLTR-L).
CLTR-L was developed to evaluate the dollar value of a client relationship over the length of the contract, and the longevity of the relationship. In other words, how much money the customer has spent and the length of time they have been a customer. This metric is important for multiple reasons, but the primary one is that it enables us to quantifiably contrast the average value of active advocates against the average value of non-advocates. From this, we can help our clients demonstrate the tangible business impact that active advocates are making on just their part of the overall revenue.
Gaining a Deeper Relationship
In our experience, CLTR-L typically reveals that customers who participate in customer advocacy programs – gaining a deeper relationship – have a higher total dollar spend and are customers for longer periods of time. For many companies, SaaS in particular, churn is a paramount issue as many studies have shown the cost of acquiring a new customer is significantly greater than the cost of retaining one.
The CLTR-L analysis quantifies the contribution the advocacy program members are making to average longevity and be used to encourage sales reps to enroll other customers to boost retention.
Tracking CLTR-L Over Time
Tracking CLTR-L over time enables our clients to demonstrate the importance of customer marketing and advocacy programs to upper management. An effective program frequently has an upward trend in CLTR-L for customer advocates over time as compared to non-reference customers.
In our experience, this data plays a big role during budget cycles and annual reviews as the metrics prove that the investment in the program yields a significant return (usually multiple times over) through the increased retention of customers that are proven to spend more money and encourage prospects to purchase too.
Additionally, we benchmark CLTR-L performances across all our clients – this enables us to conduct blind comparisons across industries. If we have a client that is trailing the Referential benchmark for its industry, we’re able to use the diagnostic data from CLTR-L to analyze and optimize its advocacy program performance.
For more information on CLTR-L and how Referential can help with your metrics to justify your program, please set up a free 30-minute consultation, or feel free to reach out to hello@referentialinc.com .
In this Q&A, we delve into insights shared by Referential's Advocacy Consultants, Kristian Gallego and Rob Lisama, on the challenges and strategies involved in customer recruitment for advocacy programs. They discuss overcoming common hurdles like database management and client engagement, emphasizing the importance of trust-building and leveraging technology effectively to drive successful recruitment outcomes.