Honda, Hyundai and Kia get best word-of-mouth recommendations in US

Mon, 09 Dec 2013

Forget advertising, incentives and, yes, even our excellently crafted vehicle reviews, sometimes the best way for automakers to sell cars is still good ol' fashioned word of mouth. In an attempt to measure this "word of mouth" power, The Boston Consulting Group, a management consulting firm, has created a new study called the Brand Advocacy Index (BAI). The index takes a look at how various industries perform from person to person. Those industries include automotive, smartphones, grocery, mobile telecommunications and banking.

The study polled more than 32,000 individuals across Europe and in the US to come up with the top 55 brands in these various industries. On the automotive side of things, the top brands in the US were Honda, Hyundai and Kia, all tied at 63 percent. On a global scale, Volkswagen and Toyota scored the highest with a 65-percent BAI rating (both in France). The average BAI for auto industry players tallied 50 percent.

As for companies in other industries, Apple's iPhone was the index's top-rated smartphone, Trader Joe's was the highest recommended grocery store, Virgin was sat atop the mobile telecom industry and USAA was the top retail bank. Scroll down for the full press release on the new study.

BCG Inaugurates the Brand Advocacy Index

BOSTON, December 2, 2013-The Boston Consulting Group (BCG) announces today the launch of the Brand Advocacy Index (BAI), a strategic metric that measures word-of-mouth recommendations with much greater precision than existing approaches. Unlike competing measures, BAI displays a strong correlation with top-line growth and helps identify concrete actions for improving what is known as "brand advocacy."

A new report from BCG estimates that brands with high levels of advocacy-the most recommended brands-significantly outperform heavily criticized companies. For the sample of brands studied, we found the average difference between the top-line growth of the highest- and lowest-scoring brands was 27 percentage points. The report, titled Fueling Growth Through Word of Mouth: Introducing the Brand Advocacy Index, is being released today.

Smart marketers have long understood that word-of-mouth recommendations from consumers have greater impact on sales than any other source of information. And it's not just that positive buzz moves the financial needle forward. Negative word of mouth from brand critics can push results in the opposite direction.

Despite the relevance of brand advocacy, companies have struggled to measure it in the marketplace, demonstrate its top-line impact, and develop tactics that improve word of mouth. BCG has created BAI to address these gaps. BAI displays a strong correlation with top-line growth-81 percent, or double that of other measures of customer promotion. It also reveals the relative influence of both customers and noncustomers in driving recommendations, as well as the rational and emotional factors that motivate both groups to recommend a brand.

"Although the level of advocacy varies widely by industry and country, we have not found a single category in which advocacy is irrelevant," says Pedro Esquivias, a BCG partner and coauthor of the report. "BAI opens a window onto the precise mechanisms for measuring and managing brand advocacy, allowing any brand to harness these insights to fuel growth."

BAI shines a spotlight on the companies that have achieved the pinnacle of word-of-mouth recommendations. To understand where companies stand, we surveyed more than 32,000 consumers in France, Germany, Spain, the U.K., and the U.S. The results reveal the brands that respondents recommended the most, selected from five diverse product categories in these countries. Only 55 brands have earned a place on our new list. (See the exhibit below.) Each brand achieved its position by being in the top three brands in its respective product category and country.

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"Consumers are positively recommending the most recommended brands to their friends, family, and coworkers-often spontaneously and even when they are not customers of the brand," said Steve Knox, a BCG senior advisor and coauthor of the report. "Their strong financial results show the power of advocacy to drive top-line growth."

Noncustomers can be particularly influential in certain industries, such as those in which consumers purchase products and services infrequently or in which only a small number of consumers purchase. The luxury automobile industry is an example: even though relatively few people own luxury autos, a large number of people feel entitled to share their opinions about the leading brands.

In the report, authors Pedro Esquivias, Steve Knox, Victor Sánchez-Rodríguez, and Jody Visser explore how BAI can guide brands, identifying and prioritizing critical areas of brand strategy and customer experience as part of a larger effort of brand-centric transformation. For areas in which the brand is weak, BAI can help prioritize actions with the highest potential to transform the business and drive advocacy. For areas in which the brand is strong, BAI can help build on specific brand advantages to drive advocacy. BAI can also help companies focus on the right segments. In addition to guiding brand transformation, BAI offers unique insights into broader issues of, for example, operations, customer service, and loyalty programs that could be improved with a better understanding of the specific brand attributes that customers value.

In an environment of constrained resources, some smart companies are planning to add advocacy to their traditional marketing mix. These forward-looking organizations want to build long-term relationships, not just Facebook "likes" and buzz. BAI offers brands an efficient way to measure this vital leading indicator, simultaneously maximizing scarce resources and driving growth. For companies ahead of the curve, our approach to measuring advocacy confers a significant advantage. For those relatively rare brands that can build an emotional connection with consumers in advance of the competition, that competitive position can be difficult to dislodge.

By Jeffrey N. Ross