This is a cross post of an article appearing here on the Better Business Banter blog.

I recently spoke with Dave Balter, serial entrepreneur, CEO of BzzAgent, and radical agent of change in loyalty marketing. We focused on the characteristics of loyalty based marketing, the Net Promoter Score, and how to establish trust with customers.

For those who dont know, BzzAgent is a social marketing company that accelerates word of mouth to drive sales. Powered by a network of over 800,000 people, BzzAgent creates measurable business results for marketers through an influential advocate network, a powerful engagement platform, and a proven analytics approach. BzzAgent has been at the vanguard of word of mouth marketing since 2001, running more than 1,500 programs for global companies including Unilever, Wrigley, L’Oreal, and Michelin. They were recently aquired by Dunhumby, a division of Tesco, for close to $60MM to reinforce their social media marketing and analytics.

Here are some highlights of our conversation:

1.a BzzAgent focuses on a set of BzzAgents who are opinion makers and brand advocates in almost every social demographic. What are the characteristics and behaviors that you believe make a successful BzzAgent that best encourage product trial?

Dave: Our network has expanded to north of 800,000 individuals across the US, UK and Canada, and over the course of 2,500 programs, we’ve noticed some interesting trends.

We tend to find advocates aren’t classified by demographic data (or geographic!) but rather by personality type and what I’d call “product consciousness”. On the personality type front, we’ve done a number of studies on the subject, and we’ve found that advocates tend to be people who communicate for fun or altruism. One interesting data point is that advocates tend to share opinions about products and services as a way to relax (think of sharing with friends at a book club or over drinks). [Check out BzzAgent’s whitepaper on the characteristics of Brand Advocates]

On the “product consciousness” front, an advocate is someone who will pro-actively speak or share their opinion about a brand. In order for that to be authentic, the individual needs to have recognized their relationship with the product or service. In essence, they need to be aware of how much they like the product, which is often through very specific experiences that creates the willingness to share. Often an advocates will share their experience, not general information about a product or service!

1.b. Do these characteristics change depending on what type of product or social group you are targeting?

Dave: There are products that are likely to generate proactive sharing, and others that are reactive. For example, you might feel comfortable just telling a friend out-of-the-blue about a great new soda or a fragrance or even a cool digital service, which is an example of proactive sharing. It wouldn’t feel abnormal to the recipient of their friend talked with them about these products.

Reactive sharing often has to do with products or services that we don’t talk about as openly. That might be what credit card you use and why, or your insurance or highly personal products like feminine hygiene or an anti-anxiety drug. Sharing in these cases tends to happen once someone has sought out an opinion, but it may feel awkward to share about these products without being asked about first.

2. BzzAgent focuses a lot on measuring ROI of the campaigns it manages, especially around the # of conversations, new trials, and coupon usage. Do you ever go back and look at long term behavior and brand “stickiness” long after the campaign has finished?

Dave: We’ve focused on the ROI of social marketing for many years, and in the past few years we’ve seen some major breakthroughs. Specifically, we’ve been measuring programs using third-party Market Mix Models from companies like Nielsen and SymphonyIRI, which uses regression analysis to prove which marketing vehicles are driving what return – as well as Matched Market Panels, which compares return across an active market vs. a market without a program running. We’re proud to say the results are really dramatic – social marketing can be measured all the way to sales.

The future of measurement for social marketing will be to tie social to shopper marketing – in essence, measuring results via in-store purchase behavior. We recently were acquired by dunnhumby and you’ll see some significant evolutions of our models based on our ability to measure individual shopper behavior.

With all that said, yes we do go back to look at overall long-term brand behavior. This is valuable information about the value of an advocate over time, which can be immensely beneficial to a brand. That said, we really focus on more direct ROI as the key measurement for our programs. [Check out more whitepapers on how BzzAgent calculates the value of word of mouth, traditional advertising communications, and social media ROI]

3. A lot of companies focused on customer loyalty leverage the Net Promoter Score (NPS) in addition to customer satisfaction. What are your thoughts on NPS as a reliable measure of customer loyalty and what other measures do you look at to determine the health of a brand among consumers?

Dave: Truthfully, we think that NPS is an interesting metric, but is often misused and rarely provides enough deep insight to help companies engage and activate brand advocates. I’m a big fan of the concept, but think it’s best served as a way to evaluate whether your employees are happy or what your clients think of you than a measurement of brand advocacy.

4. One of the Principles of BzzAgent that you and your team established is “Making marketing a better place for marketers and consumers”. Where do you think the concepts of customer relevance, value and integrity break down in today’s more traditional marketing process?

Dave: We do see a landscape shift here, in most cases for the better, but there are still some abusive tactics going on. To the better, I think companies have started to really invest in their consumers by talking with them more directly via social media and engaging more quickly and efficiently. The days of the complaint letter are long over. Companies are recognizing the need to listen more often and more closely. Think Best Buy’s Twelpforce as a good example of the benefit to the consumer (better customer service) and to the company (solving problems more efficiently).

I still see quite a bit of abuse though – I’m particularly concerned with the continued attempts to place ads in every single place possible. We’ve got ads on taxi tops and at urinals and laser-displayed on the sides of buildings. Recently I noticed a company that was trying to embed ads into your apparel. For consumers, there just isn’t anything valuable about this – I don’t really believe the argument that this helps each of us become more informed. We’re now in a marketplace where the consumer gets informed by using the tools at their disposal (google, review sites, asking peers!, etc.). Marketers need choices that allow them to market in ways that the customer respects.

5. Are there any brands that you believe are doing a great job in engaging their customer and driving loyalty? What do you think they do that is so successful?

Dave: Well, any BzzAgent clients, of course!

Seriously, I’m a big fan of brands that embed loyalty right into their product. For my daughter’s 6th Birthday, I took her to the American Girl Doll Store, which could be one of the most impressive cases of creation of loyalty I’ve seen. These folks make the process of buying a doll an event to be remembered from the way they display the choices, to the way the staff is trained to share in the joy of the event (they gave my daughter a birthday sticker and the everyone on the staff went out of their way to wish her a happy birthday). Each doll comes with a special tag that allows you to create a digital version of your doll – a wonderful tactic to engage beyond the first experience…and maybe help parents spend just a little bit more with them! With a reservation, you can have a meal in the store, where they provide mini seats for the newly purchased doll, complete with mini teacup and saucer, crown and all sorts of other knick-knacks.

I think the code American Girl has cracked is the idea that it’s not just about the product, but about everything you do around it that counts.

6. Twitter seems to be the last big social media platform to arrive on the scene that filled an unmet need for a significant audience, coupling short content with the opportunity for celebrity or anonymity as followed and followee. What are some new or undiscovered social media approaches and companies that you think promise to be disruptors in the years ahead?

Dave: I’m paying a lot of attention to the reputation management space right now. I’m involved with a company called Smarterer (http://www.smarterer.com) which allows people to get scores on their digital, social and technical skills. Of course, people can then put their scores in places that matter. About.me is another in a similar vein where you can create your online bio in a way that really represents who you are. My sense is that part of the future will be people’s ability to really articulate who they are more effectively across any of the social media or digital platforms that comes along.