Investing Terms: What is an 'Evangelist'?

Have you ever been so enthralled with a new gadget that you had to tell everyone about it? Then tell them why they too need to get one right away?

When a product or service lands in your life and makes it better than ever, it's natural to promote that brand to your friends and family.

In this case, you're known as a brand advocate, brand loyalist or brand enthusiast.

Whichever name "evangelist" customers go by, they are an important part of a company's growth and a great sign of staying power.

One simple question, "Would you recommend us to a friend?" is pure gold when it comes to business analytics. The more people that say yes, the more free, organic advertising a company gets.

Nowadays, companies are spending more money to get customers to answer yes to that question than they are on traditional advertising.

How does this tie into investing?

In addition to researching products and services that you like, start listening to what brands your friends are advocating.

Which brands do they like on Facebook? Which cell phone or internet company would they recommend you use? Is there a restaurant, clothing brand, or social network that gets people you know fired up when they talk about it?

Pay attention to these things. Studies have shown that the more willing customers are to recommend a product to their friends, the more likely the company will experience higher growth.

And high-growth companies are exactly what you want in your portfolio.

TL;DR

• An army of active brand advocates is a sign of a company's competitive advantage.
• The more people who recommend a brand to friends, the faster that brand will likely grow.
• Start listening to which brands your friends are advocating in person and online.

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.