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charles

Is There More to “Long-Term Customer Value” Than We Know?

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Once upon a time, the customer who spent the most money was the most valuable to your company.

Around that same “once upon a time,” word-of-mouth was spread over smoky poker games, among ladies at luncheons, and in conversations with your neighbor over the fence posts.

But times aren’t quite what they used to be…

Social media has replaced church potlucks for how word-of-mouth is spread. The audience covers a much wider range, and talk isn’t just on Sunday afternoons anymore – it’s 24/7.

And because chatter about your business is constant, those giving you glowing reviews online are becoming your most important customers.

Don’t get me wrong, revenue DOES still play a role in who your best customers are, but now revenue has a dance partner known as brand advocacy – and they go hand-in-hand…

First, let’s look at the traditional concept of who your most valuable customer is:

It’s the person who spends the most money with you, right? Not just once or twice a month, but over a period of years…

Now let’s take a product we’re all familiar with: Apple.

For some, Apple can do no wrong. I mean, they can release a new phone that bends while being stored in pants pockets, and people will still defend it.

Seriously…

To Apple’s brand advocates, their products are worth speaking up for… even if they seem questionable.

They’ll talk about it…

They’ll preach about it to anyone who will listen…

They’ll stand in lines for hours to get it, no matter what it is… These are people who will camp outside for days, in the rain and snow, with only an umbrella and a box of granola bars to eat… People standing in lines that extend down dozens of New York City blocks and wrap around buildings, just to get the elusive new Apple product.

Positive word-of-mouth from just one customer not only increases his or her value to your company, it can also add up to even more revenue.

Just look at these numbers from Branderati:

  • Brand advocates generally spend twice as much than average customers on favorite brands
  • Brand advocates are 75% more likely than other customers to share product information
  • Brand advocates are 50% more likely than other customers to influence a purchase
  • 90% of brand advocates will write something positive about their purchasing experience
  • All it takes to double your revenue growth rate is a 12% increase in brand advocacy

Sounds great, right? But in order to get this increase, you have to build your brand advocates…

Seth Godin outlined many ways to grow a group of followers in his book “Tribes.” In the book, Godin lists several ways to build a great team and be a strong leader, and these tactics can be used to grow brand advocates as well – after all, your advocates ARE on your company’s “team.”

Godin’s book focuses on the concept of human connection and the group’s influence.

A group only needs two things to be a tribe:

  1. A shared interest
  2. A way to communicate

It’s up to you to step in and be the leader (a group of people without a leader is just a crowd).

One of Godin’s key points is that leaders make a ruckus and don’t follow the status quo…

People yearn to be part of something, and they like to talk about things that aren’t boring.

Godin outlines five things to do get your tribe going:

  1. Publish a manifesto – Get your ideas in order: what you believe in, what your business believes in, and what you would like to achieve.
  2. Make it easy for your followers to connect with you – Be available and listen to what your followers have to say, whether it’s positive or negative, and act accordingly.
  3. Make it easy for your followers to connect with one another – You’ll want your brand advocates to be able to communicate and know each other, as this will make them feel connected. Social media is a prime place for this.
  4. Realize that money is not the point of the movement – It’s about bringing people together to support what you believe in.
  5. Track your progress – You need to be able to see how effective you are at spreading your message.

It’s important that your business, your product, and the solution you’re offering are worth fighting for.

For Apple, it’s the idea that they are “thinking different.” Apple is bucking the status quo set forth by PC users. Apple users are different… Or at least perceive themselves that way.

Here are some tips when it comes to being the leader of your brand:

  • Be passionate about your business and product
  • Don’t try to please everyone (going back to Apple, think about Steve Jobs – he certainly did things that made people scratch their heads, or even get angry, but his strong belief in his products and ideas propelled the company)
  • Tearing others down is never as helpful to a movement as building your followers up
  • Maintain a positive atmosphere and give back to those who are giving to you
  • Your movement needs to be bigger than you – you may have planted the seed, but it’s growing into a community, and treating it as such will increase the number of brand advocates in your tribe

Godin reminds readers that the restaurant with a line out the door didn’t grow in just a day…

All movements start small, but as they grow, they will begin to thrive… and you’ll quickly see how powerful they can be.

In your corner,

Charlie

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