It's one of the biggest mistakes marketers make. Research shows that 60 percent of chief marketing officers are more focused on attracting new customers than they are on retaining existing customers, even though it costs much less to keep a current customer than to get a new one.
So what can marketers learn from Makers Mark, the whiskey distiller, and Lady Gaga, the pop star?
Plenty, argues Jackie Huba, a marketing expert and co-author of the Church of the Customer blog. Lady Gaga and Makers Mark had turned their top customers into vital sources of new business through word of mouth. Huba, author of Monster Loyalty: How Lady Gaga Turns Followers into Fanatics, explains how any brand -- from big-box retailers to mom-and-pop shops -- can attract new customers by simply courting their existing ones.
Q: You call a brand's most loyal customers the 'one percent,' which most people identify today with Wall Street protests. What does it mean in the marketing context?
A: ‘One-percenters’ are the customers who will evangelize your product and service to everyone they know. They are going to buy your product as a gift for others, they might even create content online about your brand – such as fan videos or art. They are also the first customers who are going to give you unsolicited feedback, especially when you screw up, because they want you to improve and be the best that you can be.
Q: So, 'one percenters' prefer to identify themselves?
A: Yes, because they are kind of crazy. They love the brand so much that it borders on what other people think is weird. If you go to Lady Gaga’s fan site, you’re going to see a bunch of crazy fans. Even everyday brands like Costco have ‘one percenters.’
Q: What’s the difference between 'one percenters' and ‘frequent purchasers’?
A: There’s a big different between customer loyalty programs based on frequent purchasing and ‘one-percenters’ which comes down to how we define loyalty. There are a lot of marketers out there that define their loyal customers by who purchases the most, but that’s not loyalty, if there’s a new or better deal these customers might switch to another brand – whereas ‘one percenters’ wouldn’t dream of it.
Q: How did the term 'one percent' come about?
A: While researching a previous book, my co-author and I started to look into online communities for IBM, Intuit and Microsoft. What we found was a demographic of people who were highly engaged in these communities – which we measured based on who was creating the most content. Over and over again we did the math and found that it was only about one-percent of members in the community who were actually creating all of this content. Ten percent of users were commenting on the content, but the rest of the 90 percent were just sort of lurking.
Q: How does a brand identify its most loyal customers?
A: One of the easiest ways to find them is to build a program that allows them to raise their hand and identify themselves. For example, Lady Gaga built her own social network for her die-hard fans called LittleMonsters.com and Makers Mark created their Ambassador’s program, which Maker’s states is “reserved for the truly passionate.”
Lady Gaga has over 780,000 members of her social site and over 38 million Twitter followers. Lady Gaga’s manager, Troy Carter, has said that he’d rather have a million die hard fans than 54 million because the die hard fans are the ones who are going to stick with them long term.
Q: How should brands market differently to their ‘one-percenters’?
A: Super fans need much more attention than everyone else. They need special things that other casual fans of the brand might not. A lot of companies treat all their customers the same and miss the opportunity to engender more loyalty amongst their top fans. Casual fans might be happy to just ‘Like’ a brand on Facebook and will purchase if given a deal or a discount. But these super-fans can’t get enough of their favorite brand and will purchase, evangelize and engage regardless of deals.
There are three ways to empower your top fans. First, create a community. Super engaged customers love to connect with other engaged customers who are as weird as they are. Some companies create a community through online social networks, like Lady Gaga’s Little Monsters. Other companies have offline events such as Mini Cooper’s cross-country road trip, Mini Takes the States.
Second, give your best customers a name -- an identity that they can be part of. For instance, Aruba Networks has named its community members ‘Airheads,’ a title that has stuck and many proudly claim.
Finally, a community manager is everything. It’s very important to have a persona that is connected to the community and gets people involved. Lady Gaga, for instance, is really the community manager for Little Monsters. She has her own profile and regularly posts exclusive information about her music and her life.