Customer disloyalty is costing companies billions of dollars each year. According to loyalty guru Fred Reichheld, many major companies now lose – and have to replace – half their customers in five years. Think about that. Companies keep trying to get new customers in the front door. Meanwhile, about half of the existing customers are leaving out the back door. It’s like a revolving door. One CMO for a services company that we know said that increasing his company’s loyalty rate by only 1% would mean millions of dollars in revenues and profits.
Airlines, hotels, restaurants, retailers and other companies use loyalty programs to keep their customers from leaving. But these companies are missing a major opportunity to increase loyalty by energizing their Brand Advocates, those consumers who act as Champions for your brand and who influence purchase decisions and perceptions of others.
- First, creating and nurturing Brand Advocates increases the loyalty of these enthusiastic customers themselves. A recent Harris study found that 79% of Brand Advocates are likely to repurchase.
- Second, and even more important, energizing Brand Advocates helps companies keep customers who might have otherwise churned out.
We saw this at Apple, where I worked as a marketing consultant for ten years. Apple Advocates drove loyalty by acting as a powerful marketing force. These enthusiastic customers went out of their way to:
- Educate other Apple customers about product features and benefits, which increased product usage
- Defend the Apple brand against negative Word of Mouth, a significant cause of churn
- Build communities of other Apple customers, which drove brand engagement
- Remind Apple customers why they purchased Apple products in the first place
So what do we recommend?
- Build your Brand Army. Identify and engage your Brand Advocates. These are not just people who like your brand. They recommend you to others.
- Activate your Brand Army. Provide them with Social Recommendations tools that make it easy for them to recommend you even more on Facebook, Twitter, shopping sites, and more.
- Acknowledge your Brand Army.Don’t pay or provide incentives to your Advocates. That would be inauthentic and even risk offending Advocates. But thank them for recommending you.
Ultimately, the best solution for keeping customers is to provide positive customer experiences. But building and energizing Brand Advocates is also powerful way to increase loyalty and should be part of nearly every marketer’s arsenal.
PS: Did you know?
According to marketing firm Colloquy's Loyalty Census released last year:
- Membership in U.S. customer-loyalty programs has reached 1.8 billion, up from 1.3 billion in 2007.
- The average U.S. household has signed up for 14.1 loyalty programs, but only participates in 6.2 of them.
- American businesses issue roughly $48 billion worth of perceived value in reward points and miles annually.