What V. Kumar, J. Andrew Petersen, and Robert P. Leone highlight in their article “How Valuable is Word of Mouth" is that contrary to popular belief, “your most loyal customers are not your most valuable ones.” This is because the value of a customer cannot be measured simply by what he or she purchases. In fact, “how your customers feel about you and what they are prepared to tell others about you can influence your revenues and profits just as much.”
For example- Members of airline frequent flyer programs are valuable in that they repurchase, but most aren't recommending that airline to their friends. Advocates are more valuable because they will stay loyal and recommend brands.
Here’s another example from yours truly- In my quest to get fit, I find myself trying all sorts of health food products. Almost every day I bring to work with me a cup of Safeway brand non-fat plain Greek yogurt. Now I don’t know if you’ve ever had non-fat plain Greek yogurt, but it is NOT good. It’s flavorless and sour, and the absence of any sort of delicious milk fat makes it thin and runny instead of nice and thick and creamy. I would never recommend this brand to any of my friends or family, unless I wanted to laugh as their faces change from the hopeful expectation of dairy goodness to surprise and distaste as they shove the cup back toward me. In spite of this, I am still an avid consumer of the stuff because it’s part of my healthy diet and the brand is readily available and affordable. However, I don’t think Safeway brand non-fat Greek yogurt will be calling me their most valuable customer.
On the flip side of this, I also regularly drink a protein shake made by Gold Standard 100% Whey in Extreme Milk Chocolate, and I love it! Most of the time people laugh when they see me break out an enormous five pound tub of it, but then I explain to them how great it is. It only has 130 calories for a scoop, hardly any fat or carbs, as much protein as four eggs, and it helps you recover from workouts while keeping you full for hours. Plus it tastes like chocolate milk, and who doesn’t like that?
Do I sound like a paid actress advertising this brand? I’m actually just an Advocate! Not only am I a loyal customer, but I also recommend this brand to my friends and family because I don’t want them to suffer through the gross taste and grittiness that often accompanies other brands of protein powder.
The lesson to be learned here is this: It is not always just a customer’s loyalty and cash that you want, but their social recommendations. And, you can't assume that your loyal customers are Advocates of your brand.