Your best customers aren’t who you think they are

By Molly Flatt

Yes, yes, every brand likes to claim that every single customer is as important to them as their first born son, but very few of them act like it. And that’s not necessarily an effective attitude, anyway. The truth is, the old belief that your biggest spending customers are the most valuable is crumbling in the face of social media.

Seth Godin’s been using Kindle users and Walmart shoppers as examples of how businesses should focus on giving an optimum experience to those who are ‘better at spreading the word’, not just apportioning their attention equally - and Josh Bernoff wholeheartedly agrees: “dealing with individuals is hard. It’s about to become central.”

via exepotes @ Flickr

This isn’t new thinking. In the 2007 Harvard Business Review study How Valuable is Word of Mouth?, professors Kumar and Petersen at the University of Connecticut and professor Leone at Ohio State University analyzed thousands of customers across two companies, telecomms and financial services, to compare their customer lifetime value (CLV) - how much they spend - with their customer referral value (CRV) - how much they talk.

Their conclusion? By focusing on getting big spenders to talk, and nurturing their most vocal advocates, “both companies reaped returns on their marketing investments greater than 12-fold–more than double the normal marketing ROI for their industries.”

Rather than waste funds encouraging big spenders to spend slightly more while overlooking the power of customer evangelists who don’t buy enough to seem important, you can reap much higher rewards by nudging big spenders to make referrals and urging enthusiastic proponents of your wares to buy a bit more.

What all three articles tell us is: the big talkers are overtaking the big spenders as your most valued customers. You’ve got to start engaging with them, and encouraging others to join in.

Brought into the world on Tuesday, November 3rd, 2009 and filed under Stats & Research.

  • RT @CICData http://ow.ly/AynU

    ‘big talkers are overtaking the big spenders as the most valued customers’


    This comment was originally posted on Twitter

  • Your best customers aren’t who you think http://ow.ly/AynU ‘big talkers are overtaking the big spenders as the most valued customers’


    This comment was originally posted on Twitter

  • Molly Flatt
    "Big talkers aren’t big influencers, they’re people who like the sound of their own voices."

    Research? Any facts to back up your p.o.v?

    "Apple on the other hand does only what Apple wants to do, with great success."

    They'll prob be very pleased that they've convinced you it's that easy.
  • Josh
    Um, no. It shows how desperate "social media" is getting.

    Big talkers aren't big influencers, they're people who like the sound of their own voices.

    "If the principles of being truly consumer-led then pervade every aspect of the company, by forcing them to personalise and make everything that they do conversational..."

    Following the crowd/focus group is one way to do it.


    Apple on the other hand does only what Apple wants to do, with great success.
  • Molly Flatt
    I think that's a very fair point - but there almost needs to be an element of positive discrimination to redress the balance for a bit. It would be great if brands treated all customers as valued individuals deserving of some wow-factor, but historically their priority has been on those who spend the most, so it's time the less generous but more vocal folk got some love too. If the principles of being truly consumer-led then pervade every aspect of the company, by forcing them to personalise and make everything that they do conversational, every customer will benefit.
  • I've got to say, I don't totally agree with this one. Politicians often practice something similar, by paying attention to focus groups based on swing voters. The end result can often be something that doesn't appeal to the silent majority of voters, who aren't vocal but have nonetheless been providing support.

    There's a certain amount of politics to running a business; like a political party, you need to make sure your userbase know exactly why you're better than others in the market. (It's slightly different in that politics is often zero sum, whereas business usually isn't.) The vocal minority are deeply important, and should be both listened to and engaged with - and word-of-mouth is incredibly important - but your most valued customers should be a balanced mix, and it's important to not ignore the long-running ones, however quiet they might be. They're the ones who have bought into your values and have seen the changes you've made over the years; at least in my experience, conversations with them can be very productive indeed.
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