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One Way a Customer can be Strategic without Being that Big

Does your company give special attention or status to some of your best referral-giving customers, no matter their spend? If not, you should know there are good business reasons to consider some advocates as important.

So much regarding Word of Mouth or marketing seems opinion-based or focused just on B2C, that it was good to find real data support about referrals in the October 2007 Harvard Business Review article by Kumar, Petersen, and Leone.

Their study found the true value of referrals to be higher than you think. A referring customer’s value beats the lifetime spending by a typical customer. This happens in part because some new customers from those referrals make valuable referrals themselves.

Some of their other takes I find compelling include:

1. Referrals should definitely be encouraged, by giving thanks and rewards, but also by asking other good customers to begin making referrals.

2. Consider new segmentation that gives status and attention to your biggest advocates. The point here is recognizing and supporting customers whose value as a good reference warrants special attention, even when they don’t spend at strategic account levels.

3. Watch how to measure referral-making. Since not all customers saying they will refer actually do so, a better metric for counting and classifying customers comes after the fact — noting who actually gives referrals. In counting the value of a referral-giver, remember as well that not all prospects actually become customers …unfortunately! 

 

About the Author

Jeff Marr

Jeff Marr

Marr provides thought leadership to Walker and the customer strategy profession. In keeping with the newest proven approaches, Marr designs services used in client engagements. This includes facilitating customer-driven action by clients at the corporate, functional and account team levels, and creating new measurement solutions. Formal approaches Jeff helped create and launch include value mapping, account engagement, strategic assessment, won/lost bid assessment, and assessing lost/diminished customers.

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