As I started to think about the new customer acquisition problem, my first answers were:
- Identify who your best customers are
- Decode the genome of these best customers
- Use the Best Customer Genome (BCG) to run lookalike campaigns for new customers
I should mention another point in passing. A brand’s best customers could also be persuaded to get others like them – given that each of us has a wide social network, and we do tend to advocate brands we like to our family and friends. Word-of-mouth has a big influence on what we buy.
I never thought of this seriously until the same question got asked in three successive meetings. In fact, one of the CMOs put it in straight-forward terms: “I don’t want to spend a lot running Google/Facebook ads for new customer acquisition. I have X million happy customers. How can I get them to get me more like them?”
What the CMO was alluding to was referral marketing. (It is also called word-of-mouth marketing, but I will stick to referral marketing in this series.) That got me thinking about the problem more deeply. One angle especially struck me – how to persuade the best customers to do referral marketing? The best customers are very likely to know and refer more like them – which means it can become a very powerful positive feedback loop for revenue growth for a brand.
The problem seemed very similar to the loyalty programs that brands run. Most brands have a loyalty program, but few have transitioned to making it into a VRM program which creates a differentiated experience for their best customers. Referral programs also seemed to be stuck in a similar time wrap – if they existed. A free ride here, a few points there, and that’s it.
Were brands missing out on a big opportunity by not combining the two ideas of best customers and referral marketing? If so, what could they do?
Tomorrow: Rethinking Referral Marketing (Part 3)