After reading an article in Forbes entitled "Calculating the Economics of Loyalty," I had one of those apocalyptic moments:
If enough companies truly understand the real value of customer loyalty, they might completely change how they invest in customer aquisition. In other words, the profession of selling, as we've come to know it, may change forever.
Here's why:
Loyal customers feed your bottom line two ways:
- They buy more from you (and at a lower cost of sales/higher margin, because you didn't have to pay anyone to convince them to buy from you).
- They convince other new customers to buy from you (and these new customers also come at a lower cost/higher margin, because you didn't have to pay that salesperson to convince those "referred" customers, either.)
As companies begin to truly understand this value, and the postive financial impact of customer loyalty, they'll begin to invest heavily in customer loyalty initiatives - customer experience projects that excite customers enough to WANT to share their experience with other people they know - also know as Word-of-Mouth.
Social media, and the Internet have given customer word of mouth a far more powerful reach than the most potent internally-managed sales force could ever hope to have.
In order to harness this power to its advantage, companies will WANT to invest in building a better customer experience, instead of a better sales force, and the loyalty caluculates will support these decisions.
With the greater customer experience in place, your customers will do the selling for you. Those customers already have the sales tools (Twitter accounts, etc.), and they know how to use them. You just need to give the customer a reason to do it.
As more companies begin to cash in on the customer loyalty concept, they're more likely to focus sales resources on experiential intiatives, rather than selling initiatives.
A loyal customer's Tweet will outsell any amount of feet on the street.