{"id":2349,"date":"2013-12-06T15:24:33","date_gmt":"2013-12-06T20:24:33","guid":{"rendered":"http:\/\/blog.feedthebeast.biz\/?p=2349"},"modified":"2013-12-06T15:33:15","modified_gmt":"2013-12-06T20:33:15","slug":"customer-loyalty-effect","status":"publish","type":"post","link":"http:\/\/blog.feedthebeast.biz\/index.php\/customer-loyalty-effect\/","title":{"rendered":"Who\u2019s in your tent? You\u2019d better find out."},"content":{"rendered":"
The Customer Loyalty Effect can be brilliant \u2013\u00a0or devastating.<\/h5>\n

 <\/p>\n

So you\u2019ve got all these customers milling around in your tent. Do you really know who they are? Here\u2019s a tip. They\u2019re either Fans, Fence-sitters or Critics:<\/p>\n

1. Fans<\/em><\/strong> <\/strong>are your most loyal and enthusiastic customers. They love you.<\/p>\n

2. Fence-sitters<\/em><\/strong> have no particular loyalty to you one way or the other.<\/p>\n

3. Critics<\/em><\/strong> <\/strong>aren\u2019t just disloyal, they cost you money. They\u2019re dissatisfied, demanding, and costly to service. And they\u2019re very capable of spreading negative word of mouth about you.<\/p>\n

\"Customer<\/a><\/p>\n

If your mix of customers is just slightly off, you\u2019ll notice that your marketing and sales efforts aren’t producing the results you expect because:<\/p>\n

More Fans = faster growth
\n<\/em><\/strong>More Critics = slower growth<\/em><\/strong><\/p>\n

This may seem obvious, but what\u2019s not so obvious is the contribution each customer type makes to your revenues. Studies have shown<\/a> that \u201ctotally satisfied customers\u201d (Fans) contribute 2.6 times the revenue of \u201csomewhat satisfied customers\u201d (Fence-sitters), and 14 times more revenue than \u201csomewhat dissatisfied customers\u201d (Critics).<\/p>\n

At the same time, \u201ctotally dissatisfied customers\u201d (yet more Critics) were actually found to decrease<\/em> profitability at twice the rate that Fans contribute<\/em> revenue, because those Critics typically have much higher service costs, produce lower revenue, and can damage market growth through negative referrals.<\/p>\n

 <\/p>\n

\n

Fans will grow your business<\/strong><\/span><\/p>\n

\u2022\u00a02.6 times the revenue of \u201csomewhat satisfied customers\u201d.<\/span>
\n \u2022\u00a014 times the revenue of \u201csomewhat dissatisfied customers\u201d.<\/span><\/p>\n

Critics can mortally wound your business<\/strong><\/span><\/p>\n

\u2022\u00a0Critics decrease<\/em> profitability at twice the rate that Fans contribute<\/em> revenue.<\/span>
\n \u2022\u00a0Too many Critics and not enough Fans spells disaster. Something\u2019s wrong in the tent.<\/span><\/p>\n

\n

 <\/p>\n

The key takeaway is that you can have twice as many Fans as Critics and still<\/em> be losing ground! That\u2019s why you need to know who\u2019s in your tent, and fast. And yet, most don\u2019t.<\/p>\n

When Bain & Company surveyed 362 American companies a few years ago<\/a>, a whopping 80 percent of those who responded declared their companies were delivering a “superior experience” to their customers. But when Bain asked the customers themselves, only 8 percent agreed. That\u2019s a huge, frighteningly \u00a072 point gap!<\/p>\n

\"Customer<\/a><\/p>\n

To make matters worse, the average U.S. business loses between 10-30% of its customers<\/a> every year. In contrast, the most profitable companies lose less than 10 percent of their customers every five years. This strongly suggests that the most profitable companies have a better customer mix (more Fans, less Critics) than average companies. If you want to grow, you can\u2019t do it without making sure that your customer mix is working for<\/em> you.<\/p>\n

So what has this got to do with your marketing? Everything! If you don\u2019t have enough Fans in your tent, there may be an issue with your business. No matter how great your need to boost short-term sales, running a marketing campaign with too few Fans in your fold isn\u2019t likely be the best use of your time, people, and money. In fact, if your product or service is broken in some way, exposing more people to your \u201cbroken-ness\u201d sure won\u2019t help. It\u2019s almost always better to address the problem first.<\/p>\n

On the other hand, if you discover you have a tent-full of Fans, congratulations! You\u2019ll want to step on the marketing gas pedal and get the good word out. But guessing who\u2019s in your tent won\u2019t cut it. You have to go in there, talk to your customers, and find out first-hand who loves you \u2013 and who doesn\u2019t.<\/p>\n

 <\/p>\n

0<\/span><\/a><\/div> <\/div>
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<\/div>","protected":false},"excerpt":{"rendered":"

The Customer Loyalty Effect can be brilliant \u2013\u00a0or devastating.
\n 
\nSo you\u2019ve got all these customers milling around in your tent. Do you really know who they are? Here\u2019s a tip. They\u2019re either Fans, Fence-sitters or Critics:
\n1. …<\/p>\n","protected":false},"author":1,"featured_media":2352,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6,3],"tags":[144],"_links":{"self":[{"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/posts\/2349"}],"collection":[{"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2349"}],"version-history":[{"count":39,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/posts\/2349\/revisions"}],"predecessor-version":[{"id":2379,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/posts\/2349\/revisions\/2379"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/media\/2352"}],"wp:attachment":[{"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2349"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.feedthebeast.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}