What brings customers to your company? Do they find you through advertising? Or do coupons and special offers bring them to your door? The international economic crunch has businesses all over the globe wondering how to attract customers more frugally.
With revenues and consumer spending on the decline, few businesses can afford to spend on traditional advertising, as the recent 30% drop in newspaper advertising sales indicates. Fortunately, PeopleMetrics’ research shows that the best kind of advertising is free. Your current engaged customers are already spreading positive word-of-mouth, so why not make their recommendations the center of your next sales drive? As PeopleMetrics’ 2009 Most Engaged Customers (MEC) report states, "If a brand or service is recommended to a [new] customer by a trusted source, this recommendation goes a long way toward building goodwill and Customer Engagement, even if the organization fails to meet expectations." In other words, positive word-of-mouth from current customers is a highly effective method of attracting new loyal customers.
PeopleMetrics research shows that a company’s financial success is directly tied to its level of customer engagement. As we’ve written in previous posts, companies with more engaged customers enjoy higher ROI, ROA, and overall revenue growth. After analyzing how companies with highly engaged customers achieved their results, the 2009 MEC report suggests several strategies for increasing customer engagement.
One of those strategies involves disseminating positive word-of-mouth about your company. To attract new Engaged Customers, the 2009 MEC report recommends that companies provide customers with opportunities to evangelize and provide testimonials. It's important to emphasize the quality of customers who follow word-of-mouth recommendations to your company's door. PeopleMetrics' research shows that customers who come to companies through the recommendations of friends or family members are more forgiving of service failures. This is important because service failures often lead to disengaged customers who no longer want to do business with a company. The 2009 MEC found that 2 out of 5 customers who "chose an organization based on a recommendation and subsequently experienced a problem are engaged, versus just 1 in 4 of those experiencing a problem with an organization that was not recommended to them."
Techniques for encouraging current customers to provide positive recommendations include:
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Adding a section to your website to allow customers to provide ideas, recommendations, and testimonials.
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Asking new customers how they found your company. If they were recommended by a current customer, reward that customer who provided the referral. (Obviously, these little treats for referrals don't have to be huge--a $5 gift card for your product or services could be enough.)
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Participating in online social networking communities. By establishing a presence in relevant online communities, you will be able to better understand what your current customers think. Social networks also offer easy tools for spreading good word-of-mouth to new customers.
–Kate Feather
