Driving growth with loyalty segmentation

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Richard Owen, Satmetrix
Richard Owen, Satmetrix

When it comes to marketing, you could be missing the point. You're out there marketing by email, social media, post cards, offers—you name it. But, it doesn't end with the sole customer you're engaging at that moment. You should be encouraging your most loyal customers to market for you.

How? Loyalty segmentation.

You're familiar with segmentation, using everything from demographics to purchasing patterns. But, have you considered customer loyalty segmentation? It's the goose that lays the golden egg.

The easiest way to segment based on loyalty is the Net Promoter system. Companies such as Safelite, Philips, and Lenovo use Net Promoter to determine how likely customers are to recommend them to friends or associates.

By using Net Promoter to score customers on how likely they are to recommend, you can segment them into three groups: Promoters—loyal enthusiasts who will keep buying and refer others, fueling growth; Passives—satisfied but unenthusiastic customers who are vulnerable to competitive offerings; and Detractors—unhappy customers who can damage your brand and impede growth through negative word of mouth.

Now that you've segmented, you can use this knowledge to grow your company. The numbers speak to just how important Promoters are to your bottom line. For instance, a Filene Research Institute study of customer experience at credit unions found that 97 percent of Promoters are likely to maintain their relationship with the brand. Furthermore, 64 percent of Promoters are likely to refer the credit union to others.

These Promoters are ready to share your brand with their friends and help you grow your business. All they need is a little nudge from you.

Taking action

I've presented you with the goose. Now what about those golden eggs? Well, you have to make sure your goose keeps laying them, that they hatch, and then they lay even more. There are three key ways to do so:

1. Engage with your Promoters: Your Promoters love your company. So, don't just leave them standing there. Keep the conversation going via targeted loyalty programs, a monthly newsletter, or other marketing efforts. Develop relationships with them.

2. Prompt your Promoters: Ask them to share their feedback, spread word of mouth, and show their love for your brand through social media. They're already likely to recommend your brand to their friends, so ask them to just do it.

3. Keep them happy and coming back for more: Extend discounts, special promotions, and trial offers. Mobilize your Promoters to extend these offers to their friends and through their social networks with their connections.

HouseMaster, a company that provides home inspections, has seen the benefits of direct marketing to their Promoters. After identifying 12,000 Promoters through a Net Promoter survey, the company sent each Promoter a coupon and encouraged them to share it across Facebook, Twitter, and LinkedIn. The Promoters love it, and they're spreading positive, measurable word of mouth through social media.

Through its online efforts, HouseMaster has seen an 11-fold increase in likes from March to September 2012. The company's online engagement has increased 40-fold in the same six months. Beyond social media metrics, the company's total revenue is up 15 percent compared with the same time frame last year.

So, you're convinced, and now you're ready to segment your Promoters for business growth? Well, it's not all about you. This goes far beyond the marketing department.

To market effectively using the Net Promoter system, you need to reach out and work hand-in-hand with other functions within your company, including customer service, sales, and customer experience. Working together is how you'll drive a memorable positive customer experience, and that's how you'll see growth. Make exceptional customer service a core value for your company and you'll create an experience for your customers that they'll want to tell their friends about. It's the marketer's dream: Your job becomes a whole lot easier when your customers do the marketing for you.

Richard Owen is president and CEO of Satmetrix, and coauthor of Answering the Ultimate Question with Dr. Laura Brooks.

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