Creating Raving Fans - Using the Ladder of Loyalty
Tools to make you THINK differently about your business
Can I invite you to take a step back for the moment and think of a couple of the great brands that you have had experience of; that you rave to others about, or indeed others rave to you about.
My guess is your answers may have included one or more of the following:
- Snap-On Tools (… can you can tell I used to be an engineer?)
- British Rail … just kidding
You have an emotional connection with these brands not a logical connection. I put British Rail at the end of my list just to prove the point. Although they no longer exist, many of you will have read the above list and as you checked off each name would have thought “okay” fair point, may not be on my list, but others do rave about them. Then when you saw British Rail something somewhere in your body would have screamed WHAT!? That’s an emotional connection … of the sort we don’t want.
The Ladder of Loyalty
The Ladder of Loyalty is a framework for helping organisations think about their customers and where they may be on a spectrum, the objective being instead of, or perhaps as well as, finding new customers (expensive), to move existing customers up the ladder so you help them more and in turn they help you more ….by raving about you.
Let’s take a look at the individual components of the ladder.
Suspects are the vast array of potential customers who could potentially take your services. We do a lot of work with lift companies and some of the sales and marketing people in these companies would say that “anyone with a lift” is a suspect in our target market… but for best effect it’s useful to segment the market so your messaging is more precise and focused on the companies that are “ideal” suspects. (See our blogs on Market Segmentation)
Prospects are slightly more involved, they may have liked you on Facebook, downloaded an e-book, commented on a LinkedIn post, attended a webinar, subscribed to a newsletter or simply walked into your business or given you a call. These are the people that have an intent to purchase but have not yet done so.
A shopper has actually bought your product - but just once; it could be something big or small, but whatever it was they only bought once.
Given that these companies are only one-time buyers it means that to get more of them you have to spend, often considerable, time and money finding new prospects to generate leads to become new shoppers. The lead generation process needs to be repeated. This is expensive and is the main reason why brands try to take customers to the next level.
Additionally, in the vast majority of cases this is where the majority of the marketing budget is spent.
We want you to be cleverer than that…
As a result of the often considerable spend required to get a new customer, many organisations will simply not make money on one shopper buying just one product.
In the fist instance, what you want is customers making repeat purchases or buying more than one product or service. These guys have found you, you have satisfied a need and they now know your offering is sufficiently attractive to be purchased repeatedly, with confidence.
A member is a customer that feels (emotional word) part of your brand, they feel part of your tribe. They have a deeper connection; they might not shout about you but they are part of your community. Examples include Costa Coffee or Starbucks loyalty schemes … essentially things are done to make you feel a bit special.
Once you have a cohort of people at this level you have developed a significant ability to communicate with your people.
Advocates are very happy to make a recommendation but usually only if asked. And these people are important because most people rely heavily on recommendations and the opinions of others when buying new products for the first time. This is where your referrals begin to come from and you need to collect data to keep the referrers engaged and delivering …and you need to say thank you!
You all know raving fans of particular products. These guys are the walking advert for various products and services. They’ll recommend without a second thought. An example is my business coach - marcosoares.co.uk should you be interested. Now, how valuable is that? It cost him nothing and it’s critical in today’s word of social media where customers can connect and interact instantaneously. Ibs, the MD of one of the companies in Marco’s coaching group is a raving fan of Tesla. So much so Marco eventually bought one just to keep him quiet! You all, I’m sure, know raving fans of Apple…love them or loathe them you can’t deny they have “just cracked it”.
Raving fans make recommendations and referrals as if they were confetti at a wedding. The result is both reduced risk for the buyer and reduced impact of price comparisons for the seller.
Additional dimensions & their implications
The more you can put in place mechanisms to move customers up the ladder of loyalty the more effective and more efficient your marketing becomes.
Speed of transaction increases with trust
If you are working to convert suspects to prospects and prospects to customers this is usually a slow ol’ process compared to moving a shopper to a customer or a customer to a member. Indeed, the lower down the ladder you are the fiercer the competition because the prospect is more sceptical and comparisons need to be made to check competence and to build the trust required to make the initial purchase.
Once the first purchase has been made and successfully delivered, they know you, the trust is there and the decision to proceed with additional purchases is usually considerably quicker.
There is an inverse relationship between marketing spend and the rungs of the ladder of loyalty. The higher up the ladder of loyalty the less the marketing spend.
Additionally, the higher up the ladder the less price sensitive the transaction usually becomes. The client knows you and trusts you. They obviously don’t want to be ripped off but this is traded against the chance of appointing a different provider and the considerably higher risk of a problem with an unknown supplier.
The key to the ladder of loyalty is to develop repeatable processes and mechanisms that nudge customers and ‘help’ them to get as high up the ladder as possible. This usually means understanding them in detail, developing relationships and providing a more personalised offering that exceeds their expectations at each step.
The rewards are invaluable to them … and to you! They get a better and more trusted service; you get a raving fan that without instigation tells others about you providing recommendations and referrals reducing your marketing spend and increasing your profitability.
How cool is that?!
Related tools and ideas
Purple Cow: Transform Your Business by Being Remarkable. Seth Godin
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