One of the key themes I cover in Think Like A Rock Star is to discuss and explain why most rock stars can create loyal fans so much easily than most companies can. There are many reasons why rock stars so easily cultivate fans, but perhaps the biggest reason why rock stars have more loyal customers than most companies do is because rock stars focus on rewarding existing behavior, while companies focus on offering incentives to change existing behavior.
Let me say that again: Most rock stars focus on rewarding the existing behavior of their fans, while most companies focus on offering incentives to change the existing behavior of potential customers. This also speaks to a fundamental difference between who rock stars and companies market to. Companies seek to acquire new customers, so they create marketing strategies that are designed to change existing customer behavior. Price-based incentives are a big part of this, such as coupons, rebates, discounts on shipping, etc.
Rock stars seek to develop deeper relationships with their fans, and as part of this they seek to reward their fans for their existing behavior. Last week as part of my keynote at Social Brand Forum I mentioned how in 2010 Taylor Swift had a special 15-hour autograph signing for her fans. Taylor signed for over 2,000 fans over the course of nearly 15 hours on June 13th, 2010, only stopping long enough in the middle of the day to perform a 90-minute acoustic set. All for free. Because Taylor wanted to reward her fans for supporting her.
Yet this approach is also very powerful for building loyalty because for the fan it validates why they love their favorite rock star. On the flipside, when a company offers you a coupon for purchasing their product, you understand that they want your business. While this does increase the chance that you will change your behavior the next time you need to purchase that particular product, it does not increase your chance of being loyal to that brand after the initial purchase. Brands build loyalty by rewarding existing customers, not by trying to acquire new customers via incentives. For example, if you are a long-term Dish or DirecTV customer, you may have been upset over the last few years to see some of the incentive packages that the competing brands are offering new customers to sign up with them. Often, the packages are better and at a lower price than what existing customers have! This tactic works for acquiring new customers but it not only does not build loyalty among existing customers, it can actually lower levels of loyalty among existing customers!
Let’s again review the Loyalty Graph. Companies are focused on acquiring new customers, so they offer incentives to this group, trying to win their business. The problem with this approach is that New Customers is the group that’s the largest, but that also has little to no loyalty to that particular brand. This is especially problematic if your brand offers price-based incentives to this group, because if another brand offers a higher discount, it will probably win that customer’s business.
At the other end, rock stars are focused on connecting with their fans (brand advocates), and rewarding their existing behavior. Rock stars don’t have to offer incentives to their fans to encourage them to generate new sales because their fans are already engaging in this behavior. Their fans are already going out and encouraging new customers to become existing ones.
So for your brand, that means you have two ways you can attempt to acquire new customers: By marketing to them directly (and paying a lot of money to do so), or you can connect with your biggest fans and delight them, with the understanding that their efforts will lead to new customers.
If you want to build loyalty among your customers always remember: Loyalty is built by saying ‘Thank you!’ for existing behavior, not by offering coupons as incentives for new behavior.