In this video, David Bell (@davidbnz), the Xinmei Zhang and Yongge Dai Professor at the University of Pennsylvania, talks about stakeholders as marketing assets. He’s a specialist in start-ups, and in this talk he explains the way that digital marketing can be used to build assets. A key concept for him is referral lifetime value: redefining the lifetime value of each customer to include their level of engagement and amount of referral activity. Here’s a nice definition:
Referral lifetime value is similar to customer lifetime value, but someone with a high customer lifetime value may not necessarily have a high referral lifetime value. Customer lifetime value, as you may know, is the value of that customer over the course of time. Referral lifetime value is the lifetime value someone has in referring to you. This concept makes marketing channels such as email and social median important because they aren’t just tools to acquire new customers from your subscribers and followers, but they also tools to encourage your subscribers and followers to refer possible customers to you. When you consider referrals as well as customers in these channels (and in your marketing in general), your message and your goals change. The point isn’t to convert all of these people into customers, but to create a great experience with the content so that those who won’t turn into customers will be fans of your business and willing to refer others to your business. Link.
For context, there’s a note here summarising a recent course Professor Bell taught on. Previously, marketers focussed on the individual’s personal spend with the brand. For Bell, the goal is to attract and retain engagement with your audience. Referrals are a form of engagement: marketers need to be measuring not only now well they convert people into customers, but also how they pass on recommendations that generate further income. Marketers have already established that customers won by word of mouth have a higher than average value.
Of course it’s pretty easy to do that in a consumer setting: A company can give its contacts a coupon they can give to their friends, and the value of those referrals can be more much than the individual’s direct value as a client. The key to driving that referral value is repeated conversations.
This is a very powerful lens through which AR people can look at analysts. Which of them are most likely to refer to us? How valuable are they as influencers of our market? What’s the half-life of our relationships?
PS Thanks to Victoria Rusnac (@VictoriaRusnac), like me a member of the London Business School Executive MBA community, for telling me about this concept, and finding David’s useful video.
