We make customer referral programs more effective
Many companies use the expensive part of customer referral programs to attract new customers, because they know that personal recommendations always represent the best advertising. Therefore, companies rely on the personal communication between customers, which is significantly more effective than mass communication. However, some customers of a company are in a special way for customer referral programs, according to a recent study on "Customer Referral Management".
Prof. Dr. Gianfranco Walsh, Professor at the Institute for Management at the University of Koblenz and Dr. habil. Ralf Elsner from RhenaniaBuchVersand has shown in a new study that key figures in interpersonal communication - so-called "market mavens" - recruit more new customers on average and have a higher customer value (so-called "customer lifetime value", abbreviated: CLV) than other customers. Market Mavens are well-informed and usually actively communicating referees who are happy to share their knowledge with other consumers. This joy in finding and sharing information is what makes Market Mavens so interesting for companies.
As part of a broad, three-stage study, Walsh and Elsner first identified market mavens using an established measurement scale. It was then determined how many customer recommendations make Market Mavens compared to other customers and how many of these recommendations actually lead to new business for the company. In the third step, the customer value of all examined customers - non-market mavens and market mavens - was calculated on the basis of the purchase history and the number of customer recommendations made. It showed that Market Mavens were four times more likely to be recommended than other customers and had a 15 percent higher customer value.
Walsh and Elsner therefore recommend that companies always identify the market mavens among their own customers when designing customer recommendation programs and use them to acquire new customers.
Source: Koblenz [ University of Koblenz-Landau ]
