As impressed as I am with Don Peppers’ “return on customer” metric (MW May 12), I still think there is a danger that it does not capture where marketing is really headed – and it suffers from over-complication.
Today, loyal customers are not necessarily profitable and profitable customers are not necessarily loyal. And pushing messages at the “most valuable customers” to improve lifetime value (LTV) will not necessarily grow your business. Word of mouth (WoM) and referrals are now more important than increases in sophisticated measures of trust and LTV.
We are increasingly turning to our friends – rather than to marketing communications – for help with attitude formation and buying decisions. And this is becoming more important as consumers are bombarded with more messages through increasingly fragmented media.
An individual will only recommend your product or service to another if they are satisfied and prepared to put their credibility on the line. Then, two important things happen. The “broadcaster” refreshes their attitude to the brand, building a stronger barrier to brand switching; while the “receiver” converts into a more profitable customer.
A modern customer metric must include WoM.
I do hope that an updated version of return on customer is taken seriously. But I suspect that marketers will put up strong resistance to this new metric because it is different and will not “improve market share in Germany by two points in the next quarter”.
Perhaps adding WoM to return on customer will help to make everything simpler and more relevant to where marketing is going. In any event, a marketer today avoids considering WoM at his or her peril.
Keevill Barton Kershaw