Wednesday, October 21, 2009

Creating customer evangelists.

Post 351 - Greg Selkoe, founder of clothing retailer Karmaloop, and a handful of his employees gather in his office every week to review new designs. The group votes on which, if any, of the T-shirts, jackets, and other clothing should be added to the line Karmaloop sells in its store and online. That may sound a lot like what goes on at most retailers, but what's worth noting is that at Karmaloop, many of the designs are submitted by its customers.

Selling clothing designed by customers is just one aspect of a business model that brings customers so far into Karmaloop's business that they've become extensions of the company's sales, marketing, and product development teams. Karmaloop has more than 8,000 customers who proselytize the brand and get discounts or cash when they, or someone they've referred, make a purchase. Members of this "street team" are called reps. Each rep can create their own unique rep code. They're encourages to give that code to everyone they can; people then enter it at check-out the first time they shop on Karmaloop and get 20% off - plus the rep earns points towards cash or free gear. Customers continue to receive a 10% discount for every subsequent purchase. Every time that person buys again and uses the rep code, the rep earns more points and the customer receives their 10%. There's also a unique link that reps can use for their own site and a blog that tracks their sales for them.

Reps can also upload images, photos, or artwork to Karmaloop's site to make company stickers or banners other reps can download. "The reps are evangelists for our site," says Selkoe. "And they're doing a neat job: Fewer than 1% of Karmaloop's customers are reps, but their purchases and those they inspire account for 15% of sales."

Passionate customers can transform your company if you make them your secret weapon. When customers are truly thrilled about their experience with your product or service, they're willing to become outspoken advocates for your company. These believers then turn into a potent marketing force to grow your overall universe of customers.

Authors Ben McConnell and Jackie Huba, in their book Creating Customer Evangelists, explain how to convert already loyal customers into influential and enthusiastic evangelists. The year-long research project that led to the book outlines the framework for developing evangelism marketing strategies and programs. From their research into the best practices of some of the most forward-thinking companies with legions of evangelists (Southwest Airlines, Krispy Kreme Doughnuts, The Dallas Mavericks, IBM, Apple, Costco, Starbucks) McConnell and Huba outline and explain the basic tenets of this strategy:

1. Continuously gather customer feedback.

2. Make it a point to share knowledge freely.

3. Expertly build word-of-mouth networks.

4. Encourage communities of customers to meet and share together.

5. Focus on making the world, or your industry, better.

6. Establish an emotional connection with your customer evangelists.

Their research shows organizations that focus on building word of mouth into full-fledged evanagelism grow faster, are more profitable and have big-picture ideas that can end up changing their industry.

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