By Ted Janusz
Can you relate to this? John Wannamaker, the Philadelphia department store magnate, said “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” But there is one form of marketing, that ALWAYS works … what is it?
WORD OF MOUTH!
Of course, now with the internet and social media, you could call it WORLD of mouth marketing. People are six times more likely to rely on the word of other people when making a buying decision rather than advertising.
In fact, 80% of consumer buying decisions are based on personal recommendations. Here’s why it works …
The average American adult knows 400 people … people you work with, went to school with, or people you know socially. If you assume each of those 400 people know 400 others (of course, there will be some overlap – but let’s keep it simple), you now have an immediate network of 140,000 people.
And if you assume those 140,000 people know 400 others, you are up to one-third of the US population. And what will people spread about your business, good news or bad? Right! Bad news!
Your average satisfied customer will tell 5 to 8 others. But your average upset customer (if you have any) will 10 to 16. In fact, one in five will tell 20 people how upset you have made them.
In their book Creating Customer Evangelists, authors Ben McConnell and Jackie Huba say, “Competition for entertainment dollars – where Dallas Mavericks owner Mark Cuban says he competes – is fierce. To succeed, he must continually focus on increasing the average lifetime value of a Mavs season ticket holder. In 2002, that figure was $300,000, according to Cuban. “The Chicago Cubs, you’ve got to wait in line to get your season tickets,” he says. “That’s the goal … then I don’t have to spend lots of money on salespeople and all kinds of support efforts – I’ve just got to keep [customers] happy. It’s a lot easier to keep ‘em happy than to go out and get new ones to replace ‘em.”
Now the lifetime value of one of your customers may not be $300,000 like it is for the Dallas Mavericks. But once you determine what that value is for you, you’ll realize how important to keep those customers happy – since they, bar none, are your best source of marketing.
Ted Janusz, MBA, CSP is a Certified Speaking Professional who has delighted audiences for more than 5,000 hours, in 49 of the 50 United States, in Canada from Halifax to Vancouver, in Australia, Mexico, and Puerto Rico. Learn more at www.januspresentations.com.