Out of the Box

When One Customer Brings Another

By Menachem Lubinsky on May 10 2010

On a winter day earlier this year, Alice, the owner of a store selling infant clothes had an idea. The store was full of mothers shopping for clothes, especially for accessory items that she had put on sale that week. Despite steady traffic, she wanted more. If only she could encourage more traffic to move some of the winter stock and to offset the small margins of the sale items. That’s when she thought of a creative idea. Using her phone intercom system, she announced that for the next four hours, all winter clothes would be reduced by 25%. Instantly, the network got to work. Women either phoned or sent text messages about the sale to friends and for the rest of the afternoon, the store was crowded with shoppers and the owner’s objectives were met. Alice repeated this promotion on a regular basis, ultimately getting customers to ask for the dates of the next promotion. As soon as she announced it, the network went to work again.

There was a time when such a “network” would be called “word-of-mouth,” which was really a long-term way of branding. Customers who had a good experience would naturally relate that experience to friends and acquaintances and over time it would generate goodwill for a brand. It was customary to hear people relate that they built a business based on “word-of-mouth.” Indeed, that might have been over a period of five years.

Today, in a world of instant communications, that branding can happen almost immediately. A bad experience in a store, for example, can impact the store within hours. A group of women in California communicate with each other as they are experimenting with a recipe in the kitchen. In New York, a group instantly passes the word along about their experiences in various restaurants.

This new form of “social marketing” can either turn into a potential disaster or indeed an opportunity for the marketer. The restaurant group instantly demonized a restaurant that the owner admits had “an off night,” only because of the speed with which the information was shared. He never had a chance to make amends.

The opportunities can be through an effective way of “broadcasting” positive experiences. A West Coast spa used to ask customers to send a card to a friend. The cards with interesting graphics were stocked in racks by the check-out desk and already had stamps on them. One message was “wish you were here,” while another read “wish I could afford to treat you to this heavenly experience.” Today in an age of e-mail, the spa offers a bank of computers with pre-designed messages. Each message sent generates points that can be used for future sessions.

The evidence is that an aggressive posture in social marketing works. It is a way of expanding the base of consumers, often using other customers to do the work. A recent article on social marketing reminds businesses that there no longer is a “delay button” in communicating experiences. That means that management has to constantly make sure that the product or service is impeccable. There is little room for error.

A small manufacturer of novelties would routinely e-mail customers about a new product that they had just released. There was always a “pre-release” discount for their favorite customers. Most of the time the e-mails yielded results, but occasionally there would be a poor reaction. When the marketing manager looked a bit deeper into the issue, he found that the items that did not move were already discussed amongst a group of customers and had gotten negative reviews.

To “fix” the problem, the marketer first circulated the e-mails to his best customers who seemed to buy almost everything he released. The idea was for them to serve as the first round of critics, creating the positive feedback and helping move the products that in the past simply failed.

The social marketing concept is precisely why customer service is so important. It is why clerks became associates and associates became concierges. They are all designed to make customers feel good about their experience and good experiences are what good social marketing is all about.

At a consulting session with a business that was seeking to increase business, we agreed that the objective would be that every customer somehow brings in another customer. We came up with an extensive program of discounts for referrals, e-mail messages to friends, and even entering names in a contest just for providing an e-mail address.

Every customer get a customer is also used effectively by a Brooklyn service station that specializes in oil changes and lubrication services. The station offers a free oil change just for referring another customer, but they insist that the referral be done through an instant e-mail.

If you are thinking that all of this is just a modern “word-of-mouth” method of drumming up business, you’re right, but it is high time that you get with the program.

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.