By Ran Shaul

Customer Relationship Management (CRM) programs typically concentrate on identifying the ‘most important’ customers who are then lavished with special attention. Marketing and CRM leaders equate most important with the biggest spenders however, the reality is that these customers are not necessarily the most valuable – the ones that influence others and together drive the greatest growth or profit for your company. Far more important are influence metrics: What types of initiatives are most effective with your most influential customers? How many customers did this influencer inspire to follow suit in making a new purchase, joining a loyalty program, or terminating a service contract?

Let’s see an example of influencers in action. Consider Jack, a hypothetical yet highly realistic City banker. Every evening, after work, Jack visits The High Flier Casino to relax before starting the journey home. Based on his spending volume, Jack’s lifetime value for The High Flier Casino is exceptional. To Rita, the head of its loyalty program, it makes sound business sense to reward Jack for his repeat business and therefore, once or twice a year, he is treated to a free night’s accommodation. However, earlier this year, Jack switched to The Big Roller Casino. It was actually Kevin, the accounts clerk, who persuaded Jack to switch. Kevin is not a big spender like Jack. In fact, he only gambles on the last Friday of the month. However, having recently become a father and having to watch the pennies, he switched to the Big Roller Casino where they have a Blackjack table with lower minimum stakes – taking Jack with him. With the limited visits Kevin made, he received little to no attention from Rita’s loyalty program. Clearly, Jack’s move to the competition was a big loss for The High Flier Casino. However, it was actually Kevin’s move that had the greater impact. Kevin is one of those individuals who possess the power to cause Jack and others within his social group to move to the competition. The problem is Rita, and her group at High Flier Casino, didn’t realise this.

The question is if CRM misses the mark by paying too little attention to the right customers, the right relationships, and the right management metrics, can social CRM improve that?

Social Influence and Customer Loyalty

The rise of social media, which has created a massive explosion of new and potentially relevant customer data, only exacerbates the problems. While there is little doubt that investing in social media monitoring and engagement is important in gaining customer insight, responding to customer service complaints, uncovering new opportunities, and even collaborating with customers, simply monitoring social media does not actually reveal your most influential customers. For one thing, those with the loudest voices or the most followers in social media are not necessarily the most influential when it comes to actual purchase behaviour. In fact, a great deal of influential word of mouth still happens the old fashioned way: through live conversation, telephone calls, and email.

Companies should be monitoring for social behaviour that actually translates to business metrics such as revenues and retention, not tweets and blog posts. Instead of traditional or social CRM, the better alternative is IMM – Influencer Marketing Management.

The Influence Marketing Management Alternative

The essence of IMM is connecting with the right customers using the right marketing activities and tracking the right metrics to achieve game-changing results far beyond the incremental improvements possible with even the best CRM. 1.

• The Right Customers: Influencers and Followers: Most consumers are “followers.” If we want to reach them we need to reach the ones they actually listen to – their influencers. 2.
• The Right Marketing: Anchor-Based and Experiential: In the short term, revenue is revenue, but over the longer term, customers whose relationships with the company span multiple product or service categories tend to be more loyal and generate higher customer lifetime value. “Anchor” products and services are the ones that most closely correlate with long-term brand loyalty. As an example, for games console providers, it would be Nintendo’s DSi or Sony’s Playstation PSP. If you can get your influencers to adopt more of your anchor offerings, you are likely to see a sizable pickup from their followers. 3.
• The Right Metrics: A New Approach to Customer Lifetime Value: The most important metric for IMM is a new version of customer lifetime value that includes “Influence Value.” Using actual transaction data, companies calculate the direct influence value of its customers, and assign a more useful rating for lifetime value based on both individual purchases AND those influenced by each customer.

Game-Changing Results

By focusing on the right customers, with the right marketing, and the right metrics, companies can generate results far beyond the incremental improvements typical of even the best CRM programs. For example:

• A large food retail chain trying to get customers to switch to a private label line targeted influencers with special in-store launch events while mailing coupons to their followers in addition to a control group. Almost half the influencers switched to the private label within four weeks, and each influencer caused another 2.1 customers to switch as well. Overall, four times as many followers switched compared to the control group.

• A mobile phone provider introducing a new, unlimited use data package targeted influencers first and then the followers of those influencers that signed up. Each influencer caused another 3.5 customers to purchase the new package as well. Among those new purchasers, 35% had never responded to any previous company communication.

• A credit card provider anxious to increase card usage made a special offer to influencers. Each influencer that responded to the offer caused another 5.2 followers to increase their spending too, by an average 35% per month.

A Final Thought

In order to get real value from your huge investments in CRM, you need to focus on the reality of influence marketing, identify the everyday influencers – and their followers – among your customers and organise new types of marketing programs that will reach the influencers, build their loyalty, and take advantage of their already powerful purchase influence across their network of followers.

Ultimately, it’s about accepting the decline of traditional marketing, giving up the false promise of “managing” customer relationships, and using existing customer data in new ways that respond directly to the way customers now shop and buy and support the natural flows of influence relationships among friends, families, and co-workers.

About the author

Ran Shaul, Co-founder and EVP Customer Solutions, is a marketing and customer relationship management expert and one of the leading practitioners of influencer marketing. Ran has overall leadership over all customer projects at Pursway, laying out the strategy and overseeing the implementation of influencer marketing initiatives. Prior to joining Pursway, he was a founder and CEO of Synergy, an Analytic CRM consulting company serving the telecommunication, financial services, and retail sectors. The company was acquired in 2010 by Gilon, one of the leading IT companies in Israel. Over the past decade, Ran has led hundreds of projects with many of the leading brands worldwide, in areas including market segmentation, social network analysis, customer profitability and lifetime value analysis, behavioral modeling, data mining, retention and communication strategies, customer advocacy, and campaign management

About Pursway

Pursway is the pioneer and leading provider of Influencer Marketing Management solutions, empowering consumer-facing organizations to close the gap between how they market and how people buy. The Pursway patent-pending technology enables companies to identify, measure, and impact how opinion leaders shape their followers’ purchasing decisions. Using the Pursway solutions, leading global organizations in telecommunications, retail, and financial services are realizing 5-10x improvement in the ROI of customer acquisition, cross-sell, and churn prevention efforts. Companies using the Pursway solution include Cellcom, Crazy Line, Foxwoods Resort Casino, Orange, T-Mobile, and Vodafone.

Pursway is backed by Battery Ventures and led by a team with a track record of innovations in large scale data mining, advanced algorithmic development, social network analytics, and consumer marketing disciplines. For more information, visit www.pursway.com.

Pursway™ and Pursway Influencer Marketing Management™ are trademarks of Pursway. All other Trademarks or Service Marks contained in this document are property of their respective owners.