Wednesday, July 21, 2010

'Turning Social Capital into Economic Capital': Straight Talk about Word-of-mouth Marketing - Knowledge@Wharton

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2554

The questions:

Do referred customers have higher margins than other customers?
Do referred customers stay longer with the firm than other customers?
Do referred customers have a higher customer lifetime value (CLV), the net present value of all the profits a customer generates over his or her entire association with the firm?

The answers: all affirmative.

Most intriguing is the takeaway that "people tend to have a stronger attachment to an organization if their friends or acquaintances share a bond to the same establishment. Referred customers were about 18% more likely to stay with the bank than other customers, and that gap did not fade over time."

Sound famliar?

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