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Customer As Teacher: The Importance of Building Brand Equity by Providing Customers with Teaching Tools and Moments

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This was from a talk I gave at this year's 2015 MEIEA Summit in Austin, Texas

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Customer As Teacher: The Importance of Building Brand Equity by Providing Customers with Teaching Tools and Moments

  1. 1. Convert Your Customers to Teachers George Howard Associate Professor • Berklee College of Music ghoward@berklee.edu @gah650
  2. 2. Both a pedagogical and marketing approach • Observed amazing “learning” communities in all sorts of business disciplines, which, viewed through a different lens, became marketing tools • Struggled (struggle?) to “break through” with students on topics like copyright law • "You do not really understand something unless you can explain it to your grandmother." (Albert Einstein)
  3. 3. Stipulations • Firms all succeed for the same reason: They shift the burden of promotion from the firm itself to the customer • This burden shift occurs via the following: • The firm creates a [remark]able offering • The firm places the offering in front of people pre-disposed to care
  4. 4. Stipulations • The maximum value from any firm comes for a small number of customers • This heightened Pareto emphasizes the importance of following: • “Re-purchasers” • “Early Adopters • These two groups – and, often, there is overlap – are the dominant drivers when it comes “teaching” others about firms’ offerings
  5. 5. Re-Purchase • The customer journey: • Awareness > Consideration > Trial > Purchase | Re-Purchase • Firms lose money on customers who purchase only once • The cost of dragging a customer to the Purchase stage will always exceed the value of a single-purchase customer • Key equation Profitability = CAC < LCV • L = Px (when X > 1)
  6. 6. Px Loyalty • Their loyalty is based on their belief that the firm from whom they repurchase represents a higher value to them than alternative firms • The Px’s perceived value stems from: • Lower price than alternatives • Greater features than alternatives • Emotional resonance
  7. 7. Px Characteristics • Axiomatically, have established a bond of ethical fiber with the firm • This bond is apparent via the customers’ purchasing decision; their re-purchase equates to loyalty in the face of competition (assuming a non-monopolistic firm
  8. 8. Net/Net Re-purchasers become teachers
  9. 9. Early Adopters • Those at the beginning of the Life Cycle Adoption Curve • Alternatively called: • Early Adopters • Influencers • Mavens • They are “information specialists” • Derive joy from “discovering” things they deem to have value before the masses • Are unable to keep this information private
  10. 10. EA Loyalty • EAs loyalty is based on their belief that the firm they have embraced before the masses represents a higher value to them than alternative firms • The EA’s perceived value stems from: • Lower price than alternatives • Greater features than alternatives • Emotional resonance •
  11. 11. EA Characteristics • Axiomatically, these EAs have a higher (real or perceived – doesn’t matter) base of information about a firm’s offering • They dwell on the margin of information scarcity
  12. 12. Net/Net EAs become teachers
  13. 13. Px and EA Venn EAs (FIRST) Pxs (LAST) Price Value Emotional
  14. 14. Learning Curve • Definition – Time/Money spent to gain knowledge • “Steep” Learning curve = large amounts of time/money • “Flat” Learning curve = little amounts of time or money • Both Pxs and EAs flatten learning curves around a firm’s offering • Pxs do so via actual usage over time • EAs do so via either initial concentrated usage or via pre-purchase
  15. 15. Learning Curve = Information imbalance • Via climbing (flattening) a learning curve, the customer gains an information surplus with respect to the firm’s offering as compared to non-users • Thus Pxsand EAs have an information imbalance related to the offering they have repurchased or “discovered”
  16. 16. Humans don’t do well with information imbalance “Man is by nature a social animal” – Socrates “If you want to change what I’m doing, don’t try to persuade me - don’t try to make me - do anything. Instead, enlist the help of my friends…” – Mark Earls
  17. 17. The Internet in many ways is a tool to create information symmetry
  18. 18. Why we teach
  19. 19. Kettle boiling over • A human who has derived personal benefit from a product or service has an information asymmetry as compared to those she knows who have not (yet) derived benefit from the product or service • Humans can not stand information asymmetry….because: • Information is the only commodity that can be shared in a manner that benefits the taker without depriving the giver • Information “sharing” is a transaction that benefits giver and taker • Giver benefits from ego boost • Taker benefits from increased knowledge • Once information symmetry has been achieved both benefit from ability to “relate” around a shared interest
  20. 20. Boiling Kettles • People who have: • Discovered Yoga • Lost weight • Found God • Read a “great” book • Eaten at a “life-changing” restaurant • Found something to combat boredom
  21. 21. Kettles Boil when • A firm’s offering makes the user feel that they are a more-realized version of themselves • (Mirror of Erised theory)
  22. 22. Customer as Teacher • When a user – through flattening the learning curve of a product or service – feels they have materially benefited from their effort, they will scan their surroundings for others who they feel might also benefit • They become a Sherpa/a guide, who lowers the rope down to help others up • There seems (anecdotally) to be a correlation between time/effort required to flatten a learning curve and desire to
  23. 23. Px Examples • Car owners • Private school parents • Gamers • Musicians • Athletes • Wine Enthusiasts • Devout religious practitioners
  24. 24. EA Examples • Technologists • Music Fans • Film Buffs • “Foodies” • Dieters
  25. 25. Goal for firms • Determine if your offering is more likely to attract EAs or Pxs (ideally, of course, you want both – Apple is the biggest company in the world, because it (now – didn’t always) attracts both • Devise a strategy for identifying these classes of users, and provide them with “teacher tools”/reward those who self identify as teachers.
  26. 26. Goals for Academics • Strive for more opportunities when the student becomes the teacher • Identify those students who have the information imbalance, and push them to articulate their knowledge • Know that this has more to do with concretizing this particular student than it does educating the other students (but it creates a culture of learning)
  27. 27. Questions/thoughts? George Howard ghoward@berklee.edu @gah650

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