Building Loyalty The Lady Gaga Way: Focus On 1% Of Your Customers

This article is by Jackie Huba, consultant, co-author of Church of the Customer blog, and author of "Monster Loyalty: How Lady Gaga Turns Followers into Fanatics."

Shiny New Object Syndrome. It’s hard to resist. Many businesses are consumed with chasing new customers instead of focusing on the ones they already have. I see this all the time: Companies give out heavily discounted offers to lure new customers while longtime customers wonder why their loyalty isn’t being rewarded with the same offers.

A 2011 study by Forrester Research and Heidrick & Struggles shows how CMOs focus on the “new.” CMOs were asked to name their current top three marketing objectives: The No. 1 objective (59%) was “acquiring new customers.” Only 30% of CMO respondents listed retaining customers as a top priority. Just over a quarter of respondents (26%) said better customer lifetime value and customer satisfaction/advocacy were key objectives.

CMO’s Top Marketing Objectives

What about current customers? According to research from TARP Worldwide, it’s five times cheaper to keep a customer than to get a new one. So when CMOs hyperfocus on new customers, they may be damaging relationships with existing customers—loyal ones who could bring in new customers based on word of mouth.

Where other businesses don’t seem to have their priorities straight, pop star Lady Gaga understands that focusing on current customers is the key to building long-term, sustainable loyalty. With 23 million albums sold, five Grammy awards, 35 million Twitter followers and 56 million “likes” on Facebook , Gaga is one of the most well-known pop artists in the world. While known as much for her voice as for her over-the-top wardrobe, few recognize Gaga for her stunning business acumen. Gaga and her manager, Troy Carter, focus their efforts on just 1% of her fan base.

For our 2007 book, "Citizen Marketers," my coauthor, Ben McConnell, and I tracked what percentage of members created content and were most engaged in online communities and social media. Our research showed that the volume of content creators was small, just 1% of the total community members creating most of the value for the rest. I call these super-engaged participants the One Percenters—a core group of customers making up about one percent of a business’ customer base.

Companies focused on creating more customer loyalty are taking a page out of Gaga’s playbook. Premium bourbon maker Maker’s Mark created a special program for their One Percenters called the Maker’s Mark Ambassadors. Ambassadors receive an array of benefits from Maker’s branded business cards to invitations to Maker’s historic distillery in Loretto, Kentucky. Car manufacturer MINI holds a annual 3,877-mile trek from New York to Los Angeles, called MINI Takes the States, for MINI One Percenters to connect and share how they customized their own MINIs.

So where have you been focusing your efforts? On ways of wooing new customers or tending to your most loyal few? Who are your One Percenters and are you giving them a chance to connect to each other and to your company? So much more than a catchy verse, latex and lust, Lady Gaga can teach businesses how to lead with loyalty and gratitude.