August 04, 2008

The Lifetime Value Of The Customer Who Writes Product Reviews On Your Site

Let's say you have a customer named Elmer. Elmer spends maybe $1,000 a year, making Elmer one of the top ten percent of customers in your database.

But Elmer does something else. Elmer reviews the merchandise he purchases from your brand. Elmer writes really good reviews, reviews complementary to your brand, reviews your customers love to read.

When Elmer writes a review, the item reviewed sells 25% better than comparable items. On an annual basis, this results in $400,000 of additional net sales, $100,000 of additional profit for your brand.

Lifetime Value from merchandise purchased = $500.

Lifetime Value from written reviews = $500,000.

How do you, the direct marketing executive, reward Elmer for his contribution to your brand? Elmer generates more annual sales than your average employee --- maybe more annual profit than your CEO generated last year!

Again, how do you reward Elmer? Should you reward Elmer? What do you do if you notice that Elmer stops writing reviews?

Discuss.

3 comments:

  1. First, I believe all reviewers, pro and con, ought to receive a thank you e-mail from the company. If the review is negative, perhaps the company should seek additional feedback. This feedback could be used, for example, to clarify product manuals.

    Second, someone who is a serial commenter could become a greater source of feedback by being invited to focus groups or asked to beta test new products.

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  2. John Webb, England1:53 AM

    An interesting question, but how about we look at it from the acquisition angle - how do we recruit more valuable customers like Elmer?

    Adding an incentive for people who review our products (prize draw, future spend discount, etc). If a campaign was not already underway I would recommend an email campaign to contact customers a few weeks after they have recieved their item, inviting them to review their purchased product.

    I absolutely agree with Glenn when he mentions about focus groups - these customers are so valuable, we should make them feel as such. Invitiations to focus groups, perhaps even product selections. If a loyalty programme is in place, introducing an elite tier for the Elmers out there would aid in both retention and recruitment. Featuring our top reviewers in our other channels (with permissions obtained of course), may also help make them feel valued.

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  3. Thanks for the feedback!

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