Convert Your Customers to Teachers

George Howard

Associate Professor • Berklee College of Music

ghoward@berklee.edu

@gah650

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)

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

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

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)

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

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

Net/NetRe-purchasers become teachers

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

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

•

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

Net/NetEAs become teachers

Px and EA Venn

EAs(FIRST)

Pxs(LAST)

PriceValue

Emotional

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

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 Pxs and EAs have an information imbalance related to the offering they

have repurchased or “discovered”

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

The Internet in many ways is a tool to create information symmetry

Why we teach

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

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

Kettles Boil when

• A firm’s offering makes the user feel that they are a more-realized version of themselves• (Mirror of Erised theory)

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

Px Examples

• Car owners

• Private school parents

• Gamers

• Musicians

• Athletes

• Wine Enthusiasts

• Devout religious practitioners

EA Examples

• Technologists

• Music Fans

• Film Buffs

• “Foodies”

• Dieters

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.

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)

Questions/thoughts?George Howard

ghoward@berklee.edu

@gah650