Tuesday, October 11, 2005

The Credibility of a User.

Customers are the best salespeople and spokespersons...in any field...as long as they remain credible.


October 2005 Issue

The Power of One

Bike maker gears up customer evangelists

By Vicki Powers

Margaret Day loves to talk about her bicycle—almost as much as she loves to ride it. And that's a good thing for custom cycle maker Bike Friday: Day, a 70-something Australian, has made about 100 customer referrals worth more than $300,000 in sales since her first bike purchase in 1995. "I simply cannot stop telling people about the Bike Fridays," she says. Her most recent referral, in March, garnered almost $5,000 worth of bicycle sales for the company.

You can't buy that kind of loyalty but you can cultivate it—and that's precisely what Green Gear Cycling (known as Bike Friday after its signature product) has done. Through newsletters, bike clubs and a referral rewards program, it has built a community of customer evangelists whose word-of-mouth testimony has proven more effective for the company than mounting an expensive advertising campaign. "We get key customers who are excited to be involved," says Bike Friday Customer Evangelist Lynette Chiang. "They attract others and this creates community."

It doesn't hurt that the unusual styling of the high-end travel bikes, which fold neatly in seconds, catches plenty of eyes—and prospects. That curiosity factor has proven a powerful way to reach new customers, particularly in the company's early years when marketing money was tight. "The nature of anything custom is you will have or generate an interest group, community group or cult," says Chiang. "We call it a community."

Bike Friday has cultivated this community in a number of ways, notably through its 30 Bike Friday Clubs of America (and Beyond). Chiang describes these groups as self-perpetuating loyalty centers in the field, whose activities provide a social outlet for riders and help generate referrals. To "seed" a club, Chiang e-mails contacts from the database within a 60-mile radius of a new location.

The company also uses a referral awards program. Customers receive a set of 12 prepaid postage cards with their name and that of the Bike Friday expert who sold them their bike. Whenever a customer meets someone whose interest is piqued by his bike, he'll fill out a card and drop it in the mail. Bike Friday then mails information to the contact. It also captures this interaction in its database so that riders who make a referral receive a bonus if their prospect purchases a bike. Customers can choose either a $50 check or $75 credit toward future products. Day accumulated enough referral credits to purchase a $2,000 bike last year.

The referral program has helped the company acquire more than a third of its 10,000 customers; it also helps drive sales. Over the last three and a half years, the program has generated $1.3 million in sales. In 2004, 29 percent of its sales came from referrals.

"We did a lot more press releases and advertisements early on, but we realized our customers were our best advertisers—if we made them happy," explains Hanna Scholz, Bike Friday's marketing manager.

Customer evangelism is one of many forms of word-of-mouth marketing, but it is one of the most successful, according to Stephen Wayhart, principal at BrandMill, an integrated marketing firm. "These people have battle-tested your product or service. They're so passionate about it, and they tell things in their own words to others," he says.

The tactic works because people basically want to make the world a better place, according to Guy Kawasaki, author of The Art of the Start and How to Drive Your Competition Crazy. That is the frequent difference, he says, between evangelism and sales. "When you have such a cause, then people will view it as ‘good news' and they will spread this good news," Kawasaki says. "It works because people have other people's best interests at heart."

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