This blog was written by Holly Larson. Follow her on Twitter @HollyKLarson and connect with her on LinkedIn.
What can musical superstar, LGBT activist, and iconoclast Lady Gaga teach B2C companies about customer loyalty?
Everything says speaker, author, and Forbes commentator Jackie Huba, who presented at the most recent American Marketing Association Triangle Chapter’s monthly luncheon. Huba is a customer loyalty expert who became fascinated by Lady Gaga and the way she built a raving fan base of one-percent loyalists. Convinced that Lady Gaga’s strategy was replicable to B2C companies, Huba studied Gaga’s engagement strategies for five years. Now an Austin resident, Huba previously lived in the Raleigh area for 11 years and worked at IBM.
Lady Gaga is primarily known for her hit records. She has sold 27 million copies and 146 million singles from five albums and won six Grammys, says Huba. But the star is hard to characterize, because she has also performed jazz theater with Tony Bennett, won a Golden Globe for American Horror Show, and been named one of Time’s 100 most influential people. Lady Gaga also has 65 million Twitter and 61 million Facebook fans. She is the “mother monster” to her millions of “little monsters.”
Huba offered 7 strategies businesses can learn from Lady Gaga.
- Focus on your one-percenters.
Advocates are your best customers: They tell other people about what you do. In her book Citizen Marketers, Huba looked at customers who were super engaged – typically just 1% of the customer base. This group was very influential and responsible for a great word of mouth. Industry-wide, 100% of social mentions are created by 4.7% of the customer base, she says.
Amber Brown, who works in insurance, is a Lady Gaga one-percenter. She, has been to 9 Monster balls, 5 Born this Way Balls, and took a full week off work to be the first person in line for a St. Louis event, just so she could meet Lady Gaga. When Huba asked Amber why, Amber said that she had never met someone who had impacted her as much as Lady Gaga and just had to meet her heroine.
“One-percenters will do things that are a little nuts,” said Huba. “It is not rational love.” Huba is a Steelers fan who has a team tattoo on her ankle and runs a Steelers fan club in Austin with 200 attendees at its meetings.
Huba surveyed audience members and found similar stories. Diane Stadlen is a one-percenter for Rachel Ray dog food. So is her dog, which tosses out other food from its dish so it can chow down only on Rachel Ray kibble. Deborah Reiner feels passionately about USAA. Her father served in the military and she saw first-hand the excellent job the company did with financial advisement and insurance. Sarah Finnerty is a raving brand fan for Chewy’s, a Tex-Mex restaurant that entered the Raleigh market. She had a name tag from Chewy’s, created a logo for Chewy’s Angels, and made videos and put them on YouTube. Finnerty even did an anti-protest with signs that said, “Keep going! You are doing a great job” at the local chain. Finnerty was deflated and angered when the company’s marketing director said, “We don’t market this way” because Chewy’s viewed its employees as its brand ambassadors.
“That was an amazing story and a great lesson,” said Huba. Companies that antagonize their brand fans risk having them turn against them and create negative publicity when they are scorned. A former super-fan’s fury is much worse than a disgruntled customer’s complaint, becase they will go to far further lengths to school the brand.
Huba cited Forrester’s CMO research which showed that companies are always striving for something new, whether it is rolling out new products or winning new customers. “What are they doing for current customers?” asked Huba. “Only 30% are focused on increasing retention and 25% on life time value and only 25% on advocacy or evangelism. That is a disconnect. It is five times cheaper to keep a customer than get a new one.”
“Do you know who your one percenters are? Do you look for them? Do they buy from you all the time?” Huba challenged the audience.
- Lead with values
People buy both analytically and emotionally, and emotional buyers are not always price-sensitive. Companies can reach these buyers with their values.
Lady Gaga was 19 when she started. She had a demo record but couldn’t get it played. She convinced a gay club in NYC to play her albums and let her perform. That then led to participating in an LGBT parade. Lady Gaga felt embraced by this community and lent her voice to their struggles. She spoke at the 2009 National Equality March and called on President Obama to fulfill his promises to the LGBT community.
Lady Gaga would invite her fans onto the tour bus to talk to her. She learned that LGBT youths are bullied six times more than other kids. The album Born This Way was a message to her fans to be proud of themselves. She started the Born this Way Foundation to promote mental wellness, kindness, and the need to create positive school environment for youth and launched it at Harvard with Oprah and Deepak Chopra in attendance. Lady Gaga inspired teenagers from all over the country to start their own anti-bullying clubs. On the Born this Way tour, she held giant tailgate parties with food, drinks, and counselors on hand to speak to fans.
“It’s one thing to say what your values are, but you need to demonstrate to your customers what they are, said Huba. Jim Stengel, the long-time marketing officer of P&G, plotted the financial performance of the top 50 companies that led with values, demonstrating that they outperformed the market by 400%.
The green cleaning product company Method wanted to create a healthy home revolution with products that were good for the home, pets, and the environment and were attractively packaged. People who believed in sustainability were the first to buy and the last to leave. During the last recession, customers perceived green cleaning products as pricy but continued to buy Method and not Clorox, which didn’t have the same brand image for sustainability.
“How do you show your values? How are you executing on that?” asked Huba. “It doesn’t have to be a cause, but show how you are changing their lives,” she said.
- Build community among your one-percenters.
Super-fans love to hang out with each other. Lady Gaga watched The Social Network and realized she needed an online community for her Little Monsters. She didn’t see any software that worked for her needs, so she started a company, received VC money, and built littlemonsters.com. Now the company is building communities for other stars.
In the beginning, Lady Gaga would go into the chat room on her website to talk to her fans, and people would lose their minds, said Huba. Lady Gaga also launched hashtag campaigns and asked fans to share about their bullying stories.
, and organizing a trek across the United States every two years called Mini Takes the States. At each stop along the way there are giant parties with an average of 900 Mini owners and their families attending. Some 400 Mini owners took two weeks off their jobs and drove the entire route, said Huba. “They are the 1% of the 1%.” Mini realizes this event is a goldmine of customer insight and sends headquarters employees on the trip so they can talk to their best customers. When Huba bout her Mini, a 2012 coupe, she didn’t just buy a car, she got 700 new friends in the Austin fan club.
“How do you create programs that are about what your fans are interested in?” asked Huba. Companies should play host and sponsor but not control the dialogue, she stated.
4. Generate something to talk about
One-percenters love to talk about their object of worship. However, eventually they’ll run out of things to discuss unless you prime the pump, said Huba. Lady Gaga realizes this. Her outrageous stunts generate endless media coverage, but there is always a deeper meaning behind them.
Lady Gaga’s meat dress, which she wore to the MTV VMAs in 2010, is the most talked-about thing she has ever done. Lady Gaga was up for eight awards this year, but wanted to make a statement about Don’t Ask, Don’t Tell, which had been repealed by Congress, but not by the Senate. With her bizarre costume, Lady Gaga guaranteed that all eyes – and microphones would be on her. She brought four gay soldiers who had been discharged from the service. Lady Gaga positioned them behind her so they were in every photo.
Lady Gaga accepted the award but saved her statement for her Ellen appearance, right after the show.
She said, I think we need to repeal Don’t Ask, Don’t Tell. I am wearing this dress because don’t we all have the same meat on our bones. Shouldn’t we all have the same rights?
She asked her millions of Little Monsters to call Harry Reid and ask him to schedule a vote. Reid said yes. A few months later the Senate repealed it. Obviously, the repeal wasn’t due solely to Lady Gaga’s advocacy, said Huba, but it sent a strong message.
When Lady Gaga was approached by Coty to create a designer perfume. Lady Gaga knew that the celebrity perfume market is super-saturated and that she would have to do something different to stand out.
She decided that she wanted to create a perfume called Fame, that would be a black liquid that would spray on clear and be in a black bottle. The meaning is that fame is seductive but also dark. Coty said they couldn’t do it but wanted to work with Lady Gaga so much that the they created the technology to manufacture the perfume and spent $1 million on an eight-minute advertising film by Steven Klein. “It rivals any sci-fi movie you’ve seen,” said Huba. Both the perfume and marketing were so innovative and successful, that the perfume sold 6 million units in just one week.
The Alamo Drafthouse Cinema seeks to create an amazing experience for movie buffs by creating an environment that is conducive to watching films and providing food and drink. The Austin-based chain doesn’t play ads before films, won’t allow children under age 6 to attend films, doesn’t allow unaccompanied minors, won’t seat customers after a film begins. In addition, the chain doesn’t allow patrons to talk or text during the feature. If they violate this rule, they are warned once, but then thrown out. When an angry patron was ejected after drinking too much and using her phone, she left an expletive-filled voice mail on the theater’s main line.
Rather than back down and apologize the chain’s CEO, Tim League, decided to turn the angry voice mail into marketing gold. The company created a video with the voicemail as a soundtrack and on-screen captions to helpfully decode the woman’s angry and somewhat unintelligible rant. The “PSA” went viral: More than 150 media outlets picked it up, the YouTube video has more than 4.5 million hits, and all the chain’s fans were talking about it. Anderson Cooper joined that Tim League was a “great American hero” who should “win the Nobel Peace Prize,” said because the chain stand up for customers everywhere. The Alamo Drafthouse took a little bit of a risk, but it was clear what it stood for, said Huba.
“People don’t talk about average. They talk about amazing,” said Huba. Companies everywhere can learn from Lady Gaga and build a base of super fans – even if they don’t use her theatrics.
About Jackie Huba
Jackie Huba is the author of three books on customer loyalty: Monster Loyalty: How Lady Gaga Turns Followers into Fanatics, Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force and Citizen Marketers: When People are the Message. Jackie is also a Forbes.com contributor, writing about customer loyalty and word of mouth marketing. A TEDx speaker, her work has frequently been featured in the media, such as the Wall Street Journal, the New York Times, BusinessWeek, and Advertising Age. She is an 11-year veteran of IBM and resides in Austin, Texas. You can follow her on Twitter @jackiehuba.