The long tail of loyalty: how personalized dialogue and customized rewards will change marketing forever

Abstract

PurposeThis paper is aimed at describing how companies can find new opportunities for customer retention and lifetime value by applying the concepts of dialogue marketing, network‐building and relevant rewards.Design/methodology/approachThe paper cites the work of Chris Anderson, Editor‐in‐Chief of Wired Magazine, and the work of Italian economist Vilfredo Pareto. The paper explains how the works of these two men, and how programs put into place at two companies (Hewlett‐Packard and Rain Bird), have opened new vistas in customer retention.FindingsThe study found that by applying specific marketing principles, companies can do a better job of retaining all customers, specifically those customers who are not in the top 20 percent of revenue‐producers.Practical implicationsMost companies believe that 80 percent of their business comes from 20 percent of their customers. However, by applying specific marketing principles, companies can do a better job of retaining all customers, specifically those customers who are not in the top 20 percent of revenue‐producers.Originality/valueThe paper takes a new look at an old principle (the 80‐20 Pareto Principle).