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If You Love Your Customers, They'll Love You Back

The Lifetime Opportunity Value Equation (LOVE) model offers a relationship-based process framework for understanding the interaction between companies and their customers. The LOVE model is a better way to understand customer engagements that are built on mutual relationships of trust, respect, and perception of value delivery.* Where the traditional buying cycle assumes a linear process that rationally and deterministically moves from one stage to the next, the LOVE model starts with the starry-eyed irrational expectations of a romance and leads eventually to the synergy of co-creation. The LOVE model assumes a dualistic set of outcomes are being pursued and managed. Purchase can occur at any—and all—stages of the process.

It is the embrace of dualistic outcomes (for the consumer and the company) that sets the LOVE model apart from conventional thinking. By planning for multiple outcomes, the concept of balance between the parties in the relationship becomes plainly visible. While the LOVE model is not linear, it is progressive.

The LOVE model consists of five levels. Unlike the buying cycle, a company can transact with a customer at any one of the five levels, although the nature of the relationship changes significantly as a customer rises from Romance through Co-Creation.

Romance

Romance is about introductions and learning. In the online world, there are serious pitfalls in moving from social to transactional interaction too quickly as the shift is a one-way street. The LOVE model produces much higher returns if the relationship is not initially defined as a monetary exchange.

Power Struggle

Power struggle is about spending time together and working to maintain the customer's attention. In an online environment, if a firm doesn't provide an engaging experience that fulfills the customer's need for credible information, they will leave the site and the firm loses the customer's attention and its ability to control the relationship narrative. Amazon.com understands this extremely well. The Amazon site provides an enormous quantity and variety of information to customers, meaning customers have little reason to leave the site to gather additional information. Not only are there reviews, but the reviews are highly credible because users can comment on the reviewers.

Stability

Stability is the point at which there is no major mismatch of status between the parties. The relationship is stable and the firm has provided a reasonable value proposition for filling latent customer needs. You have stability when:

• The consumer is willing to go through the process of sorting through the criteria for making a decision.

• The vendor is willing to transparently make available the information needed to satisfy the consumer's criteria.

Commitment

Commitment comes when there is a demonstration of a willingness to act. This does not require actual purchase, but rather the willingness to act as commitment covers a range of actions. Downloading and use of trial-ware and placing an item in an online shopping cart both are forms of commitment. Purchase, obviously, is a higher form of commitment.

Co-Creation

Co-creation is about creating value and co-ownership of outcomes. A consumer is not merely making a purchase, but is supporting a preferred business. The huge benefits of co-creation are discussed more in the full-length article.

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Each of these stages represents a different type of relationship and a different way of thinking for most business leaders. These changes need to drive all parts of marketing. Some customers will want to help because it will make their lives easier, for example frequent customers who want the sales process to run smoother. The motivation of other customers may be less direct, such as visionary customers who see a better way or an interesting combination of products or services. Four distinct types of value created via co-creation are:

1. New products are one of the most visible ways a company can engage with and learn from its customers. A genuine dialogue with customers always makes the development process better, but in many cases it also makes it simpler as feature sets can be more targeted and it is easier to identify low value add components.

2. Process improvements are an area where many customers have strong feelings, but few companies bother to ask. Far fewer still take the view that customers should be empowered to help design the processes.

3. New ways to message and market become apparent as soon as one starts engaging with customers in a genuine dialog. They'll help you sell their bosses and they teach you to market more effectively to their neighbors. If your new product name is an undesirable slang term in a foreign language, they'll tell you rather than letting you blast it to the world.

4. Business co-creation is the pinnacle of relationship. It's when your customers are emotionally invested in your success. They make referrals to friends, family, and colleagues because it creates intrinsic joy for them. Having a customer who wants you to be successful is much more powerful than a customer you've bought with a loyalty program. It is important to remember that co-creators may exist in forms and places that are invisible to companies. You need to support these advocates, even when you don't know exactly who they are.

* The LOVE Model emerged from work initiated by my Rubicon colleague, Harry Max.