Too many companies squander money and momentum by chasing customers who won't become repeat customers. The key for a brand to maximize growth is to devote resources to brand advocates or "apostle" consumers, said Michael Silverstein, Boston Consulting Group partner and co-author of Rocket: Eight Lessons to Secure Infinite Growth.
According to a BCG study, these apostle consumers constitute 2% of customers, but account for 80% of a brand's direct revenues. They also account for 80% of revenues achieved through recommendations and 150% of profit.
One brand that does a phenomenal job cultivating apostle consumers, said Silverstein, is Victoria's Secret, which is owned by L Brands (LB) - Get Report . He said the company is on a roll because it understands the needs of its core clientele: single, professional 20-something women in urban markets.
"They know that those women want sexy, they want glamorous, and they want comfortable," said Silverstein. "Victoria's Secret is by far the best company in bras, and you see it in their stock price, momentum, growth in sales and store openings."
Silverstein notes that Toyota (TM) - Get Reportcame back from its recall problem in 2010 on the basis of consumer insight. He said the cpompany understood the needs and wants of its target market: women over 45 who were seeking "beautiful, reliable, durable" cars with low ownership and operational costs. As to whether Volkswagen can come back from its recent emissions fraud scandal, Silverstein said it has a shot -- if it stays focused on its core consumers.
"Volkswagen's core product is brilliantly engineered, and they have the potential for a comeback if they invest in consumers," he said.
Finally, Silverstein said the once-proud Hilton (HLT) - Get Report hotel chain lost its way for a spell, but recovered once it rediscovered the business traveler. Now, in his view the hotel operator, has the ability to increase sales and reward shareholders.
"The people that owned the Hilton hotels, not the people who operated the Hilton hotels, didn't reinvest in the properties," said Silverstein. "And so Hilton's resurgence is about understanding the business customer, understanding their needs and that they want a clean, quiet, easy room, and they want food that's healthy and accessible late at night."