Customer and Brand Decision Making and Influence
Management Overview
With the advent of the Internet, and significant increase in available information for collection and sharing via word-of-mouth (both offline and online), and the growth of mobile device usage, the locus of brand decision making and influence has forever shifted from vendor to consumer. This has profound effect on all things including customer centricity, marketing, customer experience, and value-related factors.
Impact of Experience-Based, Informal Word-Of-Mouth and Brand Bonding
Customers are now driving marketing, and companies have had to modify both their communication strategies and techniques to maintain relationship levels. At the center of this sea change are informal word-of-mouth and brand bonding.
Offline and online word-of-mouth is addressed regarding true (as opposed to artificial) informal communication techniques, plan building and execution, geographic variations, brand bonding as ultimate loyalty behavior, the kinds of research for measuring word-of-mouth and brand bonding, staff buy-in and employee ambassadorship, and the future of this marketing approach. Innovative organizations are building a dedicated, truly bonded and passionate, customer base; and bonding will become the standard for identifying the most effective companies at building customer loyalty behavior.
Loyalty Program Effectiveness
Optimally, loyalty programs are supposed to leverage loyalty customer behavior, reduce the consideration and use of competitive products and services, and generate data for execution and further behavioral impact. To achieve this goal, the program and its access channels must also be user-friendly. Organizations should address several loyalty program effectiveness issues:
1. Are loyalty programs achieving their financial goals? According to a 2010 study by the CMO Council, very few marketers felt that these programs had been effective at leveraging loyalty and brand preference among members, and the majority of members exhibited negative behavior toward the programs.
2. How are access channels impacting loyalty program member behavior? To optimize brand engagement and advocacy, programs must be (or become) multichannel, as desired by members.
3. How effective are loyalty programs as cross-channel marketing and communication/influence tools? Program managers need to understand, and track, members’ offline and online communication behavior.
4. What kinds of customer data are being generated through loyalty programs? Profile data is a key deliverable of loyalty programs, and there is a need to leverage this information on a micro-segmented basis to identify brand advocates and evidence of brand-bonding behavior.
Making an Emotional Connection with B2B and B2C Customers
Customers want to trust their suppliers, and ideally to bond with, and become advocates for, them. Well beyond performance of basic, tangible elements of value, consulting organizations have regularly concluded that emotionally based, more human relationships between customers and suppliers are desired, even among B2B customers. Among other things, this necessitates more personal and relevant communication. It also places more emphasis on personalization, peer-to-peer word-of-mouth and perceived brand reputation in B2B.
The basic “table stakes” tangible elements of value must be delivered at a high level, and so should customized service—throughout the entire customer life cycle. Thus, bonding behavior can be generated among all customers, even B2B.
Emotional Dynamics of Customers’ Brand Decision Making
Heavy brand message and impression clutter, coming from traditional approaches to messaging and communication has forced many consumers to seek insights about products and services through informal and less traditional methods. Studies have shown that 90% of consumers see word-of-mouth as the best and most reliable source of product and service information. This has caused marketers to seek more complete and contemporary understanding of what drives customer emotional involvement, particularly bonding and a more holistic brand relationship.
Bonding and brand passion have significant bottom-line impact for organizations, so applying the concepts has become increasingly important. Two key elements of emotional connection are image and reputation and employee behavior, which we define as ambassadorship. Every organization would be well served to focus on engaging their stakeholders, and building stronger bonding behaviors and brand relationships.
Experience-Based, Informal Word-Of-Mouth and Brand Bonding Puts Consumers in the Marketing Driver’s Seat+ (July 8, 2013)
Today, we are witnessing customer-driven marketing through empowerment and self-management; and many companies have found themselves in the backseat of the new customer–supplier relationships. They are forced to modify existing communication techniques, or create new ones, so that they can be positioned to generate bonded brand loyalists among their customer bases. How they use, or misuse, these new-age relationships and techniques, and how they assess the return-on-customer effectiveness, and level of monetization, of their initiatives will change how word-of-mouth is pursued by both small and large enterprises.
The false sense of simplicity surrounding much of the early application of word-of-mouth techniques has given way to real challenges that businesses must address:
What is true word-of-mouth versus artificial word-of-mouth, and why is it essential for marketers to distinguish between the real and engineered advice?
How do marketers actually build plans around word-of-mouth, run an effective word-of-mouth program, and track its success?
Is word-of-mouth the same in every market or geographic situation; and, if not, what are the key differences for marketers to understand?
Why is customer–brand bonding the ultimate attainment of loyalty behavior on behalf of a brand or supplier?
What kinds of research and metrics are available to monitor the revenue impact of word-of-mouth and brand bonding among customers?
What is necessary to get staff buy-in, and what is the role and effect of employee ambassadorship in word-of-mouth?
What is the real, likely future of word-of-mouth marketing?
For marketers to succeed in this arena, it’s important that they have, or develop, both a comprehensive overview and set of actionable insights for understanding all nuances of the word-of-mouth landscape: how we got here, how true word-of-mouth campaigns can be generated and modeled, how appropriate measures need to be applied to assess strategic and tactical campaign effectiveness, why customer–brand bonding is the ultimate goal of word-of-mouth, how technology tools are being integrated to facilitate learning from word-of-mouth campaigns, how employee behavior links to customer loyalty behavior, how word-of-mouth is addressed outside the United States, and how the concept is likely to morph going forward.
There’s a new dynamic associated with offline and online word-of-mouth and customer–brand bonding, and it begins with moving beyond traditional thinking about customer loyalty behavior. What is real loyalty today? How do you measure it, how do you protect it and reward customers for their loyal behavior? What we are coming to understand now is that a loyal customer is not enough. Customers may say that they are loyal to the brand and say that they will use the brand again; but, given the opportunity, they will often switch without hesitation. We have seen this in industries such as retail, wireless telecom, credit cards, and travel, each of which has spent more than almost any other industry on loyalty tools.
At the same time, we are seeing a group of innovative brands such as Google, Subway, Nike, Zara, Samsung, Amazon, Red Bull, Apple, Zappos, and Harley-Davidson, each having a dedicated and enthusiastic group of customers who are more than just loyal—they are bonded. Once these select companies have built a critical mass of bonded customers, they enjoy benefits which most brands could only dream of. They get massive word-of-mouth exposure, they have reduced customer acquisition costs, they have lower service and support costs (or none in the case of Google), they can enter new market areas, and so forth. The most remarkable example of customer–brand bonding may be Google, which not only doesn’t do any marketing (in the traditional sense) but, as noted, also doesn’t have any customer service; and, yet, Google still has a large cadre of users who are passionate about their value proposition.
Customer loyalty, in and of itself, focuses on retaining customers, and “barriers to exit” in the macro sense. In today’s interconnected world, with active vendor substitution and high churn rates an everyday reality, traditional approaches to customer behavior management will inevitably fall short. Bonding, now identified as the highest expression of customer loyalty behavior, has proven to generate stronger, and more polarized (positive to negative) results across B2B and B2C verticals, especially when compared to traditional satisfaction, retention, loyalty, and recommendation metric results. Arguably (because customer researchers detest agreement), customer bonding will be the standard for successful brand and corporate performance going forward.
Loyalty Programs in the Real World: Are They Enhancing, or Undermining, Customer Behavior?+ (April 4, 2013)
The classic objective of these initiatives and programs (see Figure 2.1) is to leverage loyal behavior among the customer base, in and of themselves, and reduce the use or consideration of competitive products and services. It’s fair to say that, to meet this objective, the program, its multiple channels of access, and its array of components and perception of personal value, and positive informal communication by members on its behalf, need to be well understood and user-friendly, as well as distinctive and beneficial.
Figure 2.1. A collection of loyalty cards.
At this critical point in the loyalty program effectiveness life cycle, it may be useful to address several key questions:
1. First, on a macro level, are loyalty programs achieving their financial goals?
In 2010, the CMO Council conducted a study, “The Leaders in Loyalty: Feeling the Love From The Loyalty Club,” in which, among the key findings was that this objective was not being met. The study concluded that companies sponsoring loyalty programs were just using them to deliver general discounts and perks to the mass of member customers, ignoring the profiles within the database which would help provide more targeted and relevant communication and stronger value perception among program members. Among the marketers in the study, only 13% felt that they had been highly effective in leveraging loyalty and brand preference among club members, and nearly 20% had no strategy in place for doing this. Further, nearly 30% of marketers reported that customers see little or no added value to becoming a loyalty program member, though they admitted that most program components have discounts, free products or premiums, rather than better service or improved customer handling.
Very significantly, over half (54%) of loyalty program members surveyed in the CMO Council study were demonstrating negative behavior, considering leaving the programs or defecting from the brands and companies sponsoring them, principally due to the onslaught of irrelevant and off-target messages, low or non-meaningful program benefits, and the impersonal treatment they receive as members. At the same time, it has been well established in multiple studies (such as by loyalty program reporting, research, and development consulting company, Colloquy) that customers participating in loyalty or reward programs are much more likely to be positively communicating their experiences and recommending the product or service of the sponsoring organization than the remainder of the customer base. So, on an overall level, loyalty programs represent opportunity converging with challenge.
2. How are access channels impacting loyalty program member behavior?
Consumers have become increasingly more connected, to institutions and each other.
The fact that many of these loyalty programs have omnichannel, or at least multichannel, member access can potentially create either further value or detract from it. Clarity, ease of program use, greater accessibility, credibility, and superior experiences—anywhere, anytime, in a 24/7 digital world—play a critical role in building stronger, more personal and deeply felt relationships and driving customer loyalty.
Companies need to be able to understand what every purchase and program interaction means to individual members (not all calls, clicks, visits, posts, or purchases are created equal) so that both communication and rewards can be customized, personally beneficial on an emotional basis. Research has shown that the more relevant the benefit, and the easier a customer can access it, the more likely a member will be to engage, and continue, with the program and brand. And, while companies want to build relationships and loyalty by rewarding customers who have strong relationships and are truly bonded to the supplier, they also need to guard against the growing trend toward gaming, which, like negative reputation and image, can bring down a program because of its impact on other members as well as the general public.
Cross-channel usage can represent real opportunity. There is potential for loyalty program members to be rewarded for interacting with brands in multiple ways. This includes:
• engaging with other members, and sharing or creating content;
• connecting with the brand (and other members) across social sites such as Twitter, Facebook, and even LinkedIn;
• utilizing Foursquare to identify location;
• making purchases or obtaining benefits;
• visiting stores, using services, and so forth.
When this is accomplished, brand engagement and bonding (through online social postings and offline informal communication) increases, appetite for loyalty program involvement is enhanced; and, not unimportantly, sales are higher.
3. How effective are loyalty programs as cross-channel marketing and communication/influence tools?
As noted, many loyalty program members are active both online and offline. Programs not only need to understand why and how brand-related informal communication is taking place, they need to actively consider incentivizing members to engage in this kind of dialogue. What’s the rationale? When members interact through their various connections, this generates a tremendous amount of data (see next section) from within their social sphere; and these valuable insights can be leveraged to drive both marketing and loyalty program efforts. Building such incentives into the loyalty program, the most influential and engaged customers help drive program awareness, interest, and new member acquisition.
Ideally, the cross-channel loyalty member’s individual trail can tell a company how socially engaged that customer is within the brand, also identifying and quantifying each member’s level of influence (offline and online). So, cross-channel tracking enables connecting the member to other program members, to other brands and programs (both positive and negative behavior), and identification of their social activity on the program’s, and the brand’s, bottom line.
4. What kinds of customer data are being generated through loyalty programs?
Another key loyalty program objective, often not applied to greatest effect, is to be an important method of generating customer profile data which can be used for targeted, even micro-segmented, marketing, promotion and communication initiatives. Rewards programs are opt-in, and companies need to be more integrated across all brand access channels, mobile applications, and point-of-sale systems, as well as social networks.
The days of generating narrow, channel-specific data are behind us. Brand engagement and social influence data should be captured online and offline. Having such a multichannel platform enables companies to identify, and understand, the behavior of every individual and determine what channels and elements of the loyalty program are having the greatest impact on behavior. They need to be able to identify what triggers brand-related actions, what moves a customer to go beyond thinking and browsing to purchase, and, on a micro-segmented basis, which customers are the strongest, and most valuable, brand supporters.
For all marketers, if they hope to build profitable purchase and positive offline and online behavior from loyalty program members, the tools for doing so exist within the program database, the customer profile dataset, software for site and social media navigation, and the elements of attraction of the program itself. First, companies should identify the strongest supporters (purchase, brand affinity, and downstream voluntary word-of-mouth) of program components embedded within their membership ranks, and there are actionable research segmentation tools to accomplish this goal. Then, they should build relationships that reward these members for their positive buying and word-of-mouth activity. Loyalty programs, used effectively, can be an excellent engagement mechanism for creating and extending customer–brand-bonding behavior.
Cultivating Behavior by Making an Emotional Connection with All Customers—Yes, Including B2B!! (November 21, 2012)
Many of us who actively conduct research in, write about, and consult our clients on how to optimize drivers of customer advocacy behavior believe that creating a personal and emotional connection with customers is essential. It certainly is a subject of continuing discussion, and even debate; but its importance can no longer be denied or dismissed. As a 2011 Peppers and Rogers customer advocacy white paper stated so well: “Advocates work on a company’s behalf to promote the brand, enhance its reputation, and in some cases, drive new business. They are also valuable customers themselves, buying more and being less price conscious than other customers. And, most important, they connect with the company on a deep emotional level, which in itself is the best differentiator there is.”
The most valuable customers appreciate and want more personalization, a relationship, and an emotional connection. It’s up to organizations to (a) identify the strongest emotional drivers and (b) effectively leverage them. Successful organizations have either morphed, or have begun, by placing customers’ interests ahead of the enterprise’s. They build a “bank account” of trust; and high trust, and the positive reputation and image it breeds, is an enduring strategic advantage, a definite competitive differentiator.
In every business sector, customers call the shots on what they want, and don’t want, in a relationship journey. In the banking industry, for example, most studies show that competitive fees, product availability, staff service, and branch hours are all pretty much basic value deliverables. Transparency in communication and dealings, and personalized proaction, however, are in much shorter supply; and these characteristics are markers for banks which create high customer advocacy levels.
Traditionally more product-centric than customer-centric, B2B companies have more slowly come to an understanding of how customers “own” the relationship compared to their B2C counterparts. But, they have increasingly become aware that customer relationships must become more human, more personal, and produce greater relevancy. In short, B2B companies have to communicate and represent what their customers are interested in—at that moment. Personalization is the way to get there.
Extensive research into numerous B2B sectors has repeatedly shown that even with the tighter decision parameters and controls such as pricing, and regulations and vendor qualification that may exist in B2B products and services, much of what drives initial and ongoing supplier choice is built around brand impression and peer-to-peer informal communication.
What creates and sustains top-end loyalty and continued relationship is, of course, excellent performance on “table stakes” tangible, basic value elements. Delivering at promised levels on pricing, completeness, accuracy, timeliness, reliability, and consistency is the minimum standard for building a foundation level of trust and helping to build the supplier–customer relationship. Proactive, personalized service that exceeds expectations, two-way communication, and engagement help bond the customer to the supplier. This is true throughout the customer life cycle, from initial supplier selection and purchase through cross-sell, upsell, and loyalty behavior.
Customer bonding is very much alive and well in B2B products and services. Multiple studies, and successful application, demonstrate that word-of-mouth and brand reputation are essential decision-making levers. If anything, due to the more critical nature of touchpoints, performance, brand perception, and relationships in B2B, a bonded relationship may well be considerably more important in this arena than in the B2C world.
The New, Real-World Emotional Dynamics of Brand and Customer Decision-Making Behavior+ (October 29, 2012)
Today, marketers must be aware that customers are so inundated and overwhelmed with messages, impressions, and the availability of product and service information that they’ve gone, in large measure, to alternative, informal, and less traditional methods of helping them decide what and where to buy. At the heart of seeking sources for decision input is trust, and its first cousins: credibility, relevance, honesty, transparency, inclusion, objectivity, and authenticity (Figure 2.2).
Figure 2.2. Trust and its first cousins are key elements of customer decision making.
This is an era where unsolicited message spam, pop-up ads, telemarketing, and other types of targeted, “push” advertising and marketing communication, indeed most long-standing forms of electronic and print messaging and promotion, receive low trust and believability scores in survey after survey of customers. Beyond permission e-mail, supplier and brand Web sites and the like, customer trust is consistently highest for word-of-mouth. How high? While the aggregate value of print and electronic advertising as a decision-making influence has remained about the same since 1977, word-of-mouth has doubled in leveraging power to the point where it is the dominant communication device in our society.
Through public studies, it has been learned that more than 90% of customers identify word-of-mouth as the best, most reliable and relevant source of ideas and information about products and services. This is about the same percentage who find it the most trustworthy and objective source. More than trend, this is marketing transformed, bringing emotional connection to the brand into sharper, more contemporary and realistic focus.
As a result, no matter how well suppliers believe they understand their customers’ needs and their online and offline behaviors on an individual basis, they must have new insights, and both a strategy and array of tactics which will help customers create influence and personal leverage, peer to peer and situation by situation. What this means as an end goal is creation of active customer bonding and brand relationship (loyalty converged with brand passion), states of elective, personal, often deep-rooted and emotional engagement between a B2B or B2C purchaser and supplier that goes beyond satisfaction, beyond delight, and even beyond loyalty.
Bonded and brand relationships represent the highest level of customer involvement achievable; interaction with suppliers on an individual and emotional level well past the typical functional, passive relationship between supplier and customer; and having them proactively and voluntarily convey their experiences to friends, relatives, and colleagues. Bonding and brand relationship are not merely different spins on gaining insight about customer purchase, referral, and communication behavior. They are also built on trust and brand excitement, through real, authentic experiences.
Arguably, because the name of the game is rational and emotional value optimization, learning about how customers perceive suppliers, brands, products, or services and then having them carry their experiences and consideration forward as active loyalists and brand passionate customers is, or will become, the only way to think about them. Companies will need to make significant adjustments from traditional minimally targeted marketing approaches to an environment where customers expect personalized interest and collaborative, supportive communication and engagement.
Customer bonding and customer negativity, and brand passion and alienation, are subjects which have incredible bottom-line importance, but companies are really just beginning to learn about the concepts (and there is still some confusion among those who know the terms) and few have successfully applied outside-in or inside-out loyalty behavior and brand passion creation in their marketing and customer experience initiatives. We see, however, that both customer bonding and brand passion have become mainstream issues; so, application approaches are rapidly maturing.
Social media influence on decision making and downstream customer behavior, and the impact of customer experience, particularly around positive and negative customer behavior, and brand passion and alienation, are already tremendously important to all companies; but, the “what’s next” and “how do I apply the concepts and tools in my work” are key subjects now. Bonding is still a fairly embryonic concept for most marketers, but there is already a strong groundswell of interest and investment in optimizing it. Companies are very actively looking for bonding enhancement and brand-related solutions and methods of minimizing, or eliminating, customer indifference and negativity.
And, customer disaffection, negativity, and sabotage—from both the inside and outside of the organization—are powerful, but rarely discussed. All of the changes witnessed over the past several decades in customer decision making and influences on corporate and brand perception have brought companies operating in B2B and B2C marketplaces to an important inflection point. There is an increasingly critical connection between brand and service promise, corporate and brand reputation trustworthiness, the transactional experience (as delivered by people, processes, communications, and culture), and downstream customer behavior.
Any small ripple in reputation change (such as through a product-related issue, online rumor, or executive miscue), brand performance, or customer service can have a tsunami-like effect on business outcomes which may last indefinitely. Worldwide, and industry to industry, about 20% of any company’s customer base is negative; and, through customer advocacy and brand passion studies, we have seen levels of alienation and sabotage that are significantly higher.
This is especially true now because of the permanency provided by social media. As one example, Lehman Brothers, at the time the fourth largest investment bank when it declared bankruptcy and collapsed in 2008 and yet has nearly six million hits online despite the fact that it technically no longer exists. Companies like FedEx, Toyota, Enron, and British Petroleum can confirm the business-related impact of the electronic “long tail.”
Of all factors which can influence consumer behavior and brand success, employees have a particularly important ambassadorial role in building trust and reputation. Studies have found that employees are often less than enthusiastic about their employers and the goods they produce, particularly in the recent anti-business shift in public opinion during the economic downturn. Poor employee morale and responsiveness, coupled with inflexible processes, often drive customer complaints, a prime cause of customer churn as well as customer defection itself. Some complaints are expressed to the company; but most are either suppressed, mentioned in casual online or offline conversation, or posted on social media sites.
Why do people/businesses need strategic assistance with these concepts and optimizing their marketing, brand, customer experience, and communication goals at this time? Creating customer bonding, brand passion, and brand relationships, from the inside out (customer experience—people and processes) and the outside in (neural, peer-to-peer communication), can make a huge profit impact on any marketing initiative and the overall enterprise, irrespective of size or industry. Every company has pressure on marketing, sales, and customer service budgets; and they are being tasked and challenged to deliver positive customer loyalty behavior through whatever cost-effective means are available to them.
Going forward, to generate lasting trust, positive reputation, and continued consumer confidence for brands, products, and services, companies will need to focus on customer-centric leadership, as well as becoming more transparent and authentic. They will have to ramp up inclusion of employees and customers, and more actively engage in offline and online dialogue with all stakeholders, particularly their best customers. These are the key new, real-world dynamics of what will be required to build and sustain customer bonding and brand relationship.
Section Summary and Perspective
The brand-related information consumers seek and gather, offline and online, profoundly impacts their decision making. Organizations can’t control this, although they can have a degree of management where information is involved. This self-directed harvesting is especially true if the information, in verbal or content form, is consistent with their own experiences. And, although some marketers seem to feel that the emotional connection, and the emotional and relationship elements of a product or service proposition necessary to create trust, are fairly recent trends, they have always been at the core of loyalty, engagement, and bonding behavior. It’s fair to say that, for an organization to be successful, the emotional core of messaging and experience must be both positive and consistent.
Emotions drive consumer acceptance, indifference, or rejection—and even negativity—of a supplier’s wares; and this extends to elements of service, communication, image, and even loyalty programs, which have become a major potential lever of behavior. And, if customers are challenged to understand the personal benefit of a loyalty program, the degree of inconsistency this creates is often sufficient to undermine trust and confidence, two key emotional pillars of value.