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Head vs. Heart
True loyalty exists when customers feel safe, appreciated, and smart.

In a recent online discussion about a financial services company, a participant summed up his sentiments nicely. “Oh, I’m extremely loyal to them,” he said. “Until the moment someone comes to me with a better deal.”

Considering the extreme competitiveness of that industry, this man probably will not be a loyal customer for long. His readiness to switch brands exemplifies a purely rational decision based solely on a simple cost-benefit analysis. A slight change to one side of the equation — and his decision changes. This is a marketer’s worst nightmare.

To secure true loyalty, a brand needs to have an emotional connection with its customers, but opinions vary as to what that magic feeling should be. Some would suggest that it’s all about “trust.” Others would recommend developing “passion” for the brand. Still others would advise creating an emotional experience. These are all potentially powerful ideas, but they are ambiguous, ethereal, and extremely difficult to make actionable. They may not say it aloud, but when presented with this kind of advice, many marketers inwardly scratch their heads. What does an emotional connection mean? What do I do to build it? How do I know if I have achieved it?

The Emotional Drivers of Loyalty

Though “loyalty” can be measured in behavioral terms (repeat purchases, share of wallet, etc.), it is a product of an emotional connection. Emotions drive behavior; loyalty is generated when a brand makes a customer feel a certain way. Once we know which emotions drive loyalty, we can develop actionable plans to enable customers to reach this emotional state.

In private online communities, consumers can honestly express their perceptions and motivations, making them an ideal venue in which to explore the emotional connections that result in loyalty. In addition to discussions, surveys, and media galleries, we rely on advanced methodologies that help illuminate people’s emotions and subconscious drivers. The insights derived from an ongoing, intimate collaboration with community members have helped us understand consumer emotions in more actionable ways, and opened high-potential opportunities to build customer loyalty significantly.

In service industries, our experience suggests three critical emotions that drive loyalty: feeling safe and relaxed; feeling appreciated; and feeling positive about oneself — specifically, feeling “smart.” These three emotions are present among loyal customers across all of the service industries we have researched: hospitality, financial services, telecommunications, insurance, and retail. All three emotions are essential to customer loyalty and represent the goals against which business leaders need to measure every product, service, and marketing decision.

In addition to enabling customers to feel safe, appreciated and smart, a brand must not evoke any negative emotions. While many product categories can weather some ambivalence in their consumers, feelings such as apathy, frustration, anxiety or doubt are never present in loyal customers in the service industries we’ve explored. Anger is especially important, as it is often associated with feeling unappreciated, disrespected, or cheated. If customers harbor any of these emotions, they will not be loyal. This is obvious — none of us wants to buy something from someone who makes us feel indignant, no matter how good the product or price.

Creating Emotional States

When you think of internet service, you probably immediately think of data speed, reliability and monthly cost as the most important factors driving consumer decisions. Certainly, the industry competes aggressively on these dimensions. However, when we examined consumers’ ideal emotional states in relation to telecommunications companies, we got a much more actionable understanding of how these functional attributes inform and influence the feelings that ultimately drive purchase decision and loyalty.

On an emotional level, internet service consumers wanted:

To feel safe and relaxed, unworried about service reliability.

“It is going to work when I need it.”

“They give me peace of mind knowing my service will always be there when I need it.”

To feel safe and relaxed about what they are charged.

“I don’t have to worry about them ripping me off.”

“I should feel safe from extra fees, hidden charges.”

To feel appreciated, and valued.

“I’m not just another number.”

“The provider makes an effort to let me know that my business is important to them.”

Finally, consumers wanted to feel good about themselves. They wanted to feel smart and proud
of their choice.

“I’m proud of myself because I made a good choice in providers.”

“I’m feeling like a smart shopper.”

Rational elements such as technology and pricing certainly were important — not as the end in themselves, but as the shapers of these emotions. Flawless service reliability led customers to feel safe, relaxed, or unworried. The company’s pricing practice of not giving new customers a lower price than long-time customers evoked a strong sense of feeling appreciated. These rational elements were important to the extent that they served to create emotional states.

These three emotions — feeling relaxed, appreciated, and good about oneself (smart) — appear and correlate with purchase decision in many other business categories or industries. In the credit card business, for example, these emotions were the dominant difference between customers who used the card frequently or sporadically. In auto insurance, the presence of these emotions was the key difference between a brand’s customers and non-customers. While the relative importance of these three emotions varied across industries, they were consistently the major difference between loyal customers and less loyal, or non-customers.

Evoking the Negative

Feeling appreciated or valued is so important to customers that, if they feel the opposite — if they feel slighted or unappreciated — their negative emotions overwhelm and distort their perceptions. They become so overpowered by these negative feelings that their attention and decision-making become, well, irrational.

This phenomenon is clearly illustrated in a recent study on catering options that we conducted for an airline. The airline’s community members were asked to respond to a number of concepts, each of which included a free offering in combination with a number of paid menu items, such as fresh salad, fruit, and small-plate cuisine. The free offering options ranged from just a beverage to a full sandwich. The paid items were the same in all options.

We discovered that members’ interest in the paid menu items was strongly affected by the specific symbolism of the free items and the emotions they evoked. If the free item was substantial and members felt it implied that the airline valued them and understood their needs, their interest in the paid items were quite strong. However, if the free items were less generous, and were perceived as a slight or a sign of being unvalued by the airline, members’ interest in the paid items rapidly decreased to zero.

This is not surprising — we don’t want to buy things from people whom we believe do not value us. Though ostensibly about food and costs, this exploration of emotion reminds us that even routine transactions are implicitly about relationships, and have a strong social and emotional undercurrent.

The less obvious insight was the strength of the negative emotions evoked by the single free element in the offering. In those cases where it evoked feelings of being unvalued, the other elements of the overall offering lost attention and consideration. Customers’ interest in the paid items, which was clearly strong when they were in an emotionally positive or neutral state, disappeared when they felt unappreciated.

Did the airline actually generate more revenue and net more profit by giving away a more expensive item for free? We won’t tell. But consumers’ behavior in this case was certainly not rational. The insights clearly helped the airline avoid inadvertently sending a disrespectful signal to their loyal customers. At
the same time, it uncovered an opportunity to raise revenue.

Accentuating the Positive

Evoking the emotions of feeling safe, smart, and appreciated requires both hard and soft skills. It requires an organization to deliver products or services flawlessly. But it also requires an acute awareness of the emotional implications of every customer-facing action.

To make customers feel safe, a company needs to deliver predictable positive experiences — no unpleasant surprises with the product, service or pricing. It’s about delivering on your explicit and implicit promise, without exception. Customers feel safe and relaxed when they know they will get what they expect, every time.

In some industries, customers recognize that perfection is unrealistic and they will be disappointed once in a while. However, they will continue to feel safe if they know the company will quickly and effectively fix the problem, every time. Making customers feel safe requires consistently delivering the product and living up to promises, while being poised to rectify any mistakes quickly and unconditionally.

Consumers feel smart when they believe they have made a good decision. So, to make them feel smart, a company needs to fully align its offering with customers’ values. Consider the simple example of buying a toaster. Sam feels smart by buying the lowest-priced model because he paid the least amount to get toast in the morning; Sarah feels smart for buying a premium model because she believes that “you get what you pay for,” and her purchase will therefore be more durable. Though both Sam and Sarah are engaging in what they believe to be a rational economic process — weighing the costs versus the benefits to maximize value — it is actually a very subjective one. That’s because a ”good” decision is always occurring in the context of a customer’s individual beliefs and values.

Therefore, making customers feel smart about their decision requires great products — in the context of what they believe to be a great product and in light of how they weigh not just the value of individual product elements, but the various forms of “feeling smart” that they engender (frugal versus wise, pragmatic versus sophisticated).

Finally, to make customers feel appreciated, a company needs to understand deeply how customers’ subconscious emotional systems are triggered by the company’s actions, and pay relentless attention to every customer touchpoint. Our research has shown that almost any interaction with a customer may trigger the emotion of feeling appreciated or unappreciated. These emotions may be triggered by impersonal policies, such as free shipping or a special service queue for loyal customers. Or, they can be evoked by a personal contact such as hearing a caring voice, or being recognized by name.

Not just customer service and support, but every customer-facing element — product offering, product performance, service experience, billing practices, pricing, outbound sales, return policies — is potentially symbolic of a company’s attitude towards its customers. Human beings have an exceptional ability to detect how someone feels towards them. Tiny gestures have large impact. If a company formulates a return policy based on the goal of minimizing fraud, customers will emotionally detect that they are not trusted. Conversely, if the company’s underlying assumption is that customers are honest and fair, and that when they need to return something they have a genuine problem, then their policy will make customers feel cared for and valued.

Companies must be dedicated to preventing consumers from feeling unappreciated. Evoking that feeling negates all of the strengths in the brand’s offer, making them insignificant as they are drowned out by the emotional noise of anger, frustration, shame, or rejection. It is distressing to see businesses send powerful signals to their customers through nickel-and-dime charges, fine print exceptions, and exaggerated promises — while at the same time spending huge budgets on loyalty programs. The foundation of customers’ loyalty is built not on one big program, but on the brand’s emotional intelligence, on its commitment and ability to do the right thing consistently.

True loyalty exists when a company has made its customers feel safe, appreciated and smart. These emotions are the anchors that will keep your customers close whenever the next guy comes along with a better deal.


communispace
JULIE WITTES SCHLACK
is svp of innovation and a founder of Communispace, where she uncovers online behavior patterns and tests new ways to generate insights. She can be reached at jwschlack-@-communispace.com. ED CHAOis director of client services f or Communispace andpreviously was with General Mills, Jarden and H&R Block. Email: echao-@-communispace.com.

NOVEMBER / DECEMBER 2012 | PDF | Subscribe | Home