June 17, The Constant Customer Holding onto a customer has never been harder -- or more important. I trust the staff with my time, my money, and my friends. Corporations have spent billions of dollars trying to make customers as loyal to their products and services as I am to that coffee shop. Now, with all that information at their fingertips, executives have been trying to figure out which business practices make faithful customers loyal.
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June 17, The Constant Customer Holding onto a customer has never been harder -- or more important. I trust the staff with my time, my money, and my friends. Corporations have spent billions of dollars trying to make customers as loyal to their products and services as I am to that coffee shop.
Now, with all that information at their fingertips, executives have been trying to figure out which business practices make faithful customers loyal. Yet an understanding of why customers stick with a brand is still evolving. Today, the search for the ties that bind customers to brands has taken on fresh urgency. Unlike stock appreciation, which can fluctuate wildly over the short and medium term, loyal customers can be counted on to build a solid base of revenues as well as to expand profits.
Such customers are likely to try new offerings and to provide strong word-of-mouth for a brand, saving companies advertising and product-assessment costs. But what is it that actually makes customers loyal? Implicit in management legend W. Since then, and especially in the past five years, marketing scholarship has established many times over that satisfaction scores alone fail to predict how customers will actually behave.
Part of the problem is that satisfaction scores measure only past experience. The American Customer Satisfaction Index ACSI , for instance, plots whether a customer thought she received good value -- whether, for example, a computer is as functional or a hotel room as clean as she expected it to be. The index reflects a rational assessment at a particular moment. People stay faithful to brands that earn both their rational trust and their deeply felt affection. That dynamic, which Gallup has studied extensively, turns out to be a better predictor of behavior than consumer satisfaction measures alone.
Return for a moment to my coffee shop. Shortly after I moved to the neighborhood, my wife and I tried a similarly priced competitor that had delicious omelets, fresh bagels and attentive counter service; I would have given the place a high satisfaction score.
My emotional attachment to my favorite place -- how it makes me feel, how I interact with its staff -- matters more to me than whether I get better value elsewhere. In the past few years, a marketing discipline has evolved to capture this distinction. Frederick F. The implication is that managers who depend on all manner of snazzy products and flashy ad campaigns to lure new buyers will always be playing catch-up with companies that concentrate on keeping established customers happy.
Ever since, marketers have stopped looking for satisfied customers and begun focusing on loyal ones. CE11measures rational formulations of loyalty according to three key factors L3 : overall satisfaction, intent to repurchase, and intent to recommend. But it also adds eight measures of emotional attachment A8. Gallup found that, despite agonizing waits for rides, high prices and imperfect service, customers, by and large, remained loyal to the park.
There is more to this, though, than just magic dust. When a brand inspires both rational loyalty and emotional attachment, customers will continually reward it with their business. All members have rational incentives to spend more of their lodging dollar with the chain, because they qualify for perks and discounts when they spend more.
Yet some members spent more than others. Its questions let customers of any product raise signs above their heads, declaring themselves the most eager buyers in the bazaar. The statistical science behind the A8 captures the sequence in which that kind of emotional attachment develops.
Gallup developed the eight A8 questions as paired indicators of four emotional states: confidence in a brand, belief in its integrity, pride in the brand and passion for it see the table below. An analysis of responses to the questions revealed that customers develop emotional attachment to a brand in a cumulative way: customers who agreed strongly with the first two statements of the A8 were more likely to agree with the next two, and so on.
Traditionally, marketing images have associated passion for a brand with only a few items -- cars, beer, and jewelry. Gallup surveyed 3, customers in six industries, using its CE11metric. Across diverse industries, the proportion of emotionally attached consumers is remarkably consistent below right. L3 Overall, how satisfied are you with [brand]?
A8 [Brand] is a name I can always trust. If a problem arises, I can always count on [brand] to reach a fair and satisfactory resolution.
Consider the case of Southwest Airlines below. Five times as many of its customers were fully engaged as were customers of United. The same dynamic occurs across many industries, including retailing, among competitors with similar prices and products. Each of these brand pairs seems interchangeable from the point of view of traditional customer satisfaction measures. But when emotional investment is considered, winners emerge regarding the likelihood of attracting lifelong customers.
And an offer to "fly the friendly skies" will inspire confidence only if the flight attendants remain friendly every minute the customer spends in the sky. Gallup found that among members of a hotel affinity club who said they got less from their membership experience than they thought they would when they enrolled, not quite one in 25 was confident in the brand.
Compare that to the customers who said the membership matched their expectations: one in four was confident. That belief is reinforced when a customer feels she is dealing with a company that is not only competent and forthright but also fair and ethical. It can be instilled, for instance, by a salesperson who steers the customer to a product she says she wants instead of dumbly pushing the most expensive merchandise.
Similarly, if a desk clerk botches a room reservation, he should know to offer an upgrade or some other token of apology. High scores on pride questions indicate that a customer has crossed a threshold of commitment to the brand. When a customer wears a logo on her backpack or drops a brand name in cocktail-party conversation, she has reached the highest rung of emotional attachment: passion. Passionate consumers have been known to wage public campaigns protesting a change in a soft drink formula, indicating a depth of commitment that moves beyond loyal to fanatic.
And that level of passion can by sparked by goods as everyday as hiking boots or potato chips. Indeed, Gallup research across a range of industries -- from online retail to airlines to banks -- found that roughly one in 10 customers in every industry is passionate.
So the excuse of being in a "boring" business no longer absolves managers from bonding with customers who make brands integral to their lives. Clearly, Southwest, like Wal-Mart, has managed to communicate an emotional appeal that its competitors lack -- an appeal that has relatively little to do with the specific natures of their respective markets. Wal-Mart banished the surly clerk who haunts so many discount retailers and replaced him with a friendly greeter, often a senior citizen instead of a resentful teen.
Such service features often inspire high emotional attachment because they improve the odds that a customer will experience each of the four emotional states that drive A8 scores. At the top of the A8 ladder, a passionate customer can -- and will -- shower dollars on a brand. But on the ground, a manager has to figure out how to persuade uncommitted customers to move up the rungs of that ladder, from provisionally satisfied to rationally loyal to emotionally engaged. Flawlessness may seem unreachable, but practical steps can be taken to come close.
For banks, flawlessness includes ATMs that always work, customer service reps who offer up-to-date information on rates, and back-office staffers who rectify errors quickly and courteously.
For airlines, flawlessness means on-time performance, clean and modern aircraft, and pleasant terminals. One way to encourage the perception of flawlessness among customers is to instill in salespeople and customer-service personnel the belief that the wares they offer are as close to perfect as possible -- and always improving. Consider: A surly or clueless desk clerk can sour a customer on a hotel chain, especially if that chain advertises its comfort and friendliness.
If managers select, position, and train employees to delight customers and reward them for doing so, customers will become emotionally attached simply by conducting business with the brand. The third strategic lever is perhaps the most surprising.
When customers experience problems -- say, a service glitch or a faulty product -- a funny thing happens. As a result, nearly half of those who say they are loyal to an airline identify Southwest as their favorite. Great companies become great by cultivating distinct brand identities. CE11offers an analytical tool for gauging how that brand resonates in the marketplace. It enables companies to clearly see the path from its products and services to the hearts, minds, and wallets of its customers.
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Mikazil Firstly, the traditional redesign process is shit his words, not mine. Healthy organizational cultures are created with intentional clarity about what matters most. It is up to you to find out the extent of the emotional connection and devise strategies to convert the disengaged and engaged customers into fully engaged customers. Too often we focus only on the conversion rate, but this is just a small part of the whole customer journey.
The Constant Customer