Winning True Customer Loyalty and Trust in a Recession: A Conversation with Expert Shaun Smith
Would you believe it if someone told you that in over 50 percent of cases, lack of trust was the primary reason a customer decides not to buy? According to customer experience expert Shaun Smith the elephant in the room in the failed sales department is absence of trust. Shaun Smith is an internationally acclaimed consultant and thought leader. His latest book, See, Feel, Think, Do–The power of Instinct in Business, investigates the role of instinct and innovation in customer experience. Smith explains how companies can improve customer loyalty during the current economic crisis.
Is the customer acquisition process more important today than the customer retention process?
It really depends on the maturity of the business, if you are a start-up you want to drive traffic so aquisition is key; if you are in a mature market, then retention is vital. In a soft market like today customers are more selective, so loyalty and advocacy are essential.
In an article you wrote, "Winning True Customer Loyalty and Trust in a Recession," you said in over 50 percent of cases of customer decision making, lack of trust is the primary reason the customer doesn’t make a purchase. The next reason for not buying was "no need" and "no desire to change." "No urgency" and "no budget" trail even further behind. This question is twofold: Do these numbers still hold weight during the current economic recession? What is the significance of these numbers?
If you look at what has happened over the past few years with Enron, WorldCom and now the banks, trust is at an all-time low. There was a report delivered at the World Economic Forum in Davos recently that said trust in big brands has declined significantly over the past year or two. One finding found that three quarters of the Australians surveyed said they trusted companies less than a year ago with only 43 percent trusting that companies will do what is right. I think we are going to see that those brands that are trusted—brands such as Tesco, Southwest Airlines and First Direct Bank—will protect their market share at the expense of competitors.
How do companies create marketing message that communicate the tone of trust and make sure sales are also on the same page?
We are going to see the shift from "expectation marketing" to "experience marketing." People will trust other satisfied consumers rather than the ad copy men. Tripadvisor.com will become more influential than Cook's brochure.
Let’s talk about branding in finance. You have written about the award-winning TV advertisement "Big Idea" featuring Anthony Hopkins, which actually was poorly received by customers. What is your take on this case study?
One survey found that being big has little impact on brands but trust and relationships have the most. This advertisement showed that well produced Hollywood style ads don’t necessarily work better than low-budget customer generated ads because we have become so cynical about traditional above the line marketing.
any better than customer generated ads.
You have been quoted as saying "‘Loyalty’ is a misused term." How is loyalty misused by companies?
Because most companies think of it as relating to the customers being loyal to them. There is no onus on customers to be loyal to you—it is for the company to be loyal to the customer by providing its best customers with recognition and value they can’t get elsewhere. The sad fact is that many companies give better deals to new customers than existing customers. This is anything but loyal.
Companies such as Lego and Harley Davidson have such loyal customers that my co-author Joe Wheeler calls them "Owners" in that they act like owners in the business giving their time to help promote and develop the product.
Interview by Blake Landau