Core Values and Customer Loyalty: Do You Have What it Takes?

David Cliche
Posted: 07/15/2009

Marketing will never be the same. The way marketers manage the relationships between organizations and customers has changed forever, and, for the first time, the responsibility for managing the brand has been transferred to the consumer.

Your brand has become fluid (whether you were aware of this or not) and the cornerstones of your retention and reputation management strategy have shifted. Half-executed customer feedback mechanisms and Net Promoter Score metrics fuel the desperate hope that your brand and reputation can survive the new customer loyalty battle being waged in social media channels.

In a February 2009 report on social media marketing, Aberdeen Group reported that 59 percent of companies surveyed have increased their marketing spend on social media initiatives.

The Deterioration of Consumer Trust, and the Opportunity

Traditional advertising and marketing efforts don’t cut it anymore. If your advertising spend is still primarily print-based and your marketing efforts consist mostly of email-based DM campaigns, you may be falling behind.

At this point you’re either smiling or crying—maybe both. Either way, the deterioration of trust customers have in brands is an opportunity for experience-based marketers. Good experiences can be communicated and championed so much faster and more broadly than ever before.

The ability for customers to affect the decisions, buying patterns, behavior, affiliations and brand loyalty among themselves is the most significant it’s ever been. They network, they become fans, they vote and share what they like and don’t like—they have opinions that can influence the opinions of their entire network. And they are talking about products and services—not just sharing photos of their families and vacations.

The time it takes for a negative brand experience to impact an organization is now measured in days and sometimes in hours—as quickly as it takes for a rogue video to get posted on YouTube as some have already found out. Facebook just broke the 200 million active users mark—and the average person on Facebook has hundreds of friends. Do the math.

Where are Your Customers on the Advocacy Ladder

Advocacy is now more important than ever as consumers go to their networks first, and tell the organization later (if they get around to it)—and then maybe not at all depending on what feedback they get from their networks. Customer feedback collection needs to become more intimate—surveys, comment postings, flash polls, etc. may not be as useful as they were because the perception is they aren’t genuine channels and they aren’t being heard.

What we can be sure of is that consumers are more likely to move due to a bad experience than before—not only has the economy placed them in a "minimize and survive" state of mind, meaning rate decreases will often lead to a switch over a good experience, but they are also not willing to put up with a poor experience for very long, if at all.

ResponseTek, a leading customer experience management (CEM) software provider, reports that the retention rates of an entire customer base is typically 5 percent lower than it is for the segment of customers who interact with a company and give feedback on their experience as a customer. The 5 percent increase in churn—which has a significant bottom line impact—stems from failing to think differently about marketing.

Customer Retention and Customer Roll-Over

We don’t have the same time we used to have to fix problems and rectify the experience—consumers are moving faster and are being offered many other choices from advocates in their personal networks.

The fact that consumers are moving from anxiety to action also presents an opportunity. I believe marketing's number one goal is about moving people to action. Marketing used to be about telling people something often enough and hoping they eventually did something. Now, marketing is all about getting people to do something as quickly as possible.

If consumers are already inclined to move, organizations can initiate brand shifts and begin gaining ground in areas that were previously locked up and impenetrable.

It’s the premise of any well-founded sales penetration strategy. Growth in a market like the one we’re in typically comes from expanding our relationships with existing customers—selling them more stuff for more money. That will be tricky these days given that customers are asking for more stuff for less money.

The economy has also seen consumers become more debt-averse—monthly payment plans aren’t likely to be as popular as they were as consumers look to eliminate financed debt and seek only what they can afford now. Eric Janszen, in his article "Selling to the Debt-Averse Consumer" in Harvard Business Review’s July-August 2009 issue, states that "consumers won’t be able to buy as many goods as before, but they’ll react positively to marketing that allows them to feel their newfound thriftiness is a lifestyle choice rather than a constraint imposed by the economy."

A January 2009 Aberdeen Group report on recessionary marketing reported that 91 percent of companies surveyed reported that the recession has had a major impact on customer purchase behavior.

It Costs More to Create a Customer

Typically, a new customer is more expensive to pursue, difficult to acquire and takes a longer time before they become profitable. Interesting dilemma—how do we grow if existing customers want more for less and new customers take too long and cost too much?

Our biggest challenge used to be the time it took to get people to the point of switching—when they were ready to act. This cycle can be anywhere from several months to a couple years, depending on the nature of the sell. Guess what? Customers are now meeting organizations half way—many aren’t getting more for less from their existing suppliers and are looking for a better alternative.

We need to be prepared to meet them the rest of the way and provide a brand experience that maximizes their present tendency to shift, knowing retention has become increasingly difficult.

Sustaining the shift and retaining a new customer will also become harder than ever before—think about the circumstances under which you acquired them… Same thing could happen to you if you blow it.

How Are You Engaging Your Customers?

  • Consider how you engage your customers and get them to participate in the process.
  • Take a longer look at your relationship with them—do you understand the customer’s entire lifecycle and is their perspective the same as yours?
  • How can you assure them that you’re invested in a long-term relationship and aren’t just in it until you’ve concluded the next sale?
  • Pay attention to advocacy scores and understand what they mean.
  • Net Promoter Score is only a number—understand it, know that it will be different at different touchpoints and figure out how to manage it.
  • Live real-time testimonials are happening across social media channels—these are no longer something you can script and frame—embrace this and figure out how a good customer experience can take on a life of its own.
  • Understand that a bad customer experience can have an equally powerful negative effect.

We need to engage customers proactively to create experiences that encourage them to stay—this involves every component of an integrated marketing approach—but all of it must focus on maximizing the experience and the outcome needs to be less about positioning, more about action-based sustainability and retention.

The voice of the customer should be ringing in your ears like the sound of a heavy metal concert—if we listen carefully, are prepared to participate on their terms and respect the power of a heavily networked consumer, there are opportunities for new customers and advocates out there. Find them before someone else does.

First published on Call Center IQ.

David Cliche
Posted: 07/15/2009

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