Customer Experience Leadership

Raising the Bar

2009-09-28T14:50:19-07:00

I’ll be the first to admit that my husband and I eat out more than we should. We are bona fide ‘foodies.’ This bad habit has given us exposure to a lot of different dining experiences, some outstanding and some pathetic.

Prior to the downturn in the economy, my husband and I were more lax with respect to our dining standards. While we didn’t eat at dumps, we accepted the fact that not all dining experiences will be outstanding. Since the economic downturn, my husband and I have become much more selective about where we choose to dine.

Now we are of the frame of mind that we don’t want to waste our money at restaurants that don’t have the various elements that create an outstanding dining experience. Now we are more apt to question whether it’s worth it to dine at certain restaurants. For us, the bar has been raised because the economy has made us more conscious of how we spend our money.

I have to believe this phenomenon is happening in other industries as well. Not only are some consumers choosing to spend their money on things they really need, others are becoming choosier about where they spend their discretionary income.

This mentality places even more pressure on businesses to be the ‘best of the best.’ As such, one could argue that this is not the time for businesses to cut back on product and service quality, despite the dismal economic conditions. Such cutbacks could readily eliminate a business from a consumer’s narrowing consideration set.

Recently my husband and I had dinner with another couple at an expensive (but worth it) local restaurant. Looking around we were amazed at how crowded it was. You would never know that we are in an economic crisis. Clearly this establishment has chosen to continue doing what it needs to do to be one of the best, and their customers were choosing them over other restaurants.

Contributed by Chris Parcenka, VP, Synovate

Customer Loyalty: Turning the Tide

2009-08-31T04:26:00-07:00

Tide works. It cleans my clothes, it smells nice, it’s reasonably priced and – because nothing else has caught my eye more than Tide’s famous red-orange container – I almost always purchase it from the limited selection of detergents available at my downtown Chicago grocery store.

Last month, things changed. I visited a suburban Super Wal-Mart to stock up on less expensive goods to bring back to the city. Turning my grocery cart down the mile-long detergent aisle suddenly broadened my horizon. Like a little kid in a candy store, I ventured down the aisle smelling and reading about more detergents than I ever knew existed. Happily walking away with discounted “Sunshine Energy” ALL detergent in hand got me thinking about my previous relationship with Tide. Have I been Tide-loyal this whole time, or merely Tide-satisfied? Is my recent ALL purchase the beginning of a loyalty shift – am I “Turning the Tide”?

Customer satisfaction is a rational and attitudinal connection to a brand. If repeated over time, satisfaction can – but does not necessarily – lead to positive behaviors toward the brand, which can be called loyalty. There are varying intensity levels of loyalty. On the lighter end of the loyalty spectrum is repeat purchase behavior. On the heavier and more passionate end of the spectrum, customers exhibit multiple behaviors that are positive to the brand: repeat purchases, frequent recommendations and brand extension / related product purchases.

So, if satisfaction isn’t the key driver behavior, what is? CEO of Saatchi & Saatchi Kevin Roberts states:

“Emotion and reason are intertwined, but when they’re in conflict, emotion wins every time”.

Emotional attitudes lead to changes in purchase behavior and active recommendations of the brand to others, which directly boost financials.

Yet, research studies focus on satisfaction – its measurements, its relativity to competing brands and customers’ product and service ideals. Brand managers focus on packaging changes, brand extensions and product alterations to incrementally improve customers’ product satisfaction. But, they’re missing the point! Satisfaction is a necessary but highly insufficient motivator of loyalty. Instead of focusing on product alterations to improve satisfaction, brand managers should focus their time and dollars on hooking their customers beyond satisfaction. This requires digging deeper into the emotional side of the consumer psyche with more powerful research methods. Despite its difficulty, this process is crucial to determining what binds consumers to brands.

So, was I loyal to Tide?

The answer is not so clear. Repeat purchasing is a type of loyalty on the light end of the loyalty spectrum. However, I believe that I’ve been merely satisfied with Tide detergent. I purchased it repeatedly due to a limited product selection, a reasonable price point, attraction to its red-orange packaging and the familiarity of my grocery shopping routine - all of which are rational attitudinal connections. I don’t have emotional connections to Tide detergent. I don’t have ties to it from childhood or feelings about the scent it leaves on my clothes and I don’t recommend it to friends and family. These reasons leave me a mildly loyal repeat purchaser by happenstance. Had Tide engaged me more emotionally to its brand, I would have exhibited more passionate loyalty behaviors. Until then, I’ve turned the tide.

Contributed by Kelsey Valentine, Associate, Synovate Customer Experience

What You Get (and Don't Get) By Slashing Prices

2009-08-28T08:43:56-07:00

Over the course of this recession almost every day there’s another report about a company cutting their costs and/or slashing their prices. But as the economy starts to recover, how will these recessionary strategies impact customer loyalty? A new study indicates that in spite of the current economic climate, consumers are not driven solely by price and that engaging customer experiences are being rewarded.

The survey, conducted by Strativity Group (http://www.strativity.com/products/2009-08-04.aspx) suggests that companies who have been simply focusing on reducing their internal costs – and prices – during this recession may have gained some short-term revenue through acquiring new customers, but most likely at the expense of building long-term, profitable customer relationships.

Companies that spend the time and effort to build exceptional customer experiences emerged with longer-term customer relationships, a larger share of wallet and consumer willingness to pay a price premium. The top customer experience drivers were the ease/simplicity of the experience as well as employees’ ability to resolve problems effectively and exhibit common sense.

Strativity’s study confirmed two common findings from Synovate’s own customer experience research that frequently surprises clients (especially the bean counters) - (1) price is typically only a low level driver of loyalty compared to other touchpoints in the experience; and (2) customer-facing employees almost always play a critical role in creating emotionally engaging experiences with customers.

Contributed by Sean Clayton, Senior Vice President, Synovate

Shopper Marketing: Change the Experience, Experience the Change

2009-06-19T10:13:49-07:00

Walking through a Whole Foods grocery store a few weeks ago got me observing some interesting things. Have you ever noticed that refrigerated vegetable shelving has mirrors behind it? That the international aisle has a different “look and feel” compared to other aisles? That Burt’s Bees products have their own customized display? As a marketer, these things caught my attention as efforts to attract consumers through a relatively new concept called shopper marketing. Deloitte’s publication “Shopper Marketing: Capturing a Shopper’s Mind, Heart and Wallet” defines shopper marketing:

“…all marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand equity, engage the shopper and lead him/her to make a purchase”

Companies have traditionally focused on using research methods to tap into consumers’ behaviors and attitudes solely toward products and services. Industry standard led us to believe that focusing on products alone was sufficient. We’ve been fooled! Understanding the customers shopping experience is critical to developing an optimal environment to reach consumers, building brand equity and encouraging product purchases. According to Vice President of Shopper Marketing at Coca-Cola North America Diane Wallace, “shopper marketing is the next big step in the evolution of strategic retail marketing”. But the In-Store Marketing Institute recently found that only 55% of consumer packaged goods companies have done anything to develop expertise in shopper marketing. So, why isn’t shopper marketing used more? What’s the catch?

In fact, leading consumer packaged goods companies are focusing more attention on shopper marketing, explained by the 2004 to 2010E 21% and 26% CAGR of shopper marketing spending from manufacturers and retailers, respectively. Yet many competitors still aren’t involved in shopper marketing because it requires complex transformational change that disrupts traditional marketing and sales status quos, budgets, funding structures, processes, metrics and incentives. Most importantly, implementing shopper marketing requires scarce skill and experience, particularly for consistent in-store execution and understanding performance metrics. While many ponder the risks, innovative competitors are using shopper marketing as a differentiator that is launching them ahead and leaving hesitators in the dust.

In the near future, shopper marketing is expected to spread throughout the consumer packaged goods industries, become a more prominent part of the marketing mix and implement better infrastructures in regards to retailer/manufacturer collaboration, insights, targeting, measurements and technologies. With 42% of leaders understanding the importance of shopper marketing, organizations are finally giving it due attention. Looking forward, in-depth shopper marketing insights and research should facilitate organizations’ implementation of shopper marketing and aid in the difficult transition they face now. So, as you stroll down supermarket aisles in the near future, you might notice you’ve developed an unexplained brand loyalty to Unilever products, cutting edge Coca-Cola displays grab your attention for the first time, and dim lighting and music put you in a pleasant mood. Accident? Of course not. It’s just you experiencing the change of a changed experience.

Contributed by Kelsey Valentine, Associate, Synovate Customer Experience

Causality: Scientific, but not rocket science

2009-06-15T11:23:27-07:00

There has been an increasing trend over the last ten years for marketing research consultants to analyze customer experience survey data through causal modeling or Structural Equation Modeling. Part of the reason for this trend is the availability of easier-to-use modeling languages. Advances in languages have taken the industry from LISREL and LVPLS (two programs that are quite difficult to use) to AMOS, EQS, Mplus, PLSGraph, and SmartPLS, among others. So, with all of this software at our disposal being used by an increasing number of marketing research agencies and consultants, are companies embracing causality? Do managers accept causal modeling output as proof of finding causal relationships in customer experience survey data?

Judea Pearl wrote a book on causality that, although is a landmark, is something I don’t recommend to others. It is “tough sledding” and requires a big investment of time to understand. (Causality Models, Reasoning, and Inference, 2000, Cambridge University Press) He creates a calculus that, taken together, claims to be a formal theory to accurately describe cause and effect using the languages of mathematics and graphical representations. It was written to advance the philosophy and science of causality for the social sciences, economics, business, etc. But company managers don’t read these kinds of esoteric books.

Managers should remember the old saying that the proof is in eating the pudding. In other words they should test the causal relations found in their cusotmer experience models. All it takes is a little controlled experiment. Most customer experience models are rich in causal details. Pearl says that a causal model should enable you to predict an outcome from doing something. For managers, all that is required is for you to do something. Improvements in CSR knowledge will cause an improvement in the call center experience, for example. All it takes is a little focus. With a little more focus, you can prove that improvements in the call center experience can improve overall attitudes about your brand. These, in turn, can influence financial success of the company. It is not rocket science; but, it can be scientific.

Contributed by Bruce Corner, Synovate Customer Experience

Competing When "Price Isn't Everything, It's the Only Thing"

2009-05-20T13:26:03-07:00

“Customer service trumps price” is the title of Bruce Temkin’s recent post (http://experiencematters.wordpress.com) on his excellent Customer Experience Matters blog. Indeed, Bruce’s research indicates that service is more important to consumers than price across 12 industries. However, Bruce’s work is consumer oriented. This brings a question to mind, “Would we find the same thing in business to business markets?”

We suspect we would find the opposite – that business people are placing price ahead of service considerations in the current economic environment. Increasing pressures for buyers to reduce their expenses, continued strengthening of corporate procurement departments, and hyper competition amongst sellers for reduced work in many sectors all tend to force the conversation towards service being a table stake and cost being the differentiator which wins the bid.

We’ve heard several times from clients across industries that they are seeking “the low cost solution”. And, that is for projects that survive the wide ranging and deep budget cuts which are regularly taking place fairly early in most companies’ fiscal years. Make no mistake, service is still expected and value (versus price) is discussed. But, bottom line price appears to be winning these days in business markets.

Operationally efficient, cost leaders are well positioned for this market. But what if your organization is product or service oriented? How can you stay in the game without simply pricing to win and suffering severe losses? There are a few tricks that are working for smart business to business players, namely:

- Extend current contracts even before they come to renewal. Make a preemptive offer of beneficial terms including pricing to build a longer term stable base of revenue that does not require renewal management:

- Create stripped down versions of solutions which deliver the basics at low prices. There is nothing simpler, yet many B2B companies lack a basic offer.

- Communicate pricing clearly by showing low entry solutions with options that create greater product and service benefit at increased prices. Sometimes, it's as easy as starting the conversation with a very low number.

Whatever the case, be prepared to meet and beat your competitors at the pricing game. While talk about service will continue, we suspect that even leading organizations won't be able to provide any service at all without starting with "a nice price!"

Submitted by John Carroll III, Senior Vice President, Synovate Customer Experience

Recession Psychology… How Has the Recession Changed You?

2009-04-27T10:14:24-07:00

I recently read an article on recession psychology in the Harvard Business Review (April 2009, How to Market in a Downturn) that started me thinking about how I have changed my own spending habits since the recession hit.

The article offered four spending profiles based on identified patterns of behavior evidenced during economic downturns since the 1970’s. In a nutshell, the four profiles are described as follows:

1. Slam on the Brakes: Most vulnerable and hardest hit group, have responded by eliminating, postponing and decreasing all types of spending. Some are lower-income, but anxious higher-income consumers fall in this category as well.

2. Pained but Patient: Consumers who tend to be resilient and optimistic about the long term picture, but less confident about recovery in the near term. This group is also cutting spending in all areas but less aggressively.

3. Comfortably Well Off: Consumers who feel secure about their ability to ride out the recession. Their consumption is relatively unchanged but may tend to be more selective and less conspicuous.

4. Live for Today: This segment remains relatively unconcerned about their finances, unless they become unemployed. Typically urban, younger renters who spend on experiences rather than stuff.

As I look at these profiles, I can easily see myself fitting in with the “pained but patient” clique. As I reflect more deeply on how my spending patterns have changed, I realize that I have switched brands on several products, I have started buying in bulk more frequently, and the car and furniture that I was planning to buy this year have been postponed until 2010. All of this has changed, yet my household income has not changed at all. At least in my case, there is definitely something to this psychology stuff!

So what profile do you fall into? How significantly do you think that the recession has affected you personally?

Also, what profile do you think that your customers fall into? In January 2009, the Consumer Confidence Index sank to the lowest level since 1967. It seems clear that new consumer segments are emerging in this recession that marketers are going to need to address. As stated in Harvard Business Review (April 2009), “Marketers typically segment according to demographics or lifestyle. In a recession, such segmentation may be less relevant than a psychological segmentation that takes into consideration consumers’ emotional reactions to the economic environment.”

As companies everywhere are busying themselves cutting costs, reducing prices and postponing new investments, I found this article to be a good reminder that even in a recession it is still important to connect emotionally with customers. Consumers may be justifiably a bit cynical these days, but they are still looking for brands and companies that understand their changing expectations and are worthy of their trust.

Submitted by Rita Kahn, Assistant Vice President, Synovate Customer Experience

Here Today… Gone Tomorrow?

2009-02-03T04:00:00-07:00

It’s depressing to see and hear about the businesses that are closing or downsizing in some way. As a human being, I feel for all of the employees that are directly impacted. As a consumer, the closures and downsizing make me even more cognizant of the old saying “consumer beware.”

In choosing a company for a product or service, I want to feel confident that the company will be around as needed and not get swept away by economic forces. If I purchase an item and I want to return or exchange it down the road, will I be able to do so? If I purchase a gift card for someone, will the recipient be able to use it? If I need service on a product, will the company be around to provide it?

The bottom line is that there is a lot of uncertainty these days. More than ever, businesses are faced with the burden of building consumer trust. As a consumer, I want some peace of mind that the businesses I choose will be there for me. I’m clearly not alone.

The cover article of the current (1/30/09) issue of Marketing News (“Right the Ship”) talks about rebuilding trust in this period of low consumer confidence. The Consumer Confidence Index hit a record low last October and is still far from reaching what would be considered a ‘good’ rating. According to this article, “A crucial step in restoring consumer confidence is restoring consumers’ trust that individual brands will remain strong and will continue to deliver on their brand promises.”

I recently had a CD that matured at what is now Wells Fargo. In deciding what to do with those funds, I researched my options. Ultimately, I chose to ‘reinvest’ my money with Wells Fargo. Not only was the rate competitive, but the Wells Fargo representative did an excellent job educating me about the recent merger and earning my trust in the stability and strength of Wells Fargo. This is what sealed the deal. Oh, and by the way, I also ended up referring my dad to them.

Contributed by Christine Parcenka, VP, Synovate

"What do I do with THIS?" The Expected Return on Easy Returns

2009-01-16T15:48:58-07:00

The fun shopping days prior to Christmas and the joy of giving are inevitably followed by ‘how am I going to wear this bright red sweater…’ or ‘what on earth is this gadget for…’ as we figure out where to store the gifts we received this Christmas. With storage space at a premium, and cash flow tightening for most of us, the ability to return or exchange gifts for usable items has become increasingly important. So, this year, I decided to gift items easy to return or exchange. This path, of course, led to merchants with the best returns and refunds policies.

I found a wide range of policies even within a particular category and, to my surprise, some merchants had good deals as well as superior returns policies. I think I am not alone in the mistaken belief that only high end retailers like Nordstrom or LL Bean can offer a ‘100% satisfaction guaranteed or return anytime for a full refund/ no questions asked’. Take the leading discounter -- Costco, for example. Costco has until now allowed customers to return items at any time for a full refund, except for personal computers, where returns were limited to six months. Recently Costco slightly modified this very liberal policy to give customers 90 days to return televisions, computers, cameras, camcorders, portable music players and cell phones. Compare this to Apple’s 14-day return policy! You can be sure that all electronic items on my gift list were purchased from Costco.

Some merchants have product specific and even brand specific return policies. At Wal-Mart within the Electronics department, if you take the time to read the fine print, computer hardware must be returned within 15 days of receipt; computer components and computer accessories must be returned within 45 days of receipt; camcorders and digital cameras must be returned within 30 days of receipt; GPS units, digital music players and portable video players must be returned within 15 days of receipt. My guess is that many Wal-Mart customers find out the hard way since generally Wal-Mart accepts returns after 90 days.

This made me wonder about the impact of return policies on customer loyalty to a merchant. After all, most consumers buy things they would rather keep provided it satisfies their need and meets their expectations. Wide scale abuse of returning items for some obscure gain will likely never happen. I also wonder if during tough economic times consumers may be willing to pay a premium for attractive returns policies, especially for big ticket items, to make sure that their investment is really worth what they believed it to be in the showroom! And, yet, retailers like Costco, Nordstrom and LL Bean continue to be the exceptions, while most others tighten their return policies hoping that it will benefit their bottom line. While it is true that tougher return policies or processes can intimidate some of us into keeping items that we will never really use or enjoy, will we return to buy more from that merchant or recommend the merchant to others? Probably not. But then again, perhaps these merchants are thinking of their return policies as drivers of cost and not as an important part of the overall customer experience with impact on customer loyalty and more importantly, future sales.

Contributed by Shubhra Ramchandani, VP, Synovate

Compelled to Act

2008-12-19T08:00:12-07:00

An article in the Journal of Economic Psychology details a study of soccer goalkeepers and their behavior during penalty kicks (link to abstract). After an expert review of 286 penalty kicks in professional soccer, judges deemed that the optimal strategy is for goalkeepers to stay put in the center of the goal and react to the kick. Keepers almost always, however, jump to the right or left just before the kick. Why do keepers earning millions ignore the optimal strategy, particularly when it is something as simple as "stand and react?" A second study with 32 professional keepers revealed a compulsion to act because it feels worse when a goal is scored following inaction (staying in the center) than following action (jumping).

I draw comparisons to the companies I see in my consulting practice. When faced with poor customer service, low satisfaction scores, and decreasing employee morale, companies feel compelled to act quickly and often believe delivering a superior customer experience as the solution. They begin making investments to enhance the customer experience, which is good. Similar to goalkeepers, today's business leaders would rather take swift action toward solving a problem than wait with what some might perceive as "analysis paralysis."

But many jump too quickly in the wrong direction. For example, they may prematurely tie performance management and compensation to customer loyalty measures before employees fully understand how they can influence those measures. This often leads to frustration, or to false positives as employees learn to "game the system." Alternatively, companies may invest in areas of the customer experience that will not have as much impact as other areas that customers deem more important. Today there are many cost effective ways to quickly assess both the customer experience and a company's competency in managing the customer experience. Pausing to gather that valuable information will help business leaders target their investments appropriately and prevent them from leaping too quickly the wrong way.