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Michael Lowenstein

Marketing Nuggets

By Michael Lowenstein

About Michael

Michael Lowenstein, PhD, CMC, is thought leadership principal for Beyond Philosophy, a U.S.-based international customer management experience consultancy. He's an international conference keynoter and speaker, workshop facilitator and trainer, author and a contributor to two customer loyalty newsletters and portals. He has more than 30 years of management and consulting experience with expertise in customer and employee loyalty research, CEM, loyalty program and product/service development, customer win-back, service and channel quality, customer-driven corporate culture, human resource development, and strategic marketing and planning.

"Marketing Nuggets" will include observations regarding trends, and often study results, representing current, real-world issues of high importance to direct marketers. Those issues include omnichannel communication usage, mobile marketing, content, informal offline and online social communication, consumer behavior, message personalization, internal customer-centric processes and organization, strategic customer life cycle planning, proactive employee contribution, etc.

 

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Does this sound like you? Have you ever set up a goal, but then realized (either quickly or too late)...



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So here we are, halfway through 2013. You, along with everyone, are still trying to find that magic formula to...



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Building Customer-Centric, Trust-Based Relationships

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More than a buzzword, "being human," especially in brand-building and leveraging customer relationships, has become a buzz-phrase or buzz-concept. But, there is little that is new or trailblazing in this idea. To understand customers, the enterprise needs to think in human, emotional terms. To make the brand or company more attractive, and have more impact on customer decision-making, there must be an emphasis on creating more perceived value and more personalization. Much of this is, culturally, operationally, and from a communications perspective, what we have been describing as "inside-out advocacy" for years.

Most brands and corporations get by on transactional approaches to customer relationships. These might include customer service speed, occasional price promotions, merchandising gimmicks, new product offerings, and the like. In most instances, the customers see no brand "personality" or brand-to-brand differentiation, and their experience of the brand is one-dimensional, easily capable of replacement. Moreover, the customer has no personal investment in choosing, and staying with, one brand or supplier over another.

A key opportunity for companies to become stronger and more viable to customers is creation of branded experiences. Beyond simply selling a product or service, these "experiential brands" connect with their customers. They understand that delivering on the tangible and functional elements of value are just tablestakes, and that connecting and having an emotionally based relationship with customers is the key to leveraging loyalty and advocacy behavior.

These companies are also invariably quite disciplined. Every aspect of a company's offering—customer service, advertising, packaging, billing, products, etc.—are all thought out for consistency. They market, and create experiences, within the branded vision. IKEA might get away with selling super-expensive furniture, but it doesn't. Starbucks might make more money selling Pepsi, but it doesn't. Every function that delivers experience is "closed-loop," carefully maintaining balance between customer expectations and what is actually executed.

In his 2010 book, "Marketing 3.0: From Products to Customers to the Human Spirit," noted marketing scholar Philip Kotler recognized that the new model for organizations was to treat customers not as mere consumers, but as the complex, multi-dimensional human beings they are. Customers, in turn, have been choosing companies and products that satisfy deeper needs for participation, creativity, community and idealism.

This sea change is why, according to Kotler, the future of marketing lies in creating products, services and company cultures that inspire, include and reflect the values of target customers. It also meant that every transaction and touchpoint interaction, and the long-term relationship, needed to carry the organization's unique stamp, a reflection of the perceived value represented to the customer.

Kotler picked up a theme that was articulated in the 2007 book, "Firms of Endearment." Authors Jagdish N. Sheth, Rajendra S. Sisodia and David B. Wolfe called such organizations "humanistic" companies, i.e. those which seek to maximize their value to each group of stakeholders, not just to shareholders. As they state, right up front (Chapter 1, Page 4):

"What we call a humanistic company is run in such a way that its stakeholders—customers, employees, suppliers, business partners, society, and many investors—develop an emotional connection with it, an affectionate regard not unlike the way many people feel about their favorite sports teams. Humanistic companies—or firms of endearment (FoEs)—seek to maximize their value to society as a whole, not just to their shareholders. They are the ultimate value creators: They create emotional value, experiential value, social value, and, of course, financial value. People who interact with such companies feel safe, secure, and pleased in their dealings. They enjoy working with or for the company, buying from it, investing in it, and having it as a neighbor."

For these authors, a truly great company is one that makes the world a better place because it exists. It's as simple as that. In the book, they have identified about 30 companies, from multiple industries, that met their criteria. They included CarMax, BMW, Costco, Harley-Davidson, IKEA, JetBlue, Johnson & Johnson, New Balance, Patagonia, Timberland, Trader Joe's, UPS, Wegmans and Southwest Airlines. Had the book been written a bit later, it's likely that Zappos would have made their list, as well.

The authors compared financial performance of their selections with the 11 public companies identified by Jim Collins in "Good to Great" as superior in terms of investor return over an extended period of time. Here's what they learned:

  • Over a 10-year horizon, their selected companies outperformed the "Good to Great" companies by 1,028 percent to 331 percent (a 3.1 to 1 ratio)
  • Over five years, their selected companies outperformed the "Good to Great" companies by 128 percent to 77 percent (a 1.7 to 1 ratio)

Just on the basis of comparison to the Standard & Poor's 500 index, the public companies singled out by "Firms of Endearment" returned 1,026 percent for investors during the 10 years ending June 30, 2006, compared to 122 percent for the S&P 500—more than an 8 to 1 ratio. Over 5 years, it was even higher—128 percent compared to 13 percent, about a 10 to 1 ratio. Bottom line: Being human is good for the balance sheet, as well as the stakeholders.

Exemplars of branded customer experience also understand that there is a "journey" for customers in relationships with preferred companies. It begins with awareness, how the brand is introduced, i.e. the promise. Then, promise and created expectations must at least equal—and, ideally, exceed—real-world touchpoint results (such as through service), initially and sustained over time, with a minimum of disappointment.

As noted, there is a strong recognition that customer service is especially important in the branded experience. Service is one of the few times that companies will directly interact with their customers. This interaction helps the company understand customers' needs while, at the same time, shaping customers' overall perception of the company and influencing both downstream communication and future purchase.

And, branding the customer experience requires that the brand's image, its personality if you will, is sustained and reinforced in communications and in every point of contact. Advanced companies map and plan this out, recognizing that experiences are actually a form of branding architecture, brought to life through excellent engineering. Companies need to focus on the touchpoints which are most influential.

Also, how much influence do your employees have on customer value perceptions and loyalty behavior through their day-to-day interactions? All employees, whether they are customer-facing or not, are the key common denominator in delivering optimized branded customer experiences. Making the experience for customers positive and attractive at each point where the company interacts with them requires an in-depth understanding of both customer needs and what the company currently does to achieve that goal, particularly through the employees. That means companies must fully comprehend, and leverage, the impact employees have on customer behavior.

So, is your company "human"? Does it understand customers and their individual journeys? Are customer experiences "human" and branded? Is communication, and are marketing efforts, micro-segmented and even personalized? Does the company create emotional, trust-based connections and relationships with customers? If the answer to these questions is "YES," then "being human" becomes a reality, the value of which has been recognized for some time, and not merely as a buzz-concept.

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