Spring '14 Canada

April 6-8, 2014 | Montreal, Quebec

Building customer loyalty in the digital age

articles

Consumers interact with marketing messages the same way they interact with other people -- through emotion. Here's how to tap into basic human triggers.

Based on behavior starting thousands of years ago, humans have evolved to use gut instincts to make quick judgments calls that still translate in today's digital world. In the opening keynote at the iMedia Canada Summit, loyalty expert Chris Malone, author of "The Human Brand" and managing partner at Fidelum Partners, laid out the two key factors that drive human decisions: intention and degree of competence. And these factors are not just used when interacting with strangers. It's a continued process that is used on people within their trusted communities and networks. These emotions also determine the feelings that consumers have toward brands and marketers.

Studies from social psychologists in over 40 countries have shown that the basic concepts of warmth and perception drive over 80 percent of human behavior. Think of people you know that are warm, friendly, trustworthy, competent, and skilled at what they do. Typically this makes us feel pride and admiration toward these people and, in turn, creates loyalty. Now think of a person who has that same skill but is cold and unapproachable. This type of person can cause feelings of envy, jealousy, and lack of trust. The flipside to this type is someone who is warm and trustworthy but lacks competence, which can cause feelings of pity and sympathy that lead to neglect. The worst combination is someone who is both cold and incompetent, which can stir up feelings of resentment, anger, and rejection. These basic patterns of perception, emotion, and behavior have been show to explain so much of our behavior in all of our interactions within society.

How is this impacting consumer behavior? These same basic perceptions are driving what consumers do with companies, products, services, and brands. Malone, along with his co-author, Dr. Susan Fisk, the world's leading authority on warmth and concept, have spent the last three years studying data from over 45 brands about how consumers view companies from a warmth and perceptions stand point. Most of the companies driving top warmth and competence are the huge household names -- Coca-Cola and McDonald's. The competent yet cold companies are typically luxury, unapproachable, and high-end brands. The government-subsidized entities like USPS and public transportation companies are generally received with warmth yet being incompetent, and the big banks, tobacco companies, and oil companies fall under the cold and incompetent category. When you roll up all of the information and assess how it's impacting purchase, loyalty, and behavior, Malone found that 50 percent of that behavior is driven just by warmth and perception.

When you take the information a step further and apply it toward digital vs. brick-and-mortar stores, the brick-and-mortar businesses are performing much stronger on all the things relating to the people. They provide good customer service, resolve problems quickly, and usually have a knowledgeable and friendly staff. The digital component for most brands was created for convenience and better efficiency for consumers, but the problem has produced lower loyalty. Over 50 percent of loyalty is driven by the warmth perceptions, and although there is more consumer data than ever before, loyalty numbers are lower than ever.

With the invention of e-commerce, social accountability went away. Before the industrial revolution, you would see the cobbler that made your shoes, while today when you order a pair from Zappos.com, you don't see the shoes until shipment, and you never see the person that made them. Despite this mass-dehumanization within e-commerce, human psychology along the way hasn't really changed.

Today, e-commerce, mobile, and social networking are creating a relationship renaissance that is bringing us back to a place where decisions are based on the people behind the products. Marketers and brands need to re-evaluate strategies and practices by starting with these three key steps:

  • Become more self-aware.
  • Embrace significant change.
  • Rebalance priorities.

From there, remember to tap into the fundamental human emotions that keep consumers engaged and loyal. Think stories and people over data and content.

Betsy Farber is an associate editor at iMedia Connection.

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