Customer-Centricity Is Mandatory for 2015

Article by Ernan Roman Featured on customerthink.com

For 2015 putting your customer at the center of every strategy and business process will be essential for acquisition, retention and competitive differentiation. No more just talking about it. This coming year, it has to happen.

Here are three tips with examples of companies that are getting it right when it comes to excellence in customer-centricity.

You Want Fans, Not Just Customers
TGI Fridays, recently earned a top spot in the Dunnhumby Customer Centricity Index which noted that when it comes to restaurants, “experience matters as much as the food.” TGI Fridays was recognized for its major differentiator, loyalty. TGI Fridays was also honored in the Loyalty360 Awards.

According to Michelle Malish, Senior Director, Customer Relationship Marketing & Loyalty:

“Fridays is intently focused on ... meeting the needs and desires of our most loyal fans. [We use] member data and insights to enable relevant, multichannel communications that build and sustain engaged relationships, support brand activations, drive incremental traffic, and create brand advocacy… We develop, test, analyze and launch new program benefits and concepts that meet our guests’ needs… Depending upon the marketing program, we may use behavioral and personal profile data to tailor messaging content, copy tone, offer strategy, channel, and contact frequency. Our goal is to deliver memorable guest dining experiences, reward members for their loyalty, inspire social sharing, and create brand fans.”

The company’s Give Me More Stripes loyalty program not only offers rewards but also has a social component that states, “In here there’s plenty to talk about,” and gives fans a platform to share their experiences.

Create an Emotional Attachment to Your Brand
When customers feel a part of the brand they will develop an attachment to the experiences associated with it, and want more. According to a Gallup poll:

“[Consumers are] more inclined to spend with businesses they feel good about… consumers will give more money to the businesses they feel emotionally connected to...the vast majority of customer buying decisions are influenced by emotional factors.”

Noting an emotional connection to their web experience, Norwegian Cruise Lines was recognized by Key Lime Interactive’s Comprehensive User Experience Report for their “Consistently positive emotional experiences … the site significantly outperformed its competitors’ in terms of time spent on the site [which] increased the brand’s perception as ‘entertaining’, ‘appealing’, ‘fun’, and ‘family-oriented’.”

Use Customer Feedback To Make Improvements
ANZ Bank, a top-four international financial services firm, was the recipient of the International Customer Experience Award for “[showing that] service, satisfaction and ROI can improve by listening to customers.”

According to Mark Hand, ANZ Managing Director Retail Distribution:

“Our real-time customer feedback tool… allows us to track the [customer] journey, and then make improvements to our customer experience programs. By collecting insights and feedback at key steps, we’ve improved our conversion rates, responsiveness and communication processes in every way.”

By using real time feedback to improve the customer experience ANZ achieved these results:

• 15 percent increas e in customer experience scores

• Up to 48 percent survey response rates – more than 10 times the industry standard.

Five Takeaways:

1. When you create compelling and competitively differentiating customer value, retention will increase dramatically.

2. Use customer behavioral data and voice of customer insights to drive development of new engagement programs.

3. Use multiple channels and multiple ways of gathering customer insights. Then, tailor messaging around the customer’s journey at every stage.

4. Cultivate fans that want to have a relationship with your brand.

5. Understand the emotional reasons that customers will identify with your products, services and overall brand.

Being customer-centric in your marketing means that you recognize your customers as more than a transaction. You take the time to get to know why they choose your company and then put in place strategies to nurture trust and deliver meaningful brand experiences designed to engage and retain.

Disney Finds Magic In Reciprocity Marketing

A healthy change is taking place: Consumers are demanding that brands engage them in conversations versus one-way blasts.

But for this to be effective, both consumers and marketers have to change previous behaviors.

» Consumers have to recognize that to receive more relevant and personalized communications, offers, and experiences, they need to provide deeper personal or business information.

» Marketers have to recognize that to competitively differentiate, they have to provide significantly more personalized communications, offers, and experiences. However, true personalization is based on much more than traditional transactional data. Marketers must earn the right to collect increasingly deeper levels of preference-based data.

How is this accomplished? With trust. According to the 2014 BrandSpark Most Trusted Awards, “Across categories when considering [a] purchase of a new product, shoppers consider it extremely or very important that it comes from a brand they trust.”

Trust is the basis for obtaining deeper engagement with customers. It is a cycle:

• Trust makes customers receptive to a reciprocity-based exchange of data in order to receive enhanced experiences.

• The improved customer experience reinforces trust.

• That, in turn, enhances trust.

• Now customers are more motivated to provide deeper additional information.

• Marketers can now engage customers in a deeper level of reciprocity-based interaction.

• And the cycle continues, based on ever-deepening personalization and value.

An exciting example of reciprocity-based marketing is Disney’s MagicBand bracelet app. In return for the collection of consumer data, Disney offers guests the ability to “enter the parks, unlock Disney Resort hotel room[s], and buy food and merchandise. Plus, [the] MagicBand gives FastPass+ access to all the experiences selected online.” Users of the band and app can receive an email or text message about availability of reservations or rides noted as being preferred experiences.

In terms of data collection, MagicBands link electronically to an encrypted database of visitor information. The bands contain a radio frequency identification (RFID) chip that allows for the collection of intelligence that is coupled with guest input into the My Disney Experience app and Web site (input is voluntary.) All of this data gives Disney valuable information about customer preferences, which are then used to provide high-value experiences.

The Disney value proposition is in sync with findings that have emerged from Relationship Research our firm has conducted regarding what customers expect in a reciprocity-based relationship:

Trust: The marketer can be trusted to deliver on a fundamental brand promise.

Listen: The brand will listen to customers’ needs, suggestions, and concerns.

Deliver: The brand will provide communications and experiences relevant to customers based on their individual preferences.

Key Takeaways

Following are four key takeaways for implementing reciprocity-based marketing strategies:

• It is not customers’ responsibility tell marketers what they want. Marketers must ask--and then respond with reciprocity-based customer experiences based on feedback.

• Competitive differentiation is rooted in the ability to deliver offers, communications, and experiences based on the exchange of deep customer data and preferences.

• Multichannel reciprocity-based marketing addresses the customer experience across all touch points, departments, locations, and company levels.

• A high value, reciprocity-based customer relationship needs to be maintained throughout the life cycle of the customer, not just during the points of initial sale or add-on sales.

Multichannel Engagement; 6 Requirements and 3 Takeaways

There’s an ever increasing range of media and channels with which to engage customers. And although companies know an integrated multichannel engagement strategy is a must, most still struggle with how to do this well - and how to integrate the data into a singular customer centric vision and process.

For starters, marketers need to understand that the world is shifting from forcing customers to sort through piles of spray and pray stuff to find useful communications, to a world where personalized, relevant multichannel communications find consumers based on their opt-in preferences.

The average U.S. consumer spends 60 hours a week consuming content across devices. Many channels are also delivered via multiple devices, making marketing and data collection increasingly more complex. With customers coming into companies from multiple directions, the challenge is to generate seamless, consistently high value, integrated customer experiences—no matter which medium a customer selects.

Multichannel strategies have to begin with an understanding of the requirements customers use to define “Engaging Customer Experiences”. Following are the 6 requirements that have emerged from over 10,000 hours of Voice of Customer research conducted by our firm, ERDM for clients such as MassMutual, IBM and QVC:

1. Improve the customer experience across every point of contact with your organization.

2. This applies to all elements of the media mix and all departments of your organization.

3. High quality experiences must be maintained throughout the relationship, not just when you are “selling.”

4. Customer experiences must be driven by the customer’s individual preferences regarding message, timing, frequency and media mix.

5. Preferences must drive high quality personalization of communications and experiences.

6. Absolute commitment to safeguarding privacy of preference information is essential.

A company that has used its multichannel insights to develop new marketing initiatives is Beyond the Rack, which uses customer data based on media usage to shape its future engagement strategies.

The company’s sales for mobile users skyrocketed from 10% of total revenue in mid-2012 to nearly one-third by 2014. Most recently, Beyond the Rack has revealed that their new focus centers around taking their mobile insights to set the standards for all interactions with customers.

Three Key Takeaways for you based on Beyond the Rack’s strategies:

1. Using its data to understand that 40-50% of their 12 million daily e-mails are opened on mobile devices, the company maximizes the impact of their mobile emails to make them more appealing on mobile devices. All marketers should identify and optimize the most active media channels to make them more engaging for customers.

2. Beyond the Rack continually engages with customers via contests such as its web-based model search. This gives customers an active opportunity to become a part of the brand through multiple media channels and not be just an impersonal buyer.

3. Yona Shtern, CEO of Beyond the Rack, stated that “Consumers have very different expectations of what they want you to be …. [at Beyond The Rack] we spent a lot of time figuring out who we needed to be.” Marketers need to build their media and marketing strategies around what customers want and where they spend their time.

Driving Word of Mouth Referrals: 5 Research Findings and 5 Tips

The Challenge: Companies rely on customer referrals to bring in new business. But, they continue to struggle to interact, listen, and respond in a manner that provides the engagement and motivation for customers to actually provide those referrals.

Online customer word of mouth interactions and reviews have always been a part of Google, which now has new rules in place that will boost business reviews to a greater degree of importance in 2014. For example businesses will now be able to feature a small 67 character review right under their PPC ad. Additionally, Google will gather and display photographs, comments, and reviews in organic search results if a prior related search had been commenced.

Five new findings regarding word of mouth marketing have emerged from thousands of hours of Voice of Customer research conducted by our firm, ERDM;

• Engaging and competitively differentiating customer experiences are the foundations of today’s customer relationships.

• Personalization of content, communications and experiences per customer's individual preferences are proof points that you care about your customers.

• Spray and pray blasts yield ever lower response rates and hurt your brand.

• It’s not about self-serve. It’s about providing customers with guidance and education which provides value and saves time.

• Authenticity, storytelling and emotion are the most powerful elements of marketing communications.

One especially innovative organization that has embraced deep customer engagement is Thrillist Media Group, the leading men's digital media company. They have focused on differentiating themselves through personalization across channels, to their savvy male audience. Per Ben Lerer, Co-Founder & CEO of Thrillist Media Group, "Word of Mouth Marketing has played a huge role in our growth... The key has always been to think about our content creation purposefully: why does someone need this information and how will they be better and have more fun as a result of it."

Examples of how Thrillist has engaged customers to buy and be brand advocates include;

» They refined their marketing lists to identify specific audiences for relevant “This is recommended for YOU” emails sent on selected products.

» They have taken the time to understand the personality as well as the purchasing history of their customers in order to present them with a humorous display of products portrayed to make them “disturbingly more handsome”.

» The company took measures to speak to their customers in a consistent tone and “be the brand” in every channel. And, though each medium was customized for its own unique experience, it presented a concerted and consistent personalized message for its consumers.

This resulted in;

» Increased traffic to the site
» Decreased “unsubscribes” by 50%
» Increased engagement by 15%.

5 Takeaways to Cultivate Customer Referrals:

1. Create methods of direct conversations. Give customers ample avenues to engage in conversations with your company through the touch points of their choice.

2. Develop strategies for active listening. Let customers know that you are listening and that you are giving them empowering levels of knowledge. Customers will not provide a referral if they do not understand the company, the products, or your company’s perceived value. Empower them with the knowledge to go forth and tell others what they’ve learned.

3. Provide a consistent value-driven customer experience. Customer’s own reputations are on the line when they recommend your company to others. By providing them with good customer support, it gives them confidence that others will have the same high quality customer experience.

4. Be humble. Acknowledge what you don’t know about how your customers truly define engagement. Ask for voice of customer insights from your customers and then trust their wisdom and act on their recommendations.

5. Achieve frictionless, high-value, engagement across every medium in the multichannel mix. And, select channels that serve the customer. For example, texting an offer is intrusive, but using text as a reminder for something they want is value.

Feature story from CMO.com

Don't Use CRM To Automate Bad Behaviors

Here’s the good news about the state of CRM today: Most companies recognize the financial value resulting from improving their customer experience (CX) and are spending the necessary dollars to acquire CRM technology and build preference centers.

Now the bad news: Many companies are focusing so heavily on their CRM technology that they are losing focus on why they embarked on CRM and preference-center initiatives in the first place--to deliver improved customer experiences.

Two quotes from recent conversations my firm, Ernan Roman Direct Marketing, had with CMOs say it all:

• “I’ve come to the realization that we are using new technology to automate our existing bad behaviors. We will be simply be increasing our ability to do more brand damaging ‘spray and pray’ due to installing the latest high-capacity CRM technology.”

• “We’ve invested millions in new customer engagement technology and just realized that we never actually asked our customers how they define more relevant communications and experiences.”

In the course of working with many Fortune leaders on CX initiatives, we have learned that their major problems have little to do with inadequate CRM or preference-center technology.
Their major problem is; not having an in-depth understanding of how their customers define meaningful customer experiences.

Therefore, we recommend that CRM and preference-center initiatives should be based on understanding how your customers define the customer experiences they want to have with your specific brand and products.

Our recommendation is based on more than 10,000 hours of Voice of the Customer (VoC) research for clients including MassMutual, Norton AntiVirus, NBC Universal, IBM, QVC, and Microsoft. 

Research findings from in-depth interviews with B2B and B2C decision makers indicate that the following six points comprise a competitively differentiating customer experience:

1. Improve the customer experience across every point of contact with your organization. Mike Rude, managing director of customer experience at FedEx Corporate Services, provided this important insight: “Too often CRM and preference-center initiatives focus on technology and process. We work hard to first understand the needs of the customer. This enables us to ensure that technology deployment will focus on delivering the optimal customer experience at every point of contact and every channel important to our customers.” 

2. "Improve the customer experience" applies to all elements of the media mix and all departments in your organization. CRM success truly hinges on effective change management. According to Forrester Research, the top "people" challenges when implementing a CRM solution include cultural resistance to adopting new ways of working (45 percent), difficulties in achieving user adoption (44 percent), insufficient planning and attention given to change management (42 percent), and inadequate leadership (38 percent).

3. High-quality experiences must be maintained throughout the relationship--not just when you are selling. “We need to think in terms of engaging customers at every stage of the customer life cycle. This causes a shift from one-way communications to conversations and thinking about content differently,” said Eric Nystrom, director of Dell’s Social Media Services Group. “Customers expect to engage with subject-matter experts and empowered employees, not corporate spokespeople. Therefore, content needs to be relevant, interesting engaging, and always on.”

4. Customer experiences must be driven by individual preferences regarding message, timing, frequency, and media mix. Said Jennifer Downes, director of direct response marketing at Lenovo NA, “For customers, the preference center is the mechanism to voice how they wish to interact with a brand. For marketers, it allows them to develop a deeper understanding of their customers. That said, the reality is that marketers as business people have metrics to meet, which may be at odds with providing the best customer experience. The key to success is for the marketer to find creative ways to meet these metrics without creating a conflict with the customer's desire for relevant engagement.”

5. Preferences must drive high-quality personalization of communications and experiences. "Based on the learnings from the VoC research, we have fundamentally redesigned the way we look at relationships with customers,” said Kris Gates, vice president of customer experience at MassMutual Retirement Services, who is driving profound changes in customer experience. “Taking a learn-pilot-scale approach to our marketing efforts, we already have several VoC research-based initiatives under way. These range from redefining how we view the customer-focused value of CRM platforms and our data, to campaign targeting and preference based communications. 

6. Privacy of preference information is essential. “Start with the end in mind,” advised Scott Frey, president and CEO of PossibleNOW. “Creating a plan for how the information is collected through the preference center and safeguarded will impact marketing campaigns and customer correspondence.”

Key Takeaways

Jeff Howell, director, subscriber communications and engagement/CRM, at SiriusXM, offered four important takeaways regarding technology, preferences centers, and delivering an improved customer experience:

• Many marketers are missing the full value of a preference center. They are viewing it as a means of fulfilling compliance requirements and capturing simplistic preferences, such as email versus mail, or Product A versus Product B.

• The real value of a preference center is to serve as a portal to engage the customer and capture information regarding issues of importance to the customer.

• Opt-in preference information should enable a customer to define his relationship with the company across multiple devices, channels, and key points in the customer's life cycle.

• “Marketers have to become smarter about using technology not as a silver bullet, but simply an enabler to deliver on a competitively differentiating customer experience,” Howell said. “Too often marketers lose focus on the customer and get distracted by the operational requirements and capabilities of the technology.”

Another takeaway, courtesy of FedEx’s Rude, is to avoid the mistake of becoming enamored by technology’s promise. Focus on understanding what the customer wants and how to use technology to deliver on those expectations, he told us.

We’d like to add one final takeaway: Internal decisions about technology need to be guided by external customer insights. Installing CRM technology without understanding how customers define relevance, engagement, and preferences will simply result in getting the latest technology to automate existing bad behaviors.

Why Isn’t Your Customer Service Better?

Challenge: At a time when good customer service would be assumed to be a core competency, why are so many companies still not delivering good to excellent customer service? What needs to be done differently?

Here’s how things went in my own recent experience with a major online movie-viewing service;

Abrupt email from the company:
What is the problem and how would you rate our customer service? 

My Reply:
I entered my credit card information into my account several weeks ago. I still cannot charge a movie.

My original request was on February 25. Today is March 15. No one ever responded to my repeated emails and voice mail messages.

Given the above, how would you rate your customer service?

They never replied.

Based on similar instances we have all experienced, following is a question every company should consistently ask themselves; “Why isn’t our customer service better?”

According to a Forrester study, “Top Trends For Customer Service In 2014” the following are high-value areas for customer service improvement;

• Anticipate the what, when, where and how for customers, and prioritize information and functionality to speed customer time-to-completion.

• Investigate methods to recommend “next-best actions” during the service resolution process to offer service tailored to the customer’s unique needs.

• Make experiences consistent. Forrester observes that 60% of companies gather feedback about their interactions with a company; however only 33% analyze customer insight across organizational boundaries.

According to a Tempkin Study, What Happens After a Good or Bad Experience, 2014, it was noted that:

• More than half of the customers who encountered a bad experience… either decreased their spending with the company or stopped altogether.

• Data shows that a good service recovery effort can help mitigate a bad experience. Unfortunately, many firms…aren’t very good at service recovery.

• After a bad experience, 60% tell a friend directly, 31% share on Facebook, and 20% write a review.

5 Takeaways

1. Understand what customers want in a good customer service experience. How do our customers define good customer service? If you do not fully comprehend what customers want from you, it is impossible to deliver a good experience.

2. Regularly monitor practices to be sure that they are in line with current customer demands. Are your customer service policies outdated? Set a regular interval to monitor your company policies and employee practices to be certain they meet the expectations of customers.

3. Get buy in at all levels for your customer service initiatives. It does not matter how many policies are put in place if these policies are not put into everyday practice at every level and every point of contact within your company. Consistency in customer experience is key.

4. Develop a “listening” strategy to monitor customer conversations. If you do not know what customers are saying about your company it will hurt you. If you do not have a social media team now is the time to start one. Active listening will allow you understand the challenges that customers face and respond quickly.

5. Make contact easy. Are customers able to contact you for service related matters across all channels? If not, then expand your accessibility. Customers do not want to work to find solutions to their problems or get their questions answered.

Preference-Driven Personalization; What Men’s Wearhouse Can Teach Us

The Challenge: Many companies are still not using preference based personalization. This compromises relevance and sacrifices engagement and potential sales.

40% of consumers say they prefer buying from retailers that cater to their preferences. According to research firm The E-tailing Group, respondents said they:

» Find it valuable if the retailer offers product recommendations tailored to their personal tastes and shopping histories.
» Purchase more often when retailers send e-mails that are personalized based on a shopper's past interactions.

One retailer who has embraced preference based personalization is Men's Wearhouse. With more than 1,100 stores nationwide, Men’s Wearhouse prides itself on providing personalized service to all of its customers. “Customer satisfaction is our highest priority, across all of our channels,” said Susan Neal, EVP, E-Business, Marketing and Digital Technology. “Just as our in-store tailors alter garments to perfectly fit each customer, we plan to deliver personalized emails individually tailored to each recipient."

• Men’s Wearhouse captures data from every customer touch point, mines behavioral signals using advanced predictive algorithms and overlays deep retail domain knowledge.

• They are extending their personalized experience to email as well.

• The company has in-store wardrobe consultants to help its customers. This service continues the online experience which offers a website for its full offerings as well as a separate website just for tuxedos by type of occasion. The Tux Sites features a dedicated Wedding Planner that can be contacted online or via an iPhone app.

• Overall Men’s Wearhouse is an example of a forward-looking retailer that understands the importance of delivering clients a consistent, personalized experience.

According to our firm’s VoC research on the Preference driven Reciprocity of Value Equation, consumers are willing to share personal preference information with trusted brands in exchange for “reciprocity of value” — in other words, receiving highly targeted and relevant offers and communications based on their individual preferences. This represents a powerful opportunity for marketers to transform how they engage with customers and prospects.

3 Research-based Takeaways

1. 59% of shoppers said that it is easier to find what they’re looking for when retailers personalize the shopping experience. So make it easy for your customers to find and buy what you have to sell.

2. 40% of consumers said they buy more from retailers that personalize shopping across all channels. So make sure your personalization experience extends to every aspect of your customer experience and interactions.

3. Retailers that remember the shopping behavior of individual consumers and use it to personalize future experiences are being rewarded — consumers are more engaged and purchase more. So be sure you have in place accurate and easily updated CRM practices and technology.

Online Reviews: 4 Tips for Building Customer Trust

The Challenge: Do you have a strategy for encouraging reviews? Do you monitor reviews? Are you responding to reviews and taking action based on this powerful voice of customer guidance?

Today’s educated and digitally savvy consumers search out online reviews, even from people they do not know; 69% of local consumers trust online reviews as much as personal recommendations. Less than 10% trust what companies say about themselves, according to an Econsultancy report. Studies by Saurage Research show that 84% of US shoppers rely on reviews before making purchase decisions.

The findings below are based on extensive Voice of Customer (VoC) research conducted by our firm, ERDM regarding the rapidly evolving role of reviews in consumer’s decision making process:

•  A large number of reviews with both positive and negative sentiments are an advantage and create trust.

•  Apparel and cosmetics customers want to be able to sort reviews by multiple criteria to evaluate the relevance of the reviewer’s comments to their personal situation. Criteria include; part of the country, (some feel that people from other parts of the country don’t share their fashion preferences), age, skin type, and clothing size.

•  Pictures and profiles of the reviewers are also important. Per this quote from a recent VoC research effort, “I like to see who is writing the review. It makes a difference as to how much weight I assign it.”

Case Study Intuit Quickbooks:

Adding ratings and reviews greatly increased sales for Intuit Quickbooks ProAdvisors. They are accounting service providers who have completed a comprehensive QuickBooks curriculum and are listed on Intuit’s website, which is searchable by businesses looking for accounting services.

• QuickBooks ProAdvisors® with reviews get 5X more referrals than those with few or none.

• ProAdvisors with reviews get more clicks than higher-ranked ProAdvisors.

• The number of reviews can be more important than the rating.

4 Takeaways to Help You Leverage the Power of Online Reviews:

1. Ask your customers for reviews and do not fear negative reviews: The Quickbooks case study uncovered that for US clients, 80% of reviewers give a 4 or 5 (out of 5) star rating.  UK clients’ reviews are 88% positive. A few negative reviews lend credibility to the positive ones.

2. Quantity of the online reviews can outweigh the quality. In the Quickbooks example, ProAdvisors with ten reviews averaging four stars receive more clicks than those who have a five star average, but only two reviews. Therefore encouraging customers to share information with you is imperative.

3. Online reviews are also important for offline businesses, “Nearly 70% of US internet users sometimes compared prices or read reviews before visiting a store.” - eMarketer

4. The more detailed and personalized the reviewers are, the more successful the review will be in converting potential customers. Offer incentives for completely filling out profile details, preferences, and including a photo.

JC Penney: If you don’t listen to your customer...you lose

The Challenge: Few companies know as much as they should about their customers and their expectations for meaningful engagement.

Being arrogant in disregarding customer expectations is dangerous. This is a lesson JC Penney found out the hard way when sales dropped 25 percent in 2012.

This is reinforced by the Accenture Study on customer-centricity in which they noted, that for too many companies, providing a tailored experience is an elusive goal; “...failing to deliver a high-quality customer experience can result in a staggering erosion of a company’s customer base—a loss of as much as 50 percent over a five-year period.”

Some of JC Penney's missteps included:

•  Customers have come to expect promotions around holidays. But the company did away with these sale events. They are bringing back event promotions 26 times a year, often around holidays like Mother’s Day.

•  Customers associate a company with the merchandise or services they traditionally provide. When the selection changes, it causes confusion. JC Penney will be returning to basic clothing and favorite brands.

•  Knowing your customers means knowing demographic aspects meaningful to sales. The company switched its focus to a trendier, younger and generally thinner audience, alienating longtime Penney customers who could not find items to suit their size or style.

Penney has been hurrying to welcome back customers. A few weeks ago, it apologized to customers in an ad that said: “Come back to J. C. Penney. We heard you. Now, we’d love to see you.”It then ran a second ad thanking customers for returning. New marketing materials also specifically state, “you asked, we listened” as well as “you can have it all”.

5 Takeaways:

» If you think “the customer doesn’t really know”, stop! You disregard the wisdom and preferences of your customers at great peril! Your business starts and ends with the customer.

» Build your value promise around the wants of your customers. Then, put measures in place at every level of the organization to deliver on that promise.
Customers should have a consistent experience with every employee and every situation. And every employee should know what you have promised.

» When is the last time you really asked your customers what you could do better? Before you add, change, or “improve” anything, make sure it is something that will be wanted and embraced by the people who count; your customers.

» If you have not recalibrated your strategies within the past 12 months, you are likely out of date with the needs of today's rapidly changing and greatly empowered consumers.

» Constantly monitor customer service complaints and sales statistics to identify and quickly resolve “hot button” issues.

New Research: It’s Not About Satisfaction It's About Engagement

The Challenge: Businesses that rely heavily on customer satisfaction surveys as a gauge of overall customer happiness, without an evaluation of total customer engagement, run the risk of losing valuable sales opportunities.

The banking industry has a lot to teach us about how not to get stuck in a rut of perceived customer satisfaction.

According to a recent Gallup poll, "research shows that banks that only consider customer satisfaction -- even extreme “top box” satisfaction -- are leaving significant cross-selling and up-selling opportunities on the table."

•  Less than half (45%) of customers who are satisfied say they would consider their bank the next time they needed a product or service, however, that consideration skyrockets to 83% among customers who are both satisfied--and fully engaged.

•  Customers who are fully engaged and satisfied are also more likely to say they will open new accounts, switch from another bank, increase balances, and add ancillary products than are those customers who are just satisfied.

Additionally an Ernst & Young Survey noted “understanding customer behavior, attitudes and requirements is more vital than ever for banks’ strategic thinking....banks need to reevaluate their assumptions and fundamentally change how they interact with their customers.”

HMS National, the Florida home warranty marketer, used Voice of Customer Insights to increase customer engagement and boosted renewal rates by over 50%. VoC learnings helped them develop more effective strategies for engaging customers throughout the customer lifecycle, starting at the moment of enrollment.

Another company which understands that engagement equals customer loyalty is Discover Card, which has led the credit card industry in customer brand loyalty for 17 consecutive years, according to an annual study by the independent research firm Brand Keys, Inc. The research found that emotional engagement is the dominant driver of purchase decisions and brand loyalty.

This is evident in Discover’s Cashback Connection page, which notes “for every reward there’s a story. We want to know what Cashback Bonus means to you.” This tactic humanizes a company benefit and ties it directly back to the consumers using it.

Click here to sign up for Ernan's Weekly Insights email.

Three key factors for their success:

•  Discover Card has created the highest levels of loyalty by leveraging real, emotional value.

•  They provide an experience that lets consumers actively engage with the brand so that expectations are created, understood, and ultimately delivered.

•  Discover Card uses the information gained through its strong customer relationships to develop product features that are directly consistent with consumers wants.

Key Takeaways:

» Understand how your customers define satisfaction and engagement, and develop processes and metrics to keep measuring these factors on an ongoing basis.

» Use voice of customer feedback from research, call centers, customer service interactions, sales reports, etc. to develop a holistic view of your customers needs…and use this information to drive  continually improving customer experiences, communications, and offers.

» Establish personal and emotional connections with customers that are both authentic and differentiating.

Strong Customer Relationships: More Powerful than Satisfaction for Retention

The Challenge: As companies grow, relationships with customers usually suffer. Larger customer files, heavier account loads, and less available time, often contribute to a decrease in engagement with customers. This begins the cycle of increasing losses of customers.

Findings from research conducted by our company ERDM indicate that engaging and forming strong relationships with customers has 12 times more influence on retention and repeat purchases than customer satisfaction. Satisfaction is now a minimum expectation.

As DMG Consulting says in their Microsoft-sponsored white paper, “In an era of intense competition, the customer experience is often the main differentiator between commoditized products and services.” In today’s consumer-centric business world, customers dictate the rise and fall of companies, and your business is completely dependent on keeping your customer relationships strong.

The key starting point for retention is understanding the state of customer relationships. Luca Paderni, VP and principal analyst at Forrester Research, says, “CMO’s and their peers...must understand what customers represent for the whole organization to help shape the strategy for the overall business.”

Once understanding is achieved, the next step, according to Walker, is closing the loop. This begins with setting alerts that indicate low customer loyalty or negative behavior, usually in the form of survey questions. After alerts are designed, a feedback system is created to ensure the information gets to someone who can act on it. There should also be follow-up protocols in place that allow staff to act on customer concerns, complaints, and opportunities accordingly. Finally, results should be documented, so the company can understand what works best and fine-tune accordingly.

This correlates with our findings, as well as the strategy used by Microsoft in the aforementioned white paper, that changing from relationships based on customer satisfaction to relationships with deeper levels of engagement - based on more in-depth understanding of their needs - increases customer retention drastically over the course of the customer lifecycle.

Key Takeaways for Marketers

1. Assess the state of current customer relationships.
Learn if you’re doing enough to meet customer expectations, and form deeper relationships with customers across multiple channels. Customers don’t just want to be satisfied, they want to be engaged.

2. Develop strategies for following up.
Create a system that will seek out red flags, notify appropriate staff members at the right time, acquire customer feedback, and use that feedback to enrich and improve customer experience.