Companies around the globe continue to worry about customer retention. Many have been taking steps to improve, rather than just monitor, the strength of their customer relationships. That's because they realize that customer attrition is costly, but retention -- at least when it's earned instead of bribed -- is quite profitable.
In order to grow, endure, and achieve long-term success, companies must also attract new customers. Since it's impossible to retain every customer forever, organizations must regularly add new ones to the mix. The alternative is brand starvation by customer attrition. Without an infusion of new customers, the brand -- and the company -- eventually wither and disappear.
Marketing departments have traditionally had the task of attracting new customers. In tackling that important job, marketers have employed comprehensive communications programs, with their most notable tool (although not always the most effective one) being TV advertising. Of course, marketers have used many other vehicles to reach out to prospects, such as event sponsorships and promotional offers or enhancements in product accessibility and visibility that include expanded distribution and enticing packaging.
The stated goal of these various efforts and activities has been to raise potential customers' awareness of the company's branded products or services and to provide prospects with a compelling reason to try those offerings. The assumption is that once the hurdle of trial has been overcome, it's up to the products and services to perform -- and product performance will then ensure customer retention.
Like most assumptions, this one seems straightforward. But it fails to address this fact: What a company must do to attract a new customer may not be the same as what it must do to keep that customer.
This assumption also places responsibility for the company's future -- and the enduring health of its precious brand assets -- in the hands of two separate and often uncoordinated departments: marketing and customer relationship management. Yet consumers don't experience brands as unrelated silos of effort, each with its separately focused brand initiatives and consumer touchpoints. Rather, buyers experience brands as a consistent -- or, depending on the case, an inconsistent -- whole.
A healthy brand
As Gallup scientists have noted, the relationship between customer and company is, at its very foundation, emotional. (See "Managing an Economy of Emotion, Not Reason (Part 1)" and "Beyond Customer Loyalty" in See Also.) And the strongest relationships are those grounded in the most passionate emotional connections.
Gallup research has consistently shown that these emotional connections are the keys to an enduringly profitable relationship between the company and the customer. Until recently, customer relationships of this sort had proven to be difficult to measure and manage. But Gallup's customer engagement metrics now provide companies with measurement capabilities that are the core requirement for assessing and managing emotional connections.
Recent Gallup research has shown that the process of forming emotional connections doesn't begin when consumers try the brand. Instead, emotional connections start to take shape with every brand encounter that leads up to trial.
This insight reveals new truths about the creation of profitably passionate brand connections. In a study that included customers and non-customer prospects for heavily promoted brands in categories ranging from fast food to coffee, Gallup researchers noted some important, and even surprising, results:
- Prospects are attracted to brands that show promise of uniquely
meeting their important emotional needs, not merely their
rational requirements. Before prospective customers will seriously
entertain purchasing and using a brand, the brand must inspire high
degrees of confidence, integrity, pride,
and passion. Gallup's research shows that these emerging
emotional connections can be reliably measured through eight
"engagement potential" rating scales.
- Consumers won't buy brands in which they have no
confidence. However, confidence in a brand is almost never
enough to trigger trial. That's because, in most product
categories, consumers have confidence in many brands, not just one.
While confidence represents the foundation of a relationship, it's
not a brand differentiator.
- Companies that want to energize and activate a brand's
prospects must tap the deeper emotional connections of
pride and passion. While prospective buyers may
feel that many brands demonstrate integrity, relatively
few brands are able to stimulate the pangs of prospect passion.
Passion is a brand differentiator.
- Brand passion begins to take shape well before the brand is
purchased; it doesn't develop overnight. What's more, research
shows that this passion is never simply -- or perhaps even mainly
-- the result of "emotional" messages delivered through "image"
advertising, packaging, or product styling and design. Yes, these
marketer-controlled vehicles certainly do contribute to creating
passion. However, Gallup scientists have found that brand passion
is often derived less from what the company directly controls than
from what consumers hear from others (word-of-mouth "buzz") or
experience through their own casual encounters with the brand
(publicity) and its representatives and users ("evangelists").
- While it takes pride and passion to lure a new customer, it takes confidence and integrity to keep them coming back. Passion can bring new customers in the door, but a long-term relationship can't be maintained unless the brand proves its ability to deliver consistently on its core, differentiating brand promise. Slip-ups may be tolerated, given sufficiently strong brand passion. But these performance hiccups must be rare rather than frequent, or the new and carefully woven relationship fabric will unravel.
Refocusing marketing
Companies have often aimed their customer acquisition efforts at prospects who are defined by their demography (for example, age, gender, or income) or their current behavior (such as heaviness or frequency of product use). These same companies have supported their attempts to entice new customers through a range of activities designed to reduce the cost or difficulty of switching (for example, by giving consumers coupons, discounts, or rebates). Gallup's research clearly suggests, however, that these efforts are off target and that they're unlikely to yield an enduring brand connection. (See "Making Market Segmentation Meaningful" in See Also.)
If an emotional connection is truly the key to an enduring customer relationship, companies should not be targeting consumers based on their demography or lifestyle. Rather, they should focus their efforts according to the consumers' evident potential to develop meaningful brand connections. In addition, instead of directing their efforts at stimulating trial through reduced switching costs, marketers should refocus their attention on establishing and enhancing these powerfully differentiating emotional bonds.
That's the road to a brand relationship, not just to a transaction.