How to build an emotinal connection with your customers

www.beyondphilosophy.com

How to Build an Emotional Connection with Customers2010 Experience Tracker

Steven Walden, Senior Head of Research and Consulting

Kalina Janevska, Consultant, Business Psychologist


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Beyond Philosophy

Customer Experience

is all we do!

Thought leadership is

our differentiator

Offices in London,

Atlanta with Partners in

Europe & Asia

Fourth book will

launch in Fall 2010

Focus on the emotional side

of the Customer ExperienceLinks with

Academia

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We are Proud to Have Helped Some Great Organizations…

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The Study Basics

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• Methodology

• Quarterly online survey via

online panel

• Sample Characteristics

• 1015 respondents

• 50% USA; 50% UK

• Objective

• Understand the best way to

connect emotionally with

your clients and consumers


Stopping The Leaky Bucket

6

Keeping existing customers is less expensive than acquiring new ones. Reichheld and

Sasser (1990) state that a 5% improvement in customer retention can cause an increase in

profitability between 25% and 85% (in terms of net present value)



The Problem of Retention ConfirmedBeyond Philosophy Research and Accenture Research (2010)

7

Accenture study (2010) of

3,556 consumers (auto, home

and life):

53 percent are

considering switching to

a new insurance provider

over the next year

UK and German insurance

customers have the least

‘loyalty’ to their current

providers - 71 percent are

either not planning to

purchase their insurance

with their provider or are

unsure and planning to

look around

Per

cen

t of

insu

ran

ce h

old

ers

Percent of customers that have switched provider in the past 3 years

HomeAutoOverall Employment Health Life

29%

41%

39%

20%

34%

8%

30%

40%

50%

20%

10%

0%

This means lost revenue

Source: Beyond Philosophy Experience Tracker Research Q2 2010



Solution: Focus on Engaging the Right Customers



Why Segmentation?



Traditional vs. Emotional Segmentation

10

Segmentation Criteria

Behaviour (switching)

Segments Defined:

High Switchers

Low Switchers

Defining Experience:

Price

Outcome

Short-term

Weaknesses

False loyalty

•Low switch because its

convenient not because

its valued

Segmentation Criteria

Emotion

Segments Defined:

Positives

Negatives

Defining Experience:

Lovemarks

Outcome

Long-term

Weaknesses

Overestimates risk

•Picks up people who

feel negative towards

you but are not ready to

leave you



Value of Emotional View

Benefits of emotional engagement:

1. Herd instinct: enthused customers encourage other customers to come to them and people

stick with you in the hard times (e.g., SouthWest Airlines)

2. Brand Equity: a positive brand buzz adds to Goodwill (straight onto balance sheet) and brand

halo effects

3. Market Expansion: greater opportunities for diversification (Virgin effect)

4. Staff enthusiasm: benefits to corporate culture that enables differentiation

5. Emotions drive behaviour: it is emotion that drives behaviour! So focus on emotional drivers



Imprinting Lovemarks in your Customer Experience

12

Brands are running out of juice". Love is

what is needed to rescue brands. Roberts

asks, "What builds Loyalty that goes

Beyond Reason? What makes a truly

great love stand out?”Kevin Roberts, CEO Saatchi and Saatchi


http://en.wikipedia.org/wiki/File:Lovemarks_Book.jpg


Done in Brand why not in Experience?

13

“Kevin, we want you to turn Toyota into

the most loved automobile corporation

from the most respected one it is today.”

So we helped them to modify their

advertisement style.

We helped them distance themselves

from the image of the car on the road to

the image of the driver behind the wheel

of a Toyota car. We added a human

touch to their advertisement.



What Did We Want to Find Out?

14

Too many

different

patterns

Similar

pattern of

decision

making

Can we understand switching behaviour?

TraditionallyEmotional Signature®

way

Group good behaviour and

compare to bad behaviour

Group good feelings and

compare to bad feelings

Low

Switchers

High

SwitchersLovers Detractors

Too many

different

patterns

Similar

pattern of

decision

making

Only 8%

overlap



What is the Conclusion?

Understand the limitations of traditional

segmentation: I can be loyal but not feel

loyal

Focus on both “High Switchers” and

“Lovers” to understand better your

customers: they explain switching

behaviour

Identify the lovemarks in each group: these

drive action and behaviour

Design your experience around the

differentiated needs/ lovemarks of your

customers



Glass Half-Full Economics



A Different Point of View

17

How can I make an emotional connection, not just

what can I get out of this now


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Insurance

Experience

Agent/

Broker

Experience

Extensions

Ease of

Process

Website

Call Centre

…knowledgeable…

…helpful…

…cares about me…

..communicates

information to me

clearly…

…bill easy to

understand…

…application process…

…plan is clear to me…

..renewal process

easy……

…easy to use…

…helpful…

…call centre advisors are

knowledgeable…

…can easily contact…

…call centre advisor is

helpful…

…like the advertising…

…my insurance provider would go

the extra mile for me…

…educates me on how to avoid

risk/stay safe…


Employment Insurance Resource Allocation

While Agent and Call Centre experiences need to be controlled as these drive switching, what

actually attracts customers and reduces switching is Experience Extensions amongst

Positives and Easy amongst High Switchers

19

Experience

Lovemarks

Opportunity

32% of Market are Positives driving 60% Tenure value


Lovers Switchers



Simple Example: Employment Insurance

20

No loyalty incentive or marketing literature sent. Customers are treated

as a direct debit transaction

The vicarious, media experience is underestimated



Auto-Insurance Resource Allocation

While Call Centre and Website experiences need to be controlled as these drive switching,

what actually attracts customers and reduces switching is Experience Extensions amongst

Positives and Easy amongst High Switchers

21

Experience

Lovemarks

Opportunity


Lovers Switchers



Simple Example: Auto Insurance

Propensity to Switch is reduced by injecting experience clues: moments

of delight (going the extra mile), advertising and education.

22

Desire for

Cover

Review Media

Ads/ Offers

Phone

Companies

Discuss

Requirements

Receive

Certificate

Payment (DD,

Check)

Renewal Completion on

Phone

1 Year +

1 2 3 4

5 6 7 8



Life Insurance Resource Allocation

23

While Call Centre and Website experiences need to be controlled as these drive switching,

what actually attracts customers and reduces switching is Agent amongst Positives and Easy

amongst High Switchers

Experience

Lovemarks

Opportunity


Lovers Switchers



Home Insurance Resource Allocation

24

While Website and Agent experiences need to be controlled as these drive switching, what

actually attracts customers and reduces switching is Experience Extension amongst Positives

and Call Centre amongst High Switchers

Experience

Lovemarks

Opportunity


Lovers Switchers



Health Insurance Resource Allocation

25

While Experience Extension and Website experiences need to be controlled as these drive

switching, what actually attracts customers and reduces switching is Call Centre amongst

Positives and Agent amongst High Switchers

Experience

Lovemarks

Opportunity


Lovers Switchers



Summary Recommendations

Recognize that your customers are different and want different things

Recognize different customers’ take into consideration different aspects

of the experience when deciding whether to switch or not

Customers who feel positively emotionally engaged with their insurance

provider have the same mindset and perception of your experience that

is different to customers that intend to switch

To make that emotional connection with your customers, you need to

identify their lovemarks

26

Lovers Switchers Lovers Switchers Lovers Switchers Lovers Switchers Lovers Switchers

Easy

Website

Agent

Call Centre

Experience Extensions

Employment Auto Life Home Health

Segment emotionally and identify your “Lovers”

Develop a lovemarks experience



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Date post:	19-Oct-2014
Category:	Business
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