ACHIEVING LASTING CUSTOMER ENGAGEMENT

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1 WHITE white PAPER paper ACHIEVING LASTING CUSTOMER ENGAGEMENT Building customer trust has become more difficult and more essential than ever. The key to developing true customer engagement relies on a balance between rational, logical thought processes and emotional decision making. Discover ways to turn customers into fans and fans into brand advocates.

2 CUSTOMER ENGAGEMENT For years, companies have worked to gain the trust of consumers to expand their reach, build their brand and deliver a measurable ROI. According to the Better Business Bureau, trust is a combination of integrity (honesty and a reputation for being truthful) and performance (good track record of producing results and doing what you say you are going to do). When consumers trust a brand, they engage with it actively. They demonstrate an increased likelihood to spend more, repurchase, buy additional products and refer you to others. 1 What does building trust mean for companies today in a world where the rise of social media and the ability for individuals to connect with people like themselves online continues to grow exponentially? People trust other individuals more than a business or brand. recommendations to augment their decision-making process, and it is one of the many disruptive shifts turning this era into The Age of the Customer, according to Forrester Research. The company s research shows that U.S. consumers make 500 billion impressions on one another about products and services every year. 3 In its 10 Key Trends to Watch in 2012, Global Trends sums up this challenge as the fight to own the new consumer. The notion of value is shifting, involving more stakeholders than simply the consumer/customer, including society, networks and communities of choice. Ultimately, these shifts are redefining the playing fields for organizations around the consumer and his/her extended value chain and away from the firm as the central actor. 4 Companies must learn new ways to engage with customers and earn their trust on this constantly changing playing field. Creating experiences that encourage customers to interact with a brand to truly engage becomes crucial to attracting customers, earning their trust and solidifying valuable, lasting relationships. Customer Experience programs that include effective engagement strategies allow businesses to create two-way communications and factor into the broader community to build brand trust, and even advocacy, from customers. MEANINGFUL ENGAGEMENT With the surge in consumer-generated content and the growing popularity of Facebook, Twitter, Pinterest, Instagram and other social media platforms, it s no surprise consumers are connecting via social media with their friends and others who share similar interests, as well as brands they like. This phenomenon continues to dramatically increase consumers ability to gain word-of-mouth Most successful brands find ways to create engaging experiences for consumers. Developing and cultivating deep connections appeals to logical thought processes while creating an emotional engagement between the consumer, his or her community, and the brand, both online and offline. Emotional connections heighten trust. It s a strategy that applies to both the business-to-consumer and the business-to-business arenas, because when you get right down to it, it s people whether purchasing THE NEW POWER OF THE CUSTOMER MEANS FOCUSING ON THE CUSTOMER MATTERS MORE THAN ANY OTHER STRATEGIC IMPERATIVE. 5 01

3 WHITE PAPER for themselves or their companies who make buying decisions. Research has proven emotion plays a role in buying decisions. Recent studies indicate decision making in this era of information overload tends to become more emotionally based because as our minds have more to process, emotion plays an even larger role. 6 Emotional decisions are made 3,000 times faster than logical decisions. 7 So one can assume leveraging emotional drivers would speed the decisionmaking process and, used appropriately, help foster trust. about their relationships with businesses include feelings of importance, self-esteem and appreciation, as well as feeling like they made the right decision when considering the businesses with which they buy/interact. 9 These feelings extend beyond the point of sale, where friendly, personalized service is critical, to encompass all other touchpoints that influence the relationship, such as direct mail, social media, web sites and mobile applications. This holistic customer experience drives the level of trust customers feel and also plays into whether they share their experience with others. Forrester asserts that companies wanting to compete in the Age of the Customer must become customer-obsessed. A customer-obsessed company focuses its strategy, its energy and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers. 10 Companies such as Hallmark, for example, understand emotion is as critical to business relationships as it is for personal relationships. Because this strategy permeates the entire enterprise, the company continually ranks as one of America s most recognized and valued brands. Emotionally engaging customers is a smart business practice. After all, it s people making decisions about the businesses with which they will engage. There s no denying rational drivers still maintain a role in the decision-making process. Cost, product quality and utility represent just a handful of the rational considerations involved in making a purchase decision. But by making a sustainable connection based on emotional drivers, businesses show they care and ensure customers feel valued. An independent study conducted for Hallmark 8 found feeling valued is a powerful emotional driver for developing trust and lasting engagement. Other emotional drivers consumers consider when thinking 02

4 CUSTOMER ENGAGEMENT IMPACT OF EMOTION THROUGHOUT THE CUSTOMER LIFE CYCLE Like any relationship, a customer s relationship with a business has ups and downs. These natural rises and dips often hinge on how the customer interacts with the brand at every touchpoint, from a face-to-face transaction and online point of sale to other more intangible measures such as reviewing other customer ratings, seeing advertisements or receiving or direct mail solicitations. Each of these interactions provides an opportunity for the business to build and strengthen its relationship with that customer. From the moment consumers become aware of the brand, these experiences become part of the fabric of their brand perception and affect their emotional connection to the business during the life of the relationship. Think about some of the most recognized service companies today, like Zappos, for example. Consumers enjoy instant online help from friendly, empowered Zappos employees when shopping on the site. That s a huge deposit into their emotional bank account. If the shoes they ordered don t fit or are off a shade in color, that becomes a withdrawal. However, free returns for 365 days from the time of purchase help smooth over any irritation. As a result of the consumer experience it creates, Zappos quickly became a beloved brand for shoe shoppers, as well as a thriving business. Because emotional elements of the consumer s relationship with the brand play such a significant role in purchasing decisions, employing strategies that create emotional connections helps to foster engagement and build brand loyalty across all phases of the customer life cycle. ACHIEVING LONG-TERM CUSTOMER RETENTION AND REFERRALS Once a customer begins to develop feelings of loyalty toward a business, using an emotion strategy to further engage that customer helps ensure the sense of personal self-esteem, and trust toward the company continues to grow. This is also a stage where using emotion really works to drive engagement, referrals, and the posting of likes and positive comments. EMOTIONAL BANK ACCOUNT Experiences with the brand and employees plot the highs and lows of the consumer s relationship with a business. Companies, through sales, marketing and customer service, have the ability to positively impact the overall experience and ensure the Emotional Bank Account grows in a positive direction. Things businesses do or say experiences of the customer become deposits and withdrawals. Most business people know it costs nearly twice as much to attract a new customer as it does to retain an existing one. Forrester defines customer engagement as a deep emotional connection with the brand indicated by high levels of active participation and resulting in a long-term relationship. The firm estimates that for most companies, the return on investment (ROI) on creating engaged customers is positive and relatively fast. 11 In fact, the composite company cited in the study achieved a 66 percent ROI, with a break even of less than 12 months. 03

5 WHITE white PAPER paper Clearly, investing in customers at the retention stage pays off, not only by creating engagement and loyalty, resulting in long-term customer relationships, but also by providing direct bottom-line benefits to the organization. The winning companies of the future will make decisions grounded by customer knowledge and an understanding of what drives retention, referrals and positive brand sentiment. Realizing the customer experience is a critical driver for understanding and better engaging with consumers, companies are finding new ways to better understand how consumers interact with their brand and create relevant emotional connections. Many companies are appointing Chief Customer Officers. Tapped to ensure the customer is taken into consideration at all times, in all departments and every decision, the role has become a key contributor to business strategy. 12 As companies continue to better define what makes customers not only loyal but also likely to refer an especially important element for success today when word of mouth through social media channels plays a significant role in purchasing decisions for consumers they are finding new ways to measure engagement. One of the most common means to determine engagement and likelihood of referrals is through the Net Promoter Score (NPS), created by Fred Reichheld, Bain & Company, and Satmetrix. Companies using the NPS regularly survey their customers with two questions: 1. On a zero to 10 scale, how likely is it that you would recommend us (or this product or service) to a friend or colleague? 2. What is the primary reason for your score? The resulting answers sort customers into three simple groups promoters, passives and detractors. An NPS can be as low as -100 (everybody is a detractor) to +100 (everybody is a promoter), but a positive score is considered good, and companies in the +50 range are excellent. Tracking the NPS score allows companies to measure how their true loyalty is building. 13 And while traditional loyalty programs are declining, customer engagement strategies that tap consumer emotions and create a complete experience are taking off. In fact, in its The State of Customer Experience, 2012, Forrester found 93 percent of the Customer Experience (CX) professionals it surveyed say CX is a top priority. 14 The same study indicated improving the online customer experience was a key objective. 04

6 CUSTOMER ENGAGEMENT Mobile experiences were also a high priority. Additionally, cross-channel experiences were key from nearly three quarters of the respondents, suggesting digital touchpoints are part of broader, more comprehensive initiatives. Other key areas of focus were using communities and other types of social computing, improving the experience of interacting with a call center agent, improving the store/branch customer experience and improving the phone self-service experience. 15 This focus on the entire experience addresses the EBA (Emotional Bank Account), ensuring no matter how customers interact with an organization, their EBA remains balanced and ultimately fosters the referrals that form the core of the NPS. RE-ENGAGING WITH CUSTOMERS Every company loses customers for a variety of reasons. It could be a service issue, increasing competition, or simply changing consumer habits. Winning back these customers requires an understanding of the problem that caused them to defect in the first place and a willingness to address it. In fact, studies show customers who have had their issue addressed to their satisfaction can become strong advocates for a business. Here again, a strategy incorporating relevant emotion and including powerful messages that resonate can effectively re-engage consumers. If service problems are the issue, quickly fixing them and offering customers a sincere apology often goes a long way toward reinforcing feelings of appreciation and peace of mind. On a more advanced level, many businesses benefit from more sophisticated methods of tracking customer attrition and developing strategies to prevent it, or are designed specifically to win back target customer segments. For companies subscribing to the Net Promoter System, re-engagement becomes a natural extension of their process to earn the enthusiastic loyalty of 05

7 WHITE PAPER customers and employees. Their commitment to developing processes for short-cycle, closed-loop feedback, learning, recovery and taking action means individual problems get remedied quickly and systemic issues are strategically addressed. 16 MEANINGFUL CONNECTIONS Successful companies endure because they understand engagement and advocacy require more than simply customer satisfaction they require a comprehensive customer experience at every touchpoint. From online shopping to positive wordof-mouth social media engagement to in-store service and streamlined billing, companies that enact comprehensive customer engagement strategies thrive. Forrester goes so far as to say that to succeed in the Age of the Customer, companies must: invest in customer insight; shift funding to customer experience and service to build relationships; create and support sales channels that deliver intelligence about customers; and spend marketing funds on useful content and interactive marketing to strengthen relationships, rather than on one-way ads Establishing a relationship with customers reinforces the consumer s emotional drivers feelings of self-esteem, contentment, appreciation and trust in the business and can turn a one-time buyer into a long-term advocate, a true brand ambassador who not only supports the organization but also recommends it to others. Investing in a strategy that positively engages consumers and drives their behavior creates long-term ROI for businesses by extending the lifetime value of each and every customer. ABOUT HALLMARK BUSINESS CONNECTIONS Hallmark Business Connections, the business-relationships unit of Hallmark Cards, Inc., leverages more than 100 years of Hallmark heritage, creativity and innovation in the business arena to provide meaningful, memorable and measurable solutions that strengthen business relationships with employees and customers. It ranks as the third-most popular brand desired by women ahead of Dove, Hershey s, Google, Apple and Target in a brand study conducted by Forbes magazine earlier this year. EquiTrend ranked Hallmark among the top 1 percent of consumer brands in the country this year, which was the eighth consecutive year the brand has ranked in the top 4 percent of most-loved consumer brands. Rhonda.Basler@hallmarkbusinessconnections.com Hallmark Business Connections 121 South 8th Street Minneapolis, MN LinkedIn: Rhonda Basler leads the Customer Engagement team at Hallmark Business Connections. An avid business trend watcher and strategic thinker, her customer advocacy expertise stems from more than 15 years experience in data-driven and brand marketing. 06

8 CUSTOMER ENGAGEMENT BIBLIOGRAPHY 1 Trust Trends, Better Business Bureau, 2012 ( 2 Welcome to the New Playing Field: The Age of the Customer, Allegiance Blog (www. allegiance.com). 3 Peer Influence Analysis report, Forrester Research, Inc., April GT Briefing November 2011: 10 Trends to Watch in 2012! Global Trends ( globaltrends.com/monthly-briefings/60-monthlybriefings/139-gt-briefing-november keytrends-to-watch-in-2012). 5 Competitive Strategy in the Age of the Customer, Forrester Research, Inc., June 6, Emotional decision making can improve decisions when managed as part of the process, Decision-Making-Solutions, Decision Innovation, ( emotional_decision_making.html). 7 - George A. Miller, Psychologist, Hallmark Business Connections Consumer Attitudinal Study, January Hallmark Business Expressions: Value of Greeting Cards Received from Businesses, Harris Interactive, January Competitive Strategy in the Age of the Customer, Forrester Research, Inc., June 6, Measuring the Total Economic Impact of Customer Engagement: A Multi-company ROI Analysis, Forrester Research, Inc., September Make Room for the Chief Customer Officer, Inc. Magazine, April 3, The Critical Question Every Company Must Ask, Forbes, August 21, The State of Customer Experience, 2012, Forrester Research, Inc., April 24, Ibid. 16 The Critical Question Every Company Must Ask, Forbes, August 21, Competitive Strategy in the Age of the Customer, Forrester Research, Inc., June 6, HBE6955