Consider how loyalty is built or destroyed by emotional experiences

I've been considering contacting ex-Houstonians for support in building a better image for the city. Their interest and support will be built on their having had positive emotional experiences here. In many instances, their bad experiences will be unrelated to the city itself, but affect their attitude. So when we reach out to ex-Houstonians, we'll need to be very sensitive and accepting of their sometimes bad opinion of the city, even if it's unfair. 

We cannot always prevent bad experiences and we have to allow others the space to be unhappy. Can we repair the relationship? Maybe. Sometimes. If we can afford to. 

CMS Wire: Positive Memories: The Shortcut to Customer Loyalty, 2019-May-08 by Liraz Margalit

When researchers at Forrester analyzed whether ease, effectiveness or emotion had the biggest impact on customer decision making and brand loyalty, they found that emotive connections won hands down.

Both long-term loyalty and memorability are built through experiences that drive positive emotions — even when that long-term loyalty is misplaced or fundamentally irrational. In fact, my company Clicktale’s research with data professionals suggests that as many as three quarters consider consumers to be “fundamentally irrational” in the way they shop. Clearly, feelings, not facts, are what drive our decisions — a factor that needs to influence the way that brands think about customer loyalty. 

Forrester: A Closer Look at the Monetary Value of Emotion, 2016-Sep-21 by Victor Milligan

Companies need a way to understand and measure emotion: to design experiences, to predict its impact, and to formally connect emotion to P&L performance. Specifically, companies need to know:

• If the emotion driven by an experience is positive or negative, meaning did it create an emotion that has the potential to draw customers closer to you or push them further away?
• What was the intensity of the emotion, meaning is it likely to alter the existing level of affinity or spending behavior?

Forrester’s Customer Emotion Matrix provides a simple yet powerful method to understand and ultimately quantify emotion by examining the two primary factors that determine if and how customers may alter behavior:

Storytelling tips from the Nielsen Norman Group

As an analytical thinker, storytelling has always been a struggle for me. I tend to organize information differently than storytellers. But throughout my career it has become increasingly important. Anytime I find a good teaching tool for storytelling, I try to work with it and incorporate its lessons. 

I especially value the reminder here to pair our stories with artifacts. If we handle it correctly, a very complex story can be embedded in a single image or token. 

Nielsen Norman Group: 6 Rules for Persuasive Storytelling, 2019-Apr-28 by Rachel Krause

Stories help us explain difficult concepts.

Giving additional context helps our audience connect with a concept. This additional context can be in the form of behaviors, emotions, reactions, motivations, or goals. Unlike a flow chart or artifact, a narrative allows the audience to understand the reasons behind users’ actions; they remind our audience members that they are not the user.... 

Stories allow us to form a shared understanding.

Thinking about how to build a product usually involves feature lists and backlogs. Stories bring user pain points and goals to the forefront of the conversation and help teams create a shared language of why they’re building a product or feature and whom it benefits. These stories can also be used to rally around a product vision, painting an image of how life could be better with that product.

6 Rules for Persuasive Storytelling

1. 1. Adapt your vocabulary to match your audience.

   2. Appeal to the needs of your audience.

   3. Back up your points with real data. 

   4. Focus on the entire omnichannel experience, inside and outside the interface. 

   5. Pair your story with an artifact for memorability and alignment.

   6. Follow up with a summary. 

How culture drives innovation

Too many people see innovation as a project when it's really a process. Or maybe it's a culture. 

Every business, every organization, every person has to decide what role innovation will play for them. If you crave stability, then innovation will be driven by necessity: fixing things that don't work anymore. But if you want to be a leader in building a better future, then you need to consider how innovation will be integrated into everything. 

Digital Tonto: How Experian’s Networked Culture Drives Innovation, 2019-Apr-24 by Greg Satell

In Who Says Elephants Can’t Dance, the bestselling memoir of the his historic turnaround at IBM, Lou Gerstner wrote, “I came to see, in my time at IBM, culture isn’t just one aspect of the game—It is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.”

There has been endless discussion about whether change should be driven from the top-down or the bottom-up, but that is, for the most part, a red herring. True transformation tends to move side-to-side, driven through horizontal connections among peers.... 

[Satell gives three examples at Experian.]

Many firms have clubs, employee groups and volunteer efforts. Seminars aren’t particularly unusual, either. Yet it’s not any one program or platform, but how those initiatives are optimized to widen and deepen informal bonds across the organization, that makes the difference.

The truth is that, today, competitiveness is no longer determined by the sum of all efficiencies within a business, but the sum of all connections. 

Cementing loyalty with an annual report on the customer's performance

I would certainly wince to see an annual report from some of my favorite places to spend money, but The RealReal and Rent the Runway are emailing customers a personalized annual report that makes them feel good.

Glossy: How The RealReal and Rent the Runway are using personalized email reports to deepen customer loyalty, 2019-Apr-29 by Danny Parisi

“Our clients have told us for years that the sustainability element is one of the biggest motivators for buying or consigning with us, but for the first time, we really wanted to be able to quantify exactly how positive consigning is for the environment,” said Allison Sommer, director of strategic initiatives at The RealReal. “This is our first and biggest effort to translate what the circular economy means in a tangible way to consignors.”

Rent the Runway does something similar with its personalized reports, which break things down by carbon imprint and water waste, equating them to more understandable, everyday measurements — for example, 6,000 bubble baths’ worth of water saved.

Half Price Books shows the way in instituting loyalty

Half Price Books is the perfect example of a company that deserves our loyalty, not because they care, but because they care enough to institute systems that preserve their values. 

Retail Touch Points: At Half Price Books, Empowered Associates Create Curated, Store-Specific Assortments, 2019-Apr-19 by Bryan Wassel

Half Price Books is unafraid to take its time when expanding to new markets. The retailer needs the right combination of demographic makeup, population growth and size for a city to become a good target, and it recognizes that not every scouting mission will be successful.

“Unlike a shoe store, we need lots of people, just because such a small percentage actually buys the printed word,” said Thomas.

With such a small audience, the key to success is making sure those that do shop there are dedicated. One way Half Price Books achieves this is through its ambiance. The retailer builds its own wooden shelves for a “homey feeling” inside the store, and its eclectic selection of both popular and unknown authors recalls the experience of visiting the famous Strand, an independent New York City store that claims to house 18 miles of books.

“Stores are a destination,” said Thomas. “If you’re a reader, and you live in New York City, you go to Strand. You want to browse their sections and discover new authors and discover new books, and we are a browser’s paradise. People love treasure hunting.”

The other key to the Half Price Books shopping experience is the staff. These associates aren’t just passionate readers who are experts on their favorite genres — they are also the ones purchasing used books from customers to further develop their relationships. Half Price Books uses a comprehensive onboarding process that includes author and category tests, as well as training on how to price incoming books.

“We give them a lot of autonomy and a lot of responsibility and authority,” said Thomas. “We’re giving our employees a pot of money and telling them, ‘You decide how much to pay for this book.’ So they feel an ownership, they love it, and they know how important it is. We have to train them thoroughly because we have 3,000 employees, and over 2,500 are deciding what to buy that book for, and what to price that book at.”

The extra effort and responsibility gives the staff more to do than the average retail associate, creating a deep sense of investment in the company. 

 

 

How to use a loyalty program to create customer-investors in our businesses

Loyalty programs are frequently misunderstood. Used properly, they allow both the customers and the business owner to realize benefits from investing in a long-term relationship.  

1. Get customer profiles into a data repository. Airtable.com is free and as easy as a spreadsheet PLUS much less vulnerable to user error. Or get a real CRM... 
2. Find a way to connect customer profiles to behavior... Credit card I.D.? Loyalty card? Phone number? Be sure that one customer doesn't end up with multiple accounts which will make that customer seem less important. 
3. Allow customers to build up capital in the account. Purchases are a start, but consider social media engagement and referrals, too. 
4. Create a program that allows your customer-investors to get some ROI. Make it scale... more investment = more return. 
5. Learn, learn, improve, raising our own return in investment. 

Entrepreneur.com Contributor:"What's the Point?" Guidelines to Customer Loyalty Programs, 2019-Apr-12 by Ashish Merchant

So why do so many brands use a points-based program?  One simple answer is to raise the value of the engagement with every transaction.  A flat discount (often advocated to extend “instant gratification”) may motivate customers to use multiple cards, not allowing the brand to distinguish between multiple transactions by the same users and multiple users.  However, reward points create an incentive for the customer to use the same card (or mobile phone number) repeatedly. Brands also build in a system to create stronger incentives for frequent users or high-value clients by way of program tiers which create higher levels of benefits.  This raises the stakes as the relationship progresses (the total value of accumulated rewards points is far higher at the end of a year, making the card perceived to be more valuable). 

How to create a retail experience that allows us to compete against Amazon

As Amazon expands into the grocery business, we can learn great lessons from the companies which are competing effectively, especially Walmart and Trader Joe's. Walmart's success is mostly about distribution power, but Trader Joe's uses techniques which any retailer can copy. 

The Trader Joe's approach to retail:

1. Make it personal
2. Make it enjoyable
3. Make it easy to manage transactions
4. Make us feel like we are supporting the community.

Harvard Business Review: What the Grocery Stores Holding their Own Against Amazon are doing Right, 2019-Apr-12 by Amit Sharma

The nature of customer loyalty is changing as shoppers get more comfortable buying groceries online — prioritizing convenience, choice, and ease over physical proximity to a store. As consumers become more sophisticated, retailers need to inspire lasting loyalty across their customer base. To do it, they should offer flexibility, proactively communicate about order status and other details, and build emotional connections with shoppers.... 

And people are emotionally connected to grocers, as utilitarian as grocery shopping may seem. For example, Trader Joe’s, which ranked highly in the C Space study, inspires loyalty by creating an enjoyable shopping atmosphere. A 2018 Forrester survey of 287 brands rated Trader Joe’s first in positive customer experiences, and the company regularly outranks other grocery chains in sales per square foot. Trader Joe’s fans closely follow new product releases, request stores in their towns, and have even created their own community on Reddit.

Trader Joe’s doesn’t offer grocery delivery, but it has created such a personal and enjoyable shopping experience that customers actually want to visit its stores. Everything at Trader Joe’s is designed to make grocery shopping feel more friendly, personal, and laid-back, including its flexible return policies, free samples, quirky product labels, fast check-out, and helpful employees.... 

Grocers need to offer their customers more than points-based customer loyalty programs, which are no longer a competitive differentiator. Most grocery chains offer similar benefits and do little to foster an emotional connection between a shopper and a brand. A study by Accenture found that 78% of shoppers abandon loyalty programs after signing up.

By investing in the factors that build long-lasting loyalty instead of transactional programs that most people ignore, grocers can attract repeat buyers and brand advocates.