In our latest post in our partnership with TAAN, we delve into the realms of neuroscience to explore the questions raised by the ever-increasing expectations of the modern consumers – from emotional bonds to tried-and-tested research.
Engaged customers are a company’s richest resource. They bring in higher sales and profits, are tolerant of your flaws and are less likely to switch to the competition.
According to Gallup’s research, fully engaged customers lead to a 23% increase in business income, as opposed to customers who are not engaged or are actively disengaged, who in turn account for a revenue drop of 1% and 18% respectively. Furthermore, a 5% increase in customer retention can increase a company’s profitability with as much as 75%.
However, engaging customers is easier said than done.
There are multiple reasons for which customers are increasingly disengaged with brands: from the increase in online shopping, to the decrease in innovation gaps between brands and to the fact that companies just can’t keep up with the expectations of ever-demanding customers. Therefore, as customers develop shorter attention spans and have higher expectations, they will find that brands become less relevant to them and will therefore fuel the disengagement trend.
With “millennials”, the figures are grim: they have the lowest level of engagement, both as customers (around 75%) and as employees (71%), according to a Gallup study. But, on the other hand, engaged millennials are more profitable and loyal than the other customer groups, states the same study. Therein lies the challenge and the opportunity. Giving up on engagement and focusing on transactional efficiency is not therefore the answer. The key lies in creating new strategies and effective tactics to reach this elusive goal.
One of the top challenges with building customer engagement comes from the lack of accurate customer insights, according to a study performed by Microsoft last year. Without knowing what your customers want from your products or services, you simply cannot make them happy. Gone are those days when, if you had this truly great product that satisfied a customer’s needs, long-term loyalty would be implied and secured. Today, it is so easy to find new and better alternatives, to products and services, and most times a customer doesn’t have to look too far to find them either. As a result of being part of the global digital ecosystem, customers are actively setting different consumer trends, while companies and brands are busy trying to keep up with them.
And the irony of it all? Despite all these efforts, most companies end up losing customers anyway, and in the end, they still don’t know why!
Therefore, in-depth customer knowledge allows you to craft your offers in a compelling manner that will draw their attention and convince them to give you a try.
Then, what differentiates engaged or loyal customers from merely satisfied ones? Loyal customers have an emotional bond with the company or brand which translates into turning a blind eye to the company’s flaws. Additionally, loyalty has this amazing property of creating an exit barrier that practically helps you retain customers, particularly when they are approached and “bribed” by other companies into jumping ship.
This emotional bond, however, is difficult to measure via traditional research methodologies that use rational constructs to evaluate emotional connections and declarative answers to assess non-conscious reactions.
By using cutting edge neuro tools, neuroscience provides deep, accurate and unbiased consumer insights that constitute the starting point of any customer engagement journey. It does so by recording and interpreting brain and biometric reactions that are collected using specialized equipment like EEG, fMRI, eye-tracking, GSR and facial recognition, to name just a few. These reactions represent the physiological substrate of the non-conscious processes that take place in customer’s minds when they interact with a brand or product. They are unbiased and accurate, as they are not subject to conscious evaluation and filtering.
Customer engagement in banking
Marketing theory is rife with examples of how in any commoditized industry, exit barriers for incumbent customers are pretty much non-existent. And the banking industry is a good example, being highly competitive and commoditized. If there ever was designated an industry in need of higher engagement, it would surely be retail banking.
Customers’ attitude towards money, debt, savings, security have undergone deep changes during the last years. Their expectations about a bank’s role in their lives has also consequently changed. Despite this reality, banks still persist in an obsolete approach to customer engagement, where transactional efficiency combined with high powered message assailing equals engagement. These strategies developed in the past are outdated and banks end up spending huge budgets on devising loyalty strategies to keep their customers engaged.
Customers desire unique experiential relationships with their banks. Relationships that are rooted in their own individual contexts and not some standardized one-size-fits-all approach that is currently strategy du jour! Such deep context-driven expectations do not fall in clearly defined demographic groups, but they rather transcend age and gender. Therefore, the classical demographic segmentation fails to provide an accurate image of the customers’ desires, contexts, needs and wants.
Segmenting customers on experiential dimensions, on the other hand, and using these experiential segments to map customer journeys will lead to the design, blueprint and delivery of unique and relevant customer engagement strategies. Given the richness of insights and outputs, such an approach also serves as an excellent input for the bank’s own internal operational challenges, shortcomings, re-designs and for the subsequent internal re-orientation required for a truly customer-centric approach.
Neuro-powered Customer Engagement
Customer Engagement, if thought through and leveraged well, can truly serve as a sustainable competitive advantage. Great customer engagement starts with unbiased, deep, rooted insights, not just about the product or offer, but also about customers’ contexts. For these are personal and drive decision-making. Contexts that even customers are unaware of when they make those decisions.
Neuroscience has the ability and the means/resources to deliver these insights.
Coupling such deep non-conscious insights with experiential segmentation, allows organizations and businesses to craft and deliver on great customer engagement.
About the authors
Dr. Ana Iorga, right, is a consumer neuroscience expert who has spent over a decade in working with business as well as academia. Having founded one of the fastest growing full service advertising agencies in Romania, she has deep expertise in the world of design, communication, branding and the creation of marketing campaigns for brands across diverse industries such as Consumer Goods, Retail, Finance and Media.
Spanning a professional career of over two decades, Anil Pillai, co-founder of Terragni Consulting, is an experienced engagement strategy expert. He currently heads the Customer Consulting practice at Terragni Consulting, a People & Customer engagement strategy organization, part of the team that has seen the company named as one of the 25 most promising consulting companies in India.
They are both members of TAAN. Operating since 1936, TAAN exists to enhance the intelligence, expertise, reach and effectiveness of their members, through cooperative learning and shared capabilities