There is no doubt that customer purchasing behaviour is not only influenced by rational thought. Behavioural science examines how customer’s perceptions of an interaction are influenced by the amounts and sequencing of painful and pleasurable experiences during buying behaviour. Insight into the pleasure and pain that customers experience directly influences spend levels and customer satisfaction.

Academics such as Richard Chase have developed and tested guiding principles for managers and retailers to consider when they review interaction with customers. These principles were reported by McKinsey and are now widely applied by customer focused organisations. The five principles that Chase has developed are as follows:

1. Get Bad experiences over early

Examples of this include getting credit checks completed early when subscribing for a telephone or subscription service.  Tackling the most challenging aspects of the interaction early delivers higher levels of customer satisfaction.

2. Break up Pleasure and combine pain

Focusing on those factors that provide the customers with the most pleasure becomes possible by tackling the more difficult aspects of the interaction early. This allows many other aspects of the customer interaction to “flow” and pleasurable associations then form a stronger part of recollections.

3.  Finish Strongly

Many restaurants provide free desert that coincides with the delivery of the bill. They recognise the importance of finishing on a positive. Likewise providing customers with discounted or free products in a retail environment post purchase generally results in higher satisfaction scores.

4. Give Customers Choice

Using words that provide customers with choice is very powerful. Scripts and guidelines can be developed for interaction with customers. When these words are used customer feel like they are exercising their free will rather than being forced into making a purchase. Again this results in more positive customer satisfaction scores and purchase intent.

5. Let Customers stick to their habits

Many companies inadvertently cause psychological discomfort for their customers. Forcing all customers to self-serve at check-outs is an example of introducing unnecessary stress to the customer. Using IVR systems in call centres is another example of taking customers outside of their normal psychological comfort zone.

Applying the principles of behavioural science to interactions with customers has a direct impact on the bottom line. Many organisations could benefit from greater insight and understanding about the customer shopping experience. This type of insight can lead to process re-design which in turn leads to increased satisfaction and ultimately profit.

For the context of this blog, “brand” transcends the more simplistic view of being logos, slogans, pictures and jingles. It represents more of the DNA of an organisation that is then succinctly distilled into the logos, slogans and pictures we know and see every day. Brand in this context really lays at the heart of an organisations core competency(s).

Taking Apple Inc., how did the company go from virtual bankruptcy in the late 1990s to the number one company in the world in terms of market capitalisation? It thought differently. With Steve Jobs leading the way the company used the term “think different” to transform industries. And it all started from a premise of “let’s do things different…” Thinking about these simple words, it is hard not to see how they managed to transform a poor performing company into a superstar. The foundation of Apple was built on being innovative and thinking differently; from developing an operating system that can boot up in a short amount of time to revolutionising the way we listen to and purchase music. All this came from a core belief that the company could simply do things different.

Looking at another company, General Electric (GE) we can immediately understand what the company is about. Like Apple, GE’s “imagination at work” brand statement really permeates all aspects of their business and sits at its core. You can get a sense that no idea is too audacious if there is value and merit in it. As a diversified company GE aims to be a market leader in whatever industry they operate in. How do they do this? Through using your imagination at work. No matter what industry GE is operating in, the company believes and understands that they can best serve their customers by being innovative. They also understand that they can attract the best minds because GE’s brand is synonymous with ideas and innovation.

Whether you love brands or hate them, we all have a connection with them on some level. Brands, like the Apple and GE, can both inspire customers and discourage them. How we are able to have a connection with brands is by knowing explicitly what they stand for, which means as a consumer we can make a value judgement about whether or not we support them. So it is imperative to assess and test your brand to know if customers and consumers really know what you stand for.

Tough market conditions do however present opportunities for all businesses.  Whilst many companies are retreating away from investment, smart companies are increasing theirs.

According to Harvard Business School Professor, John Quelch, “Instead of cutting the marketing budget, you need to know more than ever how consumers are redefining value and responding to tough conditions.” He also states further that “successful companies do not abandon their marketing strategies in tough times; they adapt them.”

Many organisations simply examine the sales forecasts and cut spending across the board during a period of economic slowdown without considering how these cuts will impact on communication. Companies that do not ‘speak’ to their customers during tough times disengage them and find themselves vulnerable once the economy has regained momentum.

When your customers choose to spend the fewer dollars they have, you want them to choose your organisation not your competitors. The process of acquiring new customers is more costly than retaining existing ones, so it is of upmost importance that you hold on to your existing customers in a stagnant market.

It is well documented the impact employees can have on a customer’s experience with a company. In these tough economic times you need to be even more in tune to your customer’s needs and the ‘moment of truth’ brand experiences your company has with your customer’s every day.

To differentiate your customer experience from that of your competitors in the current economic climate, consider the following:

• Vigilantly focus on customer needs – in a changing economy, a customer’s basic needs don’t disappear, but priorities can shift and you need to look for creative and innovative ways to satisfy those needs. It is more important than ever to know what is going on in the lives of your important customers and how you can better assist their business.

• Reinforce your brand attributes at every interaction – It’s important to remember that in a risk-adverse climate customers cling even stronger to the brand in which they are most familiar. Your brand attributes are a framework for your business decisions and interactions with our customers. Remind customers of why they should choose your brand at every interaction and opportunity.
• Communicate frequently – the pace of decision making can pick up when the economy slows so get information from the front lines to operating people as quickly as possible and keep customers informed.
• Look for more ways to deliver best value to our customers – think outside the square, work smarter with reduced budgets and look for new ways to provide more value for less expense.

Current and prospective customers are still forming opinions and gathering experiences regardless of whether you are proactively managing your brand or not. Believe it or not tough market conditions actually provide exceptional opportunities to improve your strategic position.

Companies are aware of the importance of delivering customer value, but come unstuck when deciding what value is and whether it is being delivered to the customer.

A Customer Value Proposition is a statement of the end benefits customers can expect from a product or service at a given cost of obtaining those benefits. Customer value can be defined in many ways, but ultimately it is what the customer perceives it to be.

When developing a Customer Value Proposition, keep in mind the following:

1. Identify and understand the customer
2. Focus on customer needs
3. How different are you from competitors?
4. Tell customers what’s in it for them
5. Turn features into customer benefits
6. Avoid developing single value propositions across markets
7. Keep value propositions up to date
8. Concentrate on the intangibles
9. Communicate your value proposition
10. Ensure you know if you are getting it right

Just creating a great value proposition will not win and retain business. You must deliver real value! Failing to deliver on the value the customer thought they were purchasing will destroy a relationship over time. Your value proposition must be reflected in product and service definition and development. Getting marketing, sales, manufacturing, research and development, and customer service departments to align their activities to the customer value proposition can be challenging. Internal communications play an important part in building company-wide commitment.

Measuring and reporting customer value is essential. We all know that a company’s sale force has a tendency to ‘inflate’ customer feedback, and therefore, an objective measure is needed. Conducting a periodic Voice of the Customer Survey is one such approach. This involves the following:

1. Establish which customers to survey and individuals within the customer organisation to participate (noting the distinction between key decision makers and influencers / users)
2. Establish the best survey approach – face to face, self completion, telephone, web based
3. Establish to what to measure – purchasing criteria, performance, share of wallet, loyalty and advocacy, competitive positioning. Identifying performance gaps highlighting positive or negative variances between intended versus actual customer value is imperative to establish
4. Agree on survey timing – that is to conduct the initial survey and subsequent surveys
5. Internally report customer feedback – ensure company wide take-up of the findings

A word of caution. Be prepared to act on customer feedback. Surveying a customer who clearly is not satisfied is likened to waving a red flag in front of a bull. And, research for the sake of research is an utter waste of time, money and effort.

At The Right Group, we are fortunate to work with many leading Australian companies who understand what their customers want and deliver on this promise. As part of our firm’s strategic branding services, we work with customers to develop an optimal Customer Value Proposition. Our research team provides clients with a fact-based understanding of the drivers of customer value and delivery measurement.

Many organisations simply examine the sales forecasts and cut spending across the board during a period of economic slowdown without considering how these cuts will impact on communication. Companies that do not ‘speak’ to their customers during recession times disengage them and find themselves vulnerable once the economy has regained momentum.

When your customers choose to spend the fewer dollars they have, you want them to choose your organisation not your competitors. The process of acquiring new customers is more costly than retaining existing ones, so it is of upmost importance that you hold on to your existing customers in a stagnant market.

It is well documented the impact employees can have on a customer’s experience with a company. In these tough economic times you need to be even more in tune to your customer’s needs and the ‘moment of truth’ brand experiences your company has with your customer’s everyday.

To differentiate your customer experience from that of your competitors in the current economic climate, consider the following:

* Vigilantly focus on customer needs – in a changing economy, a customer’s basic needs don’t disappear, but priorities can shift and you need to look for creative and innovative ways to satisfy those needs. It is more important than ever to know what is going on in the lives of your important customers and how you can better assist their business.

• Reinforce your brand attributes at every interaction – It’s important to remember that in a risk-adverse climate customers cling even stronger to the brand in which they are most familiar. Your brand attributes are a framework for your business decisions and interactions with our customers. Remind customers of why they should choose your brand at every interaction and opportunity.
• Communicate frequently – the pace of decision making can pick up when the economy slows so get information from the front lines to operating people as quickly as possible and keep customers informed.
• Look for more ways to deliver best value to our customers – think outside the square, work smarter with reduced budgets and look for new ways to provide more value for less expense.

Current and prospective customers are still forming opinions and gathering experiences regardless of whether you are proactively managing your brand or not. Believe it on not recessions actually provide exceptional opportunities to improve your strategic position.