Changing Customer Behavior

Mar 22, 2012

Do you ever really stop to think about what it means to drive a successful marketing program? Actually, it is pretty simple. If you can change behavior and produce quantifiable results, you have nailed it. But what does this actually mean?

Zain Raj, CEO of Hyper Marketing, Inc., talks about consumer behavior in his recent book, Brand Rituals. A brand ritual defines the pinnacle actions that are a product of the people's attitudes, beliefs, and behaviors. Think about it ... What does it mean to Starbucks or Dunkin Donuts to have customers that make them part of a morning ritual? A ritual is more than a routine. It means that a customer will go out of their way for the brand. It means that they are an advocate of the brand. Zain highlights four progressions of enriched experiences that produce four stages of consumer mindful behavior. If you drive your target audience to the top of the four, you've created a brand ritual. The stages of enriched brand experiences move from current consumer behavior to a magnified interest, to modified attitudes and ultimately to a new behavior. The mindfulness that aligns with each of these stages is a customer transaction, attraction, connection, and bond, respectively.

You see, it is not as simple as just getting your product or service sold. That is not the end game. It is only the beginning of igniting your customers. In today's social world, this is extremely important. Consider that the cost of acquiring a new customer is usually estimated to be six or seven times the cost of retaining an existing customer. That should provide some motivation for brands to provide a deeper relationship with their customers. But let's drill down into your customer data a little bit more. Many use the Pareto Principle for their customer revenue breakdown. That is the top 20% of their customers generate 80% of the revenue. Thus, you want to change the behavior of the bottom 80% to be identical to your top 20%. But in our agency practice, we actually break it down one step further.

Typically we see that approximately 15% represent a brand's top spend customers. While they are your best customers, they are not the best group to focus on. Their brand spend is likely close to being tapped out. There is not much more to squeeze out of them. The next tier of spend customers (generally the next 15-20%) represent a brand's greatest opportunity. This group is likely to purchase heavy in the brand category, but not necessarily with your brand. This tier two spend group often purchases across different companies within the brand category. You should aspire to make this tier your best customers and focus on changing their behavior to drive the most significant revenue lift.

So how do you change customer behavior? It is all about the consumer experience. Stay engaged with your customer after their purchase. The evolution of digital technologies makes this more possible than ever before. At the same time, the digital world also makes it possible to disenchant customers if they think they are getting spammed or a brand over reaches the privilege of having their customer data. Yes, you need to respect the fact that a customer provides their contact information to you because they trust you. Do not abuse the privilege and lose the trust. Provide timely, periodic, and relevant information of value and/or entertainment. Appropriately timed, contextually relevant communication is key.

In his book, Delivering Happiness: Profits, Passion, and Purpose, Tony Hsieh, CEO of Zappos, talks about exceeding customer expectations. This is how you change customer behavior. But to exceed an expectation, you first need to understand an expectation. And how might you actually understand what your customers expect and aspire to have. Quite simple: Listen and engage.

And this is where social media powers behavior change. Get to know the LCR Mentality of social media: Listen, have Conversations, build Relationships.

LISTEN: Know your target audience and find the existing places and communities where they are talking, tweeting, blogging, commenting, etc. Spend some time there and just LISTEN to what they value and need. Understand the way they talk and their vernacular. In order to change behavior you must understand your audience's existing wants, needs, motivations, and behavior.

CONVERSATIONS: Once you have gained a solid understanding of your target audience and how they socialize in the various forums and communities, start to engage in the conversation. Remember, don't sell. This should be more of a friendly conversation or networking nature. Let these conversations lead and influence your offer to have a competitive differentiation that directly addresses the target audience aspirations.

RELATIONSHIPS: Continue conversations and work on building trusted relationships. Trust is established by having good rapport and delivering value. While you are delivering value to a target audience group, work to establish relationships one-on-one.

Social media is a key channel to change behavior and build rituals for your brand. Look at the psycho-demographic groups that are most likely to produce measurable results to your bottom line. Create an LCR mentality and consciously plan, and you will use a strong relationship to change mindful behavior.

Make It Happen!