Emotional customer connections create more value
Various forces have combined to change the marketing landscape in recent years, including the worst recession since the 1930s, a lack of consumer credit, salary constraints, unemployment, economic uncertainty, increased competition between brands, and new media and technologies that allow consumers to compare and discuss brands. So where can real competitive advantages be found?
The answer, according to Black Sun, lies in making the most of your company's biggest asset: its customers. The time has come to invest in building stronger, longer-lasting customer relationships, thereby maximising the value of each customer.
In practical marketing terms, this of course means identifying, retaining, and nurturing your most valuable customers, and reducing the cost of serving your least profitable customers.
According to Black Sun's director of customer optimisation, Richard Dixon, "With CRM programmes morphing into technologies, projects, and loyalty programmes that are all too often focused on promotions and points for prizes, the concept of 'customer optimisation' focuses on building value by gathering insights that help you understand the needs of your most valuable customers."
Customer optimisation involves using all of these insights to create a compelling proposition that wins their hearts and minds, and allows the marketer to deliver personalised communications that engender more profitable behaviour.
One of the secrets of successful customer optimisation is to build an emotional connection with the customer. Often, brands address only the rational side of the customer relationship (e.g. service, quality and price), but the emotional connection is just as important.
In a Mori study commissioned by Black Sun, consumers described an emotional connection as "feeling good about a brand". This connection, they said, tends to be developed when a brand "shares its values", "communicates with them in a relevant way" and "makes them feel valued as a customer".
The effects of creating an emotional connection are significant, according to the study, which found that emotionally engaged customers are:
- At least three times more likely to recommend;
- Three times more likely to re-purchase;
- Less likely to shop around (44% said they rarely or never shop around);
- Much less price sensitive (33% said they would need a discount of over 20% before they would defect).
These results were similar across all sectors, from travel through to financial services. Dixon concluded: "Brands need to develop a customer optimisation strategy to compete successfully in this new marketplace and to make the most of their biggest asset: their customers."