OPINION23 October 2013

Working relationships


Companies understand the meaning of “relationships”, but rarely consider what it takes to make their audiences’ needs a priority, says Insight Consulting Group founder Mark Ingwer.


Many companies talk about the need to establish strong “relationships” with their customers. Some compile complex customer relationship management algorithms to develop and maintain these relationships. And, these companies rightly recognise that the transactional interactions of the past are ineffective in creating loyal customers.

The concept of customer relationships makes sense in the context of meeting personal needs. As in all interpersonal relationships – from friendships, to marriage, to company and client – trust and the promise of mutual benefits are the foundation for growth and development. When we put others’ needs first in relationships, we’re more likely to make those relationships work.

Emotional needs not yet a business priority
After decades of formally documenting the stages of business-customer relationships, we’ve learned that many companies become complacent in their endeavour to understand, satisfy and embrace the emotional needs of consumers. Companies understand the meaning of “relationships”, but rarely consider what it takes to make their audiences’ needs a priority. They seemingly cross their fingers, hoping that what brought customers to their company will cause them to be loyal. Just as in most human romantic relationships, business-to-consumer relationships fall apart when one party (the business) fails to track the evolving needs of the partner (the consumer). The challenge of sustaining long-term value pushes businesses toward considering short-term relationships as the easiest route to profits.

“Companies understand the meaning of ‘relationships’, but rarely consider what it takes to make their audiences’ needs a priority”

Indeed, if a department attracts new customers, it wins the lion’s share of the marketing budget, but it is well documented that it costs some companies five to ten times more to attract new customers than to retain an existing one. On the other hand, if companies sustain relationships with existing customers, a mere five percent decrease in annual defections can lead to a 25% to 125% rise in profits. Another way of crystallising these figures lies in a social reality of the internet era. When we are satisfied with a product or service, we may tell three friends, but when we are dissatisfied, we’re inclined to tell (or tweet) it to three thousand.

Even when brands claim to desire lifetime relationships with customers, many tactically distance themselves from the humanity of their interactions. The systemic nature of marketing strategy depersonalises their audience by using language that groups customers into segments and targets. People are commonly referred to as “buyers,” “shoppers,” “payers,” “non-responders,” “early adopters,” and “eyeballs.” What is too often lost is the nuance – human.

The routine marketing logic follows a self-sustaining strategy: measure category and purchasing behaviours, shoot a creative mix of emotionally salient messages and rational pleas at the targets, place all bets on marketing science, and presume the targets can’t help but consume. But if we truly view consumers through the lens of relationship dynamics, we’ll learn that, whether we are working, shopping, or engaging with friends and family, our psychological needs are a constant driving force. Understanding and putting this into practice strategically will eliminate the artificial two-way mirror between daily life experiences and the ways businesses communicate.

The powerful role of trust
Customer relationships, like interpersonal relationships, are built on trust. And if trust is lost, the relationship is lost as well. Marketing scholars Jennifer Aaker and Susan Fournier reveal how closely business relationships and interpersonal relationships mirrored each other in an Internet-based psychology test. Over a two-month period, the researchers measured the evolving strength of their relationship with customers as they were introduced to an online film processing and digital library business. The participants were told they had been selected for a pilot program before the business was to be opened to the public. They were told to take pictures and use the website’s services at their pleasure, evaluating the experience along the way. Some participants interacted with a version of the website that used exciting, amped-up marketing language. Other participants engaged with a company that was more down to earth, personalised, and directed at forging a sincere dialogue.

The sincere company
Aaker and Fournier found that relationships with the “exciting” company had the trajectory of a short-term fling, while those involved with the “sincere” company developed a relationship that deepened over time. The sincere, relationship-oriented business had raised consumer expectations of the service quality and built loyalty to the website. If the company delivers as promised, there is no question that the personal touch will keep customers invested in the experience for a long period of time.

“Businesses must re-establish the emotional trust that is destroyed when they transgress, be committed to following through on promises, and be prepared to stand by that attitude when crisis strikes”

Yet there is one caveat to the research that speaks to the irony and complexity of consumer decision-making. When the researchers imposed an unexpected service failure within the experiment – e.g., “Sorry, but we lost all your film!” – relationships with the users interacting with the sincere business were harmed the most. Why? Because when a business promotes itself as an earnest entity that truly cares about its customers, and then fails to deliver on those expectations, it does more harm than simply not delivering. “Trust is much heralded in marketing, but it has a downside,” said Aaker in an interview for Stanford Graduate School of Business News. “What needs to be understood and managed are the contracts, norms and rules that underlie the relationship between a consumer and brand, and how a brand’s actions fit or violate those norms.”

Businesses must re-establish the emotional trust that is destroyed when they transgress, be committed to following through on promises, and be prepared to stand by that attitude when crisis strikes. In the days following the British Petroleum (BP) oil spill, how many times did we hear executives tell the public not to worry? While chief executive officer Tony Hayward haplessly expressed how much he’d “like his life back”, BP was writing a 187-page legal report that pointed fingers at third-party contractors, tacking an asterisk to every apology. Perhaps they should have known that what won’t work with a friend or loved one won’t work for an angry public either.

The deceit of satisfaction
On the surface, one might think that meeting needs is purely about satisfying the consumer. It’s hard to deny that sentiment but what needs to be done is a realigning of the definition of satisfaction with what makes us deeply satisfied. Of course, companies are trying to interpret and meet emotional needs but it is questionable whether traditional consumer research methodology is capable of measuring true need satisfaction. Consider these two points:

  • Roughly 80% to 90% of new products and services fail or drastically fall short of sales expectations in their first year.
  • Customer satisfaction is used by 90% of companies as a benchmark for success. Overwhelmingly, most companies report that their customers like their products just fine.

What’s at play with this apparent contradiction? One reading of the product failure data is that there are too many products in the marketplace. And, in most cases of failure, advertising and marketing efforts aren’t successfully connecting emotionally with consumers. But the customer satisfaction benchmark is confounding. If everyone says they are satisfied, why do most new products fail?

Surveys fail to predict repurchase
As it turns out, positive consumer satisfaction surveys are neither a predictor of repurchase nor an indicator of whether emotional needs are met. Most companies go only so far as to ask whether their clientele is satisfied with their “experience” – most customers say “yes”. The marketers congratulate themselves, only to find later that the same ‘satisfied customers’ went elsewhere the next go-round.

Again, the mental process that occurs during a customer satisfaction survey is typically a rationalisation of past experience. The brain quickly evaluates the individual’s expectations of the product, and if they were in the ballpark, the product is checked “satisfactory”. A one-time purchaser of an electronics brand may never tell a researcher: “It worked well enough. I was satisfied. But the design and overall feel just didn’t enhance my deep-seated feelings of identity and autonomy.” The consumer may have appreciated the product, but if his or her unarticulated emotional needs went unmet, the appreciation means virtually nothing for a business trying to form a base of loyal buyers.

This is a problem for businesses using a logical, traditional process to study the emotional issue of satisfaction. If a business is going to learn about an emotional issue, it needs to study the issue with a method sensitive to emotion. At the end of the day, businesses must see their customers as individuals who are always striving for a healthy sense of self-identity.

Mark Ingwer, Ph.D., (B.S/ Psychology) is the author of ‘Empathetic Marketing: How to Satisfy the Six Core Emotional Needs of Your Customers’, a business psychologist and founder of Insight Consulting Group.