How to build an emotinal connection with your customers

How to Build an
Emotional Connection
with Customers
2010 Experience Tracker

Steven Walden, Senior Head of Research and Consulting
Kalina Janevska, Consultant, Business Psychologist

www.beyondphilosophy.com

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Beyond Philosophy

Customer Experience Thought leadership is Fourth book will
is all we do! our differentiator launch in Fall 2010

Offices in London,
Atlanta with Partners in Links with Focus on the emotional side
Europe & Asia Academia of the Customer Experience


We are Proud to Have Helped Some Great Organizations…


The Study Basics

• Methodology
• Quarterly online survey via
online panel

• Sample Characteristics
• 1015 respondents
• 50% USA; 50% UK

• Objective
• Understand the best way to
connect emotionally with
your clients and consumers


Stopping The Leaky Bucket

Keeping existing customers is less expensive than acquiring new ones. Reichheld and
Sasser (1990) state that a 5% improvement in customer retention can cause an increase in
profitability between 25% and 85% (in terms of net present value)


The Problem of Retention Confirmed
Beyond Philosophy Research and Accenture Research (2010)

Accenture study (2010) of
Percent of customers that have switched provider in the 3,556 consumers (auto, home
past 3 years
and life):
50%
53 percent are
considering switching to
Percent of insurance holders

40% 41%
a new insurance provider
39%
34% over the next year
30%
29% UK and German insurance
20%
customers have the least
20% ‘loyalty’ to their current
providers - 71 percent are
10%
8%
either not planning to
0%
purchase their insurance
with their provider or are
Overall Auto Home Employment Health Life
unsure and planning to
Source: Beyond Philosophy Experience Tracker Research Q2 2010 look around

This means lost revenue


Solution: Focus on Engaging the Right Customers


Why Segmentation?


Traditional vs. Emotional Segmentation
Segmentation Criteria Segmentation Criteria
Behaviour (switching) Emotion

Segments Defined: Segments Defined:
High Switchers Positives
Low Switchers Negatives

Defining Experience: Defining Experience:
Price Lovemarks

Outcome Outcome
Short-term Long-term

Weaknesses Weaknesses
False loyalty Overestimates risk
•Low switch because its •Picks up people who
convenient not because feel negative towards
its valued you but are not ready to
leave you


Value of Emotional View

Benefits of emotional engagement:
1. Herd instinct: enthused customers encourage other customers to come to them and people
stick with you in the hard times (e.g., SouthWest Airlines)
2. Brand Equity: a positive brand buzz adds to Goodwill (straight onto balance sheet) and brand
halo effects
3. Market Expansion: greater opportunities for diversification (Virgin effect)
4. Staff enthusiasm: benefits to corporate culture that enables differentiation
5. Emotions drive behaviour: it is emotion that drives behaviour! So focus on emotional drivers


Imprinting Lovemarks in your Customer Experience

Brands are running out of juice". Love is
what is needed to rescue brands. Roberts
asks, "What builds Loyalty that goes
Beyond Reason? What makes a truly
great love stand out?”
Kevin Roberts, CEO Saatchi and Saatchi


Done in Brand why not in Experience?

“Kevin, we want you to turn Toyota into
the most loved automobile corporation
from the most respected one it is today.”
So we helped them to modify their
advertisement style.

We helped them distance themselves
from the image of the car on the road to
the image of the driver behind the wheel
of a Toyota car. We added a human
touch to their advertisement.


What Did We Want to Find Out?
Can we understand switching behaviour?
Emotional Signature®
Traditionally
way

Group good behaviour and Group good feelings and
compare to bad behaviour compare to bad feelings

Low High
Lovers Detractors
Switchers Switchers

Similar Similar
Too many Too many
pattern of Only 8% pattern of
different overlap different
decision decision
patterns patterns
making making


What is the Conclusion?

Understand the limitations of traditional
segmentation: I can be loyal but not feel
loyal

Focus on both “High Switchers” and
“Lovers” to understand better your
customers: they explain switching
behaviour

Identify the lovemarks in each group: these
drive action and behaviour

Design your experience around the
differentiated needs/ lovemarks of your
customers


Glass Half-Full Economics


A Different Point of View

How can I make an emotional connection, not just
what can I get out of this now


…like the advertising…
…my insurance provider would go …knowledgeable…
the extra mile for me… …helpful…
…educates me on how to avoid …cares about me…
risk/stay safe… ..communicates
information to me
Agent/ clearly…
Broker

Experience
Extensions
Website
Insurance
…bill easy to
understand…
Experience
…application process…
…easy to use…
…plan is clear to me…
…helpful…
..renewal process
easy……
Ease of
Process
Call Centre

…call centre advisors are
knowledgeable…
…can easily contact…
…call centre advisor is
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Employment Insurance Resource Allocation
Experience
Lovemarks
Opportunity Lovers Switchers

32% of Market are Positives driving 60% Tenure value

While Agent and Call Centre experiences need to be controlled as these drive switching, what
actually attracts customers and reduces switching is Experience Extensions amongst
Positives and Easy amongst High Switchers

Source: Beyond Philosophy Experience Tracker Research Q2 2010


Simple Example: Employment Insurance

No loyalty incentive or marketing literature sent. Customers are treated
as a direct debit transaction
The vicarious, media experience is underestimated


Auto-Insurance Resource Allocation
Experience
Lovemarks

While Call Centre and Website experiences need to be controlled as these drive switching,
what actually attracts customers and reduces switching is Experience Extensions amongst
Positives and Easy amongst High Switchers



Simple Example: Auto Insurance
Desire for Review Media Phone Discuss
Cover 1
Ads/ Offers 2
Companies 3
Requirements 4
1 Year +
Completion on Receive Payment (DD, Renewal
Phone 5
Certificate 6
Check) 7 8

Propensity to Switch is reduced by injecting experience clues: moments
of delight (going the extra mile), advertising and education.


Life Insurance Resource Allocation
Experience
Lovemarks

While Call Centre and Website experiences need to be controlled as these drive switching,
what actually attracts customers and reduces switching is Agent amongst Positives and Easy
amongst High Switchers



Home Insurance Resource Allocation
Experience
Lovemarks

While Website and Agent experiences need to be controlled as these drive switching, what
actually attracts customers and reduces switching is Experience Extension amongst Positives
and Call Centre amongst High Switchers



Health Insurance Resource Allocation
Experience
Lovemarks

While Experience Extension and Website experiences need to be controlled as these drive
switching, what actually attracts customers and reduces switching is Call Centre amongst
Positives and Agent amongst High Switchers



Summary Recommendations

Recognize that your customers are different and want different things
Recognize different customers’ take into consideration different aspects
of the experience when deciding whether to switch or not
Customers who feel positively emotionally engaged with their insurance
provider have the same mindset and perception of your experience that
is different to customers that intend to switch
To make that emotional connection with your customers, you need to
identify their lovemarks
Employment Auto Life Home Health
Lovers Switchers Lovers Switchers Lovers Switchers Lovers Switchers Lovers Switchers
Easy
Website
Agent
Call Centre
Experience Extensions

Segment emotionally and identify your “Lovers”
Develop a lovemarks experience


Further Conversation? Contact us...

steven.walden@beyondphilosophy.com
kalina.janevska@beyondphilosophy.com

London Office: 0207 917 1717
Atlanta Office: 1 678 638 6162


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