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Customer Experience, Emotions and the Recession 

John Todor | Feb 10, 2009 877 views 10 Comments

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There seems to be a tacit assumption that when budgets get tight customers are attracted to discounts and lower prices. I have argued elsewhere that when people focus on price they tend to become more indifferent to the brand, the company and the experience. The net result is they are less committed or loyal.

In just completed research (soon to be published in the Journal of Positive Psychology), psychologist Ryan Howell makes an interesting point. People get more happiness or positive emotions from experiences than from things. People get a feeling of invigoration or inspiration form experiences that yields more positive emotional memories, sort of a return on investment.

Also, a positive emotional response is not tied to how much you spend; it is related to the experience itself.

Howell says that it is not that material things don’t being any happiness. It is that they don’t bring as much. He says you might be happy with a new TV but you get thrilled with a vacation.

My view is that you might be happy at the moment you buy a new TV but that is not related to the material item, rather to anticipation of using it. Take it a step further, if you buy a new TV and never plug it in, how happy does that make you?

What’s the take away from this post? Even it a recession when budgets are tight, people are attracted to positive emotional experiences. They will scrimp on things of less emotional value to be able to splurge on experience that up lift their spirits. They get an emotional ROI and this is remembered.

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10 Responses to Customer Experience, Emotions and the Recession

  1. Andrew Rudin February 12, 2009 at 4:17 pm (861 comments) #

    In the factory we make cosmetics; in the drugstore we sell hope.

  2. John Todor February 13, 2009 at 9:43 am (199 comments) #

    Andy,

    I like it. Here is the way Kjell Nordstrom puts it.

    “Sushi is just cold, dead fish, but that isn’t what the customer buys or how it should be marketed. The question must be why so many companies still persist in selling cold, dead fish to customers who are much more interested in sushi.”

    John

    John I. Todor, Ph.D.

  3. Graham Hill February 13, 2009 at 3:47 pm (992 comments) #

    Hi John

    Sounds like Needs Theory to me.

    I assume that the experiences that Dr Howell talks about satisfy higher order needs such as esteem, belonging or self-actialisation to use a Maslowian categorisation.

    I note in the write-up on Dr Howell’s research that he asked respondants to think of previous purchases and their associated happiness, rather than to make a conjoint A or B decision about future purchases. Knowing how long it takes to get thing in print in academic journals, I wonder whether his research took place in a pre-recession period, If it did, I am not sure its findings are generalisable at a time when everybody is measurably cutting back on the quantity and quality of product, service and experience purchases.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

  4. John Todor February 13, 2009 at 7:33 pm (199 comments) #

    Hi Graham,

    People are cutting back on spending, no doubt, but they haven’t stopped spending completely. Yahoo did some interesting research on search patterns and terms leading up to Valentines Day and found both sexes where looking for help with gifts they could make. There are reports that more people are cooking at home rather than dining out, and finding renewed enjoyment in the process.

    As I recall from one of your emails, you were participating in some Kohl festival, I am sure that involved some expenditure on food and beverage. Most likely, you scrimped elsewhere.

    John

    John I. Todor, Ph.D.

  5. Graham Hill February 14, 2009 at 9:27 am (992 comments) #

    Hi John

    I think you are right.

    Customers are spending demonstrably less, but they haven’t stopped spending. Most research suggests that customers’ needs haven’t changed, but the solutions they hire to meet them have. Some customers are trading down, e.g. eating cheaper cuts of meat rather than prime filet, and some customers are delaying spending. As this frugality is new to customers, I would expect them to have to think more about their decisions and to seek help, e.g. how to cut cheaper cuts of meat so that they are tender. All this means that CRMers should strive to understand customers’ needs and then innovate around better, cheaper and disruptive solutions to meet them. Just as you suggested in your response to Connie Hill’s interesting article on Calculating Marketing Automation’s ROI.

    The challenge for many CRMers is that they are not used to innovating. That may strike some readers as strange. CRMers are used to inventing stuff instead of innovating. They are used to having great ideas and then rolling them out to the market with a marketing fanfare. Many of these, indeed, 60-80% of these ideas fail in the market as they don’t meet customers needs. Innovation starts with a thorough understanding of customers’ needs (through the jobs they are trying to do and their desired outcomes) and then innovates around meeting them. Particularly customers unmet needs. This is all rather new to many CRMers.

    Why not join the Customer Driven Innovation groups I have founded on LinkedIn and Facebook to share your thoughts on this topic further.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

  6. Firozali A. Mulla February 20, 2009 at 6:30 am (37 comments) #

    Customer Experience, Emotions and the Recession.
    I think it is better to have the reduced sum in the packet then no pay. I feel that in the recession we have many problems that are panics and real. We forget what the reality is as we are social animals first then the Almighty’s creation. Honest. We have the blessings but if the neighbour tell us of the low income all round, no dividends, bank tighten the loans, we start the boggling the mind we have never ourselves witnessed. This is the worst and there is nothing we can do. We then may pass these on to any as we are swimming in this whirlpool and seeing many things drown. These are the facts. The period we need to strengthen our beliefs and think up wisely and not to lose the guts.
    I thank you.
    Firozali A Mulla MBA PhD
    P.O.Box 6044
    Dar-Es-Salaam
    Tanzania
    East Africa

  7. John Todor February 21, 2009 at 1:03 pm (199 comments) #

    Firozali,

    Thanks for your comment. It reminded me of the speech the CEO of Wells Fargo bank made recently. He said people feel things are out of their control and this leads to fear and uncertainty. It has created a crisis of confidence.

    What is the answer? Leadership and a take charge attitude. Not just leadership from people like Obama but from companies and consumers. Ask, what can I do to improve my situation or the situation of my customers. Then act accordingly.

    Valentines Day is a day for giving gifts to loved ones. Well this year Yahoo saw a sharp spike in searchs for gifts you can make. There was also a spike in blogs talking about the inherent pleasure in being creative and making something. This is a form of taking charge and taking control. You might still be poor finanacially but richer emotionally.

    John

    John I. Todor, Ph.D.

  8. Firozali A. Mulla February 22, 2009 at 4:26 am (37 comments) #

    John
    I just dug this up and wanted to share this with you. This is what we had and what we have. This leaves the employees in the pipeline what I call, “Work in progress” as they wait for the pink slips
    In the world that was and in the worlds that is to come, we will never see the equality as we want to. Why do we need equality anyway? The years you talk of had love with money and responsibly. Now we have more crooks then the real people. In 1987 just 38.1% of issuers in the American bond market were rated as speculative, or “junk”. In 2007 junk-bond issuers made up most of the market for the first time. The number of lowly-rated CCC issuers has almost tripled over the past 21 years. The intellectual fashion has been for companies to have “efficient” balance-sheets. If cash is not immediately needed to reinvest in the business, it should be handed back to shareholders, who can use it more profitably elsewhere. Hoarding cash for a rainy day was seen as a failure of executive imagination. You said this. We have thugs in the top seats.
    Firozali A Mulla MBA PhD
    P.O.Box 6044
    Dar-Es-Salaam
    Tanzania
    East Africa

  9. Firozali A. Mulla February 22, 2009 at 4:42 am (37 comments) #

    John
    In today’s turbulent, often chaotic, environment, commercial success depends on employees using their full talents. Yet in spite of the myriad of available theories and practices, managers often view motivation as something of a mystery. In part this is because individuals are motivated by different things and in different ways.
    In addition, these are times when delayering and the flattening of hierarchies can create insecurity and lower staff morale. Moreover, more staff than ever before are working part time or on limited-term contracts, and these employees are often especially hard to motivate.
    Now let us look at the above factor. Why is it that we change in the turbulent times and are very different in peaceful or cash filled times? In the times of plenty, we have no worries and we can think of giving back to the employees. Now, I do not want to look as if I am pessimist, but this comes from many students, the employers have forgotten the motivating factor to be handed to the employees. This may even include a small greeting on his wedding day when the practice was in the database and off went the mail, on the day. Do we have the time:
    for achieve goals;
    gain a positive perspective;
    create the power to change;
    build self-esteem and capability,
    manage their own development and help others with theirs.
    I thank you
    Firozali A Mulla MBA PhD
    P.O.Box 6044
    Dar-Es-Salaam
    Tanzania
    East Africa

  10. Firozali A. Mulla February 22, 2009 at 12:23 pm (37 comments) #

    John
    I read further on the small business where the employees get hurt most.
    Barter Fits the Bill for Strapped Firms
    more in Small Business »
    Small businesses, squeezed for cash and unable to get loans, are turning to an ancient payment system: barter.
    Daniel Blank, creative director at Bureau Blank Inc., a New York graphic-design and brand-identity company, first used bartering when he started the company in 2004, because it was hard to get capital for a start-up. But he hadn’t had to barter since then, until now.
    For the past couple of months, Mr. Blank has been getting advice on running his business from Joe Hunt, a former ad-agency owner who has started Workforce Enterprises LLC, a document-solutions company in New York. For about two hours each week, Mr. Hunt helps Bureau Blank with its accounting and finance operations, among other things.
    Specialty Moving & Delivery
    Eddie Bolch, foreground, sometimes barters his company’s moving services.
    In return, Bureau Blank is helping Mr. Hunt shape his company’s communications strategy, as well as designing the company’s logo and Web site.
    “It’s a result of the economy being a lot tougher now,” says Mr. Blank, who estimates the traded work amounts to about $10,000 worth of services.
    He adds: “I wouldn’t have done the project if I had to pay the cash.”
    As small businesses find it impossible to borrow money and customers are slower to pay bills, the barter economy is becoming a crucial way for many companies to find the cash they need to keep operating.
    “It’s really of value to small businesses because it helps them to survive through the recession,” says Carmen Bianchi, director of the Entrepreneurial Management Center Business Forum and adjunct professor of family business management at San Diego State University.
    Atlanta Refrigeration Service Co. worked out a deal with a local sandwich shop that was 90 days overdue on a $1,500 bill: The sandwich shop paid $500 and agreed to cater lunch to Atlanta Refrigeration’s office five times over the next six months.
    You see this is what I mean. The huge corporation have the buffer but the small ones get the hammers and the employees get shattered totally. And these are the future growth business nipped in the slow economy.
    Firozali A Mulla MBA PhD
    P.O.Box 6044
    Dar-Es-Salaam
    Tanzania
    East Africa

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