More than just a buzzword, ‘being human’, especially in brand-building and leveraging customer relationships, has become a buzz-phrase or buzz-concept. The ‘human’ factor, in marketing, communications, positioning, and experience creation through sales, service, and operations now pervades titles of articles, blogs, white papers, and even books. But, there is little that is really new or trailblazing in this idea. To understand customers, the effective enterprise needs to think in human, emotional terms. To make the brand or company more attractive, and have more impact on customer decision-making, there must be an emphasis on creating more perceived value and more personalization. Much of this is, culturally, operationally, and from a communications perspective, is what we have been describing as “inside-out advocacy” for years.
Most brands and corporations slide by on fairly macro, passive, and transactional approaches to customer relationships. These might include customer service speed, occasional price promotions, merchandising gimmicks, new product offerings, and the like. In most instances, the customers see no proaction, brand ‘personality’ or brand-to-brand differentiation; and their experience of the brand is one-dimensional, easily capable of replacement. Moreover, the customer has no personal investment in choosing, and staying with, one brand or supplier over another.
Worse, it can sometimes feel like ‘the enterprise culture’ as we know it has lost its way with stakeholders, especially with regard to being purpose-driven and trust-based. In their recent book, Conscious Capitalism, authors Raj Sisodia and John Mackey (Co-CEO of Whole Foods Market) observed: “…many corporations seem to exist primarily to maximize the compensation of their executives and secondarily to create shareholder value, rather than to optimize sustained value creation for all stakeholders.”
A key opportunity for companies to become stronger, more trusted, and more viable to customers is creation of branded experiences. Beyond simply selling a product or service, these ‘experiential brands’ connect with their customers. They understand that delivering on the tangible and functional elements of value are just table stakes, and that really connecting, and having an emotionally-based relationship, with customers is the key to leveraging loyalty and advocacy behavior.
These companies are also invariably quite disciplined and proactive. Every aspect of a company’s offering — customer service, advertising, packaging, billing, products, etc. — are all thought out for consistency. They market, and create experiences, within the branded vision. IKEA might get away with selling super-expensive furniture, but they don’t. Starbucks might make more money selling Pepsi, but they don’t. Every function that delivers experience is ‘closed-loop’ and 360 degree, carefully maintaining a balance between customer expectations and what is actually executed.
In his 2010 book, Marketing 3.0: From Products to Customers to the Human Spirit, noted marketing scholar Philip Kotler recognized that the new model for organizations was to treat customers not as mere consumers but as the complex, multi-dimensional human beings that they are. Customers, in turn, have been choosing companies and products that satisfy deeper needs for participation, creativity, community, and idealism.
This sea change is why, according to Kotler, the future of marketing will be in creating products, services, and company cultures that inspire, include, and reflect the values of target customers. It also means that every transaction and touchpoint interaction, and the long-term relationship, needed to carry forward the organization’s unique character, must be a reflection of the perceived value represented to the customer.
Kotler picked up a theme that was articulated in the 2007 book, Firms of Endearment. Authors Jagdish Sheth, Raj Sisodia, and Daniel B. Wolfe labeled such organizations “humanistic” companies, i.e. those which seek to maximize their value to each group of stakeholders, not just to shareholders. As they stated, right up front (Chapter 1, page 4):
“What we call a humanistic company is run in such a way that its stakeholders—customers, employees, suppliers, business partners, society, and many investors—develop an emotional connection with it, an affectionate regard not unlike the way many people feel about their favorite sports teams. Humanistic companies—or firms of endearment (FoEs)—seek to maximize their value to society as a whole, not just to their shareholders. They are the ultimate value creators: They create emotional value, experiential value, social value, and of course, financial value. People who interact with such companies feel safe, secure, and pleased in their dealings. They enjoy working with or for the company, buying from it, investing in it, and having it as a neighbor”.
For these authors, a truly great company is one that makes the world a better place because it exists. It’s as simple as that. In the book, they have identified about 30 companies, from multiple industries, that met their criteria. They included CarMax, BMW, Costco, Harley-Davidson, IKEA, JetBlue, Johnson & Johnson, New Balance, Patagonia, Timberland, Trader Joe’s, UPS, Wegmans, and Southwest Airlines. Had the book been written a bit later, it’s likely that Zappos would have made their list as well.
The authors compared financial performance of their selections with the 11 public companies identified by Jim Collins in Good to Great as superior in terms of investor return over an extended period of time. Here’s what Sheth and his colleagues learned:
• Over a 10 year horizon, their selected companies outperformed the Good to Great companies by 1,028 percent to 331 percent (a 3.1 to 1 ratio)
• Over five years, their selected companies outperformed the Good to Great companies by 128 percent to 77 percent (a 1.7 to 1 ratio)
Just on the basis of comparison to the S & P 500, the public companies singled out by Firms of Endearment returned 1,026 percent for investors over the 10 years ending June 30, 2006, compared to 122 percent for the S & P 500, more than an 8 to 1 ratio. Over 5 years, it was even higher—128 percent compared to 13 percent, about a 10 to 1 ratio.
Bottom line: Being human is good for the balance sheet as well as stakeholders. As Southwest Airlines founder Herb Kelleher has observed “A humanistic approach to business can pay handsome dividends, even in a somewhat benighted industry like air passenger service.”
Exemplars of branded customer experience also understand that there is a ‘journey’ for customers in relationships with preferred companies. It begins with awareness, how the brand is introduced, i.e. the promise. Then, promise and created expectations must at least equal – and, ideally, exceed – real-world touch point results (such as through service), initially and sustained over time, with a minimum of disappointment.
As noted, there is a strong recognition that customer service is especially important in the branded experience. Service is one of the few times that companies will directly interact with their customers. This interaction helps the company understand customers’ needs while, at the same time, shaping customers’ overall perception of the company and influencing both downstream communication and future purchase.
And, branding the customer experience requires that the brand’s image, its personality if you will, is sustained and reinforced in communications and in every point of contact. Advanced companies map and plan this out, recognizing that experiences are actually a form of branding architecture, brought to life through excellent engineering. Companies need to focus on the touchpoints which are most influential.
Also, how much influence do your employees have on customer value perceptions and loyalty behavior through their day-to-day interactions? All employees, whether they are customer-facing or not, are the key common denominator in delivering optimized branded customer experiences. Making the experience for customers positive and attractive at each point where the company interacts with them requires an in-depth understanding of both customer needs and what the company currently does to achieve that goal, particularly through the employees. That means that companies must fully comprehend, and leverage, the impact employees have on customer behavior.
So, is your company ‘human’? Does it focus on providing stakeholder benefit? Does it understand customers, and their individual journeys? Are customer experiences ‘human’ and branded? Is communication, and are marketing efforts, omni-channel, micro-segmented and even personalized? Does the company create an emotional, trust-based connection and relationships with customers, and with employees as well? If the answer to these questions is YES, then ‘being human’ becomes a reality, the value of which has been recognized for some time, and not merely a buzz-concept.
…was just posted: http://www.customerthink.com/blog/an_update_on_the_financial_value_of_being_human