Take 5: How to Build Customer Relationships That Last

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Once upon a time, companies sold products and services simply by stressing their benefits. But those days are long over. Now it’s all about getting customers engaged—and making sure they stay that way.

Here, Kellogg faculty share their best research and strategies for fostering the kinds of long-term relationships that help business thrive.

1. Tips for Authentic Customer Engagement

Rather than “pushing” customers towards products or brands, the best marketing “pulls” them in by telling stories and addressing their needs and interests.

“The motto for engagement marketing is, ‘Ask not how you can sell, but how you can help,’” says Mohan Sawhney, clinical professor of marketing. He offers tips for authentic customer engagement.

First, offer customers real value. Sawhney points to Valspar Paint, which sets itself apart from other paint sellers with an app that offers virtual one-on-one consultations with a professional color consultant, who creates a customized color scheme for each customer’s space.

Second, build a customer community by asking for opinions and insights and by bringing customers together in online social-sharing spaces.

Third, inspire customers, perhaps by sharing your brand’s vision or making your brand an agent of social impact—as Starbucks has done by releasing videos promoting fair-trade coffee.

Fourth, provide entertainment value. Brand-sponsored online games, for example, can help build customer engagement.

Finally, Sawhney says, keep the conversation going by being constantly engaged with customers—always innovating, responding to customer concerns as they arise, and nipping service problems in the bud via timely, tactful communication.

“You can’t expect customers to tune in only when you have a product to launch,” he says. “You need to have a constant presence.”

2. Do Social Media Posts Boost Sales?

It’s not news that many customers post on social media about their experiences with a brand. But how does the act of posting affect those customers’ actual purchasing behavior?

Professor emeritus of marketing Bobby Calder and colleagues sought to find out. They looked at a 2011 contest run by a Canadian loyalty program, the Air Miles Reward Program (AMRP), which offers consumers points for purchases at a range of stores and lets them redeem those points for merchandise, gift cards, or travel rewards. In turn, AMRP receives money from participating companies when customers use AMRP cards during a purchase at one of their stores.

The contest asked AMRP members to post on a social-media site, sharing what they would do if they won extra points. Of the nearly 8,000 members who participated, some posted short responses such as “blender,” while others wrote lengthier responses such as “have not seen my mother in several years and I want to get a ticket to visit her on her 80th birthday.”

The members who wrote longer responses used their AMRP membership more in the weeks after the contest. That behavior change, of course, meant more revenue for AMRP. Meanwhile, the fewer words participants used, the less likely they were to increase their subsequent AMRP use.

Calder and his team attribute this finding to the fact that members who wrote longer responses were probably thinking more about how the AMRP brand related to their goals or values.

“You are not trying to persuade people that a brand is valuable,” Calder says. “Instead, you are trying to make an experiential connection—so the brand becomes part of the consumer’s life in a way that connects with personal goals or values that are relevant to the individual.”

3. Want to Predict Behavior? Measure Engagement

To find out how effective it is to connect with people’s goals and values, Calder and colleagues conducted several experiments.

For example, they asked jazz-festival attendees about their experience, including whether the event “made me think of actually playing an instrument or singing myself.” The more connected attendees felt to the event, the more likely they were to say that they would either attend next year’s festival or go to another arts-related event.

In another experiment, the researchers showed participants advertisements during television shows. The more the viewer was connected and engaged with the show, the more he or she reported liking the ads within it.

What if your company isn’t up to putting on a festival or creating a TV show? It can still create actual or virtual experiences that consumers value. Oreo, for example, created a “popup door” shaped like a giant Oreo in New York City; passersby who opened it got to try new flavors of the cookie. This offered a fun way for cus­tomers to engage with a brand cen­tered around the expe­ri­ence of tak­ing a break from the hec­tic pace of life.

4. Finding Out Exactly What Customers Want

You can’t engage customers before knowing their expectations. And in today’s marketplace, those expectations are extremely high, particularly when it comes to customer service.

To assess the quality of their customer service, companies need to look beyond their own industry, to compare their offerings to the entire retail landscape. So says clinical associate professor of marketing Michal Maimaran, who, along with John Schroeder, wrote a guide for companies that want to get more value from innovation.”

For example, many customers are used to accessing services via an app (think Uber or GrubHub). And, no matter the industry, customers expect to find information and ask questions quickly and easily online, via company websites and social-media accounts. They assume, too, that customer-service hotlines will save them time by keeping a record of their personal information and past transactions. To stay competitive today, businesses need to ensure that their own customer service is similarly user-friendly.

But it’s not enough to know consumers’ general expectations. Companies must also discern what customers want from them in particular. A small lawn-care business, for example, might find that its customers care less about a robust social-media presence and more about being able to change appointment times outside business hours.

“As customer-service expectations across industries evolve, it is not a matter of ‘if’ but ‘when’ your industry will be impacted,” says Maimaran. “The leaders of the next five or ten years will be the ones who realize this first and act upon it.”

5. Creating an Experiential Connection with Customers

Ulta Beauty is an example of a company focused intensely on engaging with customers. And it has paid off: the company’s stock grew by more than 3,000 percent between 2009 and 2016.

Ulta Chief Merchandising and Marketing Officer David Kimbell discussed how the company has achieved its success in a conversation with Eric Leininger, a clinical professor of executive education.

It boils down, Kimbell says, to a single consumer insight: while the beauty industry has been set up to separate products by price and category, most consumers buy beauty products across price points, categories, and brands.

That realization has prompted Ulta to engage a wide customer base while also targeting specific consumer subsets. Key strategies include analytical customer relationship management capabilities; emails tailored to customer trends and interests; a high-quality magazine; and a consistent and engaging brand experience in-store.

“There is a segment of consumers that sees beauty as a joy: it’s fun, it’s a passion, it’s an escape,” Kimbell says. “By tailoring our experience in a way that helps this behavior come to life, we’ve been able to have success.”

This article first appeared in www.insight.kellogg.northwestern.edu

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