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Finding The Emotional Transaction Delivers Customer Engagement, Loyalty and Community

Submitted by Joshua-Michéle on December 5, 2008 – 6:49 pmView Comments

During a client meeting this week on creating an online community I was trying to understand what might motivate their customer to participate.  (Principle: think of your user first when getting into any social technology like blogs, wikis, social networks and communities.  More on that here).   The client’s response to my question essentially was, “they save money” – hardly a rallying cry.  This led me to a concept I have wanted to put in writing for some time now.

Every transaction has two components –one rational and one emotional.   If you win the rational component – you get a rational buyer.  If you win the emotional – you get loyalty and a shot at community.   Rational loyalty is an oxymoron.

For years the emphasis of business transactions (checking in to a hotel, resolving a customer service issue, buying a product) has been on the efficiency of the transaction.  Success is measured in time saved or dollars spent etc.  Yet each transaction contains an emotional component that eludes our traditional metrics.  Paying attention to the emotional component of each transaction (happiness, contentment, surprise, delight, insecurity) delivers the keys to the new kingdom; engagement, loyalty and community.   I am not talking about a generic notion of creating a “great customer experience.”   I am talking about understanding the specific emotional context in which the transaction is occurring and creating ways to emotionally connect with your customer.
Here are three stories of companies delivering on the emotional side of the transaction:
1. Zappos understands the emotional component of shopping for a personal item (in this case, shoes) online.   Will they fit?  Will I need to return it?  Will it be a hassle?   In other words, the emotional component at work here is insecurity or doubt.  They proactively address these with a free shipping and free return policy.   Then they take the emotional transaction to another level.  When you are a first-time buyer they automatically (and unbeknownst to you) upgrade your shipping to next day air.  Your shoes arrive the next day compliment of Zappos – your new best friend.   There are two pieces at work here.  First, the surprise of something welcome and unexpected.  More importantly – Zappos has done you a favor – and in the primordial social contract, favors bind people together in mutual reciprocity. Another tidbit on that here.

Insight: Consider how you might deliver a pleasant surprise of the unexpected.  Better yet, do your customers a favor.  They will owe you one.

2. The Fiskateers is an online community of what might appear to be scissor enthusiasts.  Scissor enthusiasts?  Well, yes and no… It turns out that many people who buy these high-end scissors are actually scrapbookers… They may buy the scissors for rational reasons of quality – but when it came to creating a community, Fiskars tapped into the passions these scissor owners had about scrapbooking.  They recruited four passionate users and asked them if they would form an ambassador program…  These ambassadors invited other members personally – each new member received an engraved pair of scissors with their name and their number in the community.   Fiskars had a goal of having 250 members in the first six months… They beat that goal in 48 hours.  They now have 5,000 members.   The Fiskateers have had a great affect on sales though they won’t say how much.
Fiskars delivers community by tapping into the shared passion of a small group of their customers – it isn’t about scissors, it is about scrapbooking and crafting.  They also gave their members a clear sense of belonging and exclusivity (custom scissors with your community identity engraved on them).

Insight: The emotional life of your customer is likely not about your product – but it may be about what they do with your product.   Build on that possibility. (For more on The Fiskateers see my video interview with Francois Gossieaux where he discusses it in more detail – or see this great case study from B.L. Ochman)

3. Ethnography is another powerful tool in reaching the emotional side of transactions.   This example of how ethnography had an impact on a hotel comes from INC magazine:

“…while the hotels had long offered packages to families, the ethnography revealed that children were essentially ignored at the hotels. Now, when families arrive, the front desk ignores the parents and checks in the kids. That tiny gesture has been wildly popular, building lots of goodwill — and promises of return visits. Thanks to these kinds of changes, leisure business is up some $500,000, Conklin says. Not a bad return on the $45,000 he spent on the ethnography.”

The rational transaction might be measured by how quickly I can be checked into the hotel (save you time, saves me money) but the winning solution is to check the kids in first.  Why?  Because if you make my kids happy you have made me happy.  “Goodwill” is earned through the emotional transaction.


Insight: look deeper into the minute interactions you are having with your customers and there are likely some small but powerful changes to the way you interact with them.

While we think of ourselves as rational creatures, new research is finding that emotions lie at the center of our memory and decision-making skills.  Recently, David Brooks gave a lecture at the Aspen Institute discussing the case of Elliot (minute six in video)  who, after a stroke lost the ability to feel emotion.  As a consequence he began making a series of terrible personal and business decisions (lost his wife and his business).  Without emotional cues he also lost the ability to remember events.  The punchline Brooks tells us is that emotions tell us what to remember, what to value and are the central organizing principle for thinking.   When you frame it this way you see clearly that getting to the emotional transaction is critical to building sustained, meaningful relationships with customers.

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  • Joshua-Michéle
    Kimberly - thanks for the thoughtful comment. On first review I really like the model. I will be checking out Allegiance.com now! One thing you imply but I would make explicit is that in an age of one-click shopping customers increasingly choose on price and are highly mobile. Building meaningful relationships insulates companies from that kind of churn.
  • Thanks for writing this post. I enjoyed reading it. I especially liked your comments on the fact that every transaction has two components—one rational and one emotional, as that is something that Allegiance has also found to be true in the work that we do with companies.

    Much like you, we have found that business often ignore customer attitudes and emotions, as most businesses still focus on the traditional axis of competition: Reasonable Quality, Reasonable Service, and Reasonable Price—which doesn’t really provide them with a complete customer relationship picture (nor take advantage of the opportunity to reduce their customer churn and improve their company’s financial performance).

    What many businesses are missing—really missing—is the higher level view of customer and employee engagement. First, engagement has a rational or intellectual component. Second, there is an emotional facet, which is exhibited as attitudinal attachment or as enthusiasm. And third, there is a behavioral factor (e.g. likelihood to recommend, etc.)

    For example, our customer loyalty and engagement experts have identified four emotional elements that are present in nearly every business relationship and that driver customer engagement. These drivers, which apply to nearly all industries, include: 1) Helpful service; 2) Feeling confident and informed; 3) Feeling valued; and 4) Feeling protected.
    These customer drivers are common to any business. But, how a customer values them varies by age, length of the customer relationship, and geography among many other variables.

    My point is that over time, businesses that make these types of emotional connections with their customers will engender a belief and feeling among their customers that their company genuinely cares about them. When that happens, the company's customers will develop a strong emotional bond with their company, and the end result will be totally engaged customers who not only identify with but also express themselves by the company's products and services they purchase and use.

    For this reason, fostering true loyalty and engagement with customers through emotional drivers can no longer be ignored—it has become an imperative in 21st century business. And new technologies, such as those offered by Allegiance, can not only provide today's companies with a complete picture of their customer and employee relationships, but can make all of the difference in helping business manage their customer and employee loyalty and engagement like the true business asset that they are.
  • admin
    Hastings - Thanks so much for the insightful comment.
    I am very much in agreement that these projects require a culture that:

    Supports entrepreneurs within the organization - no matter their title
    Encourages trial and error
    Actively seeks to learn from mistakes
    Seeks long-term relationships (with employees, customers and stakeholders)

    That being said - I don't often encounter that type of culture -- If you look at this article on the recent Automotive debacle you can see how GM promoted leadership from their finance group -- that gave them a leadership (and culture) that emphasized short-term thinking and short term shareholder gain. http://www.nytimes.com/2008/12...

    This mindset is endemic within organizations. Without going into too much detail I think that the economy is beginning to punish short term thinkers b/c the rate of change is increasing (think of media and publishing, open source software, open source hardware) which means the payoff from short-term strategies is now VERY limited.
  • So many business seem to be a bit autistic, but all three of these examples illustrate the ability to empathize with others. In this context, it's the ability of product and marketing managers to empathize with their customers.

    All these examples have the quality of obviousness, of making you go, "Well of COURSE that's a great strategy." But when you think about it, there was nothing obvious about any of these strategies. Two of these strategies (Zappos and Fiskars) have the feel of trial-and-error management, and the third was the result of $45,000 worth of research and analysis.

    For either the trial-and-error approach or the rigorous-planning approach to succeed requires a certain kind of corporate culture to be in place first, a culture that empowers middle managers, that controls departmental turf battles, and that rewards innovation -- in other words, a company with enlightened executives above the product and marketing managers.

    I bet that some middle managers will take the challenge of your three insights and come up with similarly brilliant strategies, only to see them fail because their corporate cultures don't support them. And I also bet that if you interviewed the C-level executives of these three companies, you'd find unusually effective leaders.
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