Monthly Archives: November 2007

Earning the Affinity of Your Consumers

Some years ago I came across an excellent paper by Juan Pablo Valencia and Taryn Westberg at the London Business School, where extensive investigations were conducted into how experiences people have with brands influence their perception of it and how best to generate value from Brands through experiences.

Their paper (Experience and the Brand) discusses this in elaborate detail, which makes for some interesting reading in itself and one of their conclusions is to use a consumer affinity pyramid where you place your consumers based on the level of their affinity for your company. The people who love your brand are at the top and those who hate you are the very bottom. Interestingly people at different levels of the pyramid have specific consumption patterns, thus generating different revenue for the company. Moreover, as they move to higher segments the bring more value in the following ways:

  • Higher consumption rate and repeat usage
  • More willingness to pay price premiums
  • Longer relationship with the brand (decreased churn)
  • Word of mouth/brand ambassadorship
  • Community Effects

There are alternative models to the one just described. For example, brand impact can be evaluated by calculating the advertising and PR expenditure that would be needed to get the same results in terms of changes in customer behaviour. The concept is simpler, but can only be used for comparative purposes. Alternatively, if customers can be tracked through CRM or other means, then the actual impact on sales can be measured. Sales impact can then be used to determine effectiveness with an ROI model.

So then we get to the interesting part. If this is indeed the case – the big question then becomes: how do you influence people’s movement upwards in the pyramid? What creates higher levels of affinity in consumers? Is it a fancy marketing campaign? Is it friendly staff? Is it the ability to customise your own products? Well, as far as I can tell – it is not that simple. Despite the transformative power of experiences (as extolled in the paper), consumer affinity is made up of a range of factors, if one is to consider affinity from a long-term perspective, where it can truly have an impact on the company and its sustainability. Ultimately there is no gimmick solution to this problem, but in fact it is one that demands a profound re-evaluation of the company as a whole, what it is, what it stands for and how it treats its supporters: the consumers.

Broadly speaking we know that higher levels of affinity means people have a deeper emotional bond with a company. Experiences that are meaningful have a capacity to create an emotional bond by virtue of our participation in them, which moves us from objective observers into being active participants. If the experience we participate in is a positive one, or even transformative, our affinity will be higher than it would be if say, we just heard about it from someone else. That means we care more.

We care about the product and the company, we worry when things are not going well, we get more disappointed than average consumers if we are let down and we are also more willing to personally contribute to the company with content, ideas or even help our fellow consumers with advice and ideas. So with this in mind, the responsibility of companies is huge in making sure to respect and value every single last contact with its consumers and not consciously and repeatedly fail its most staunch supporters. That is a radically different approach than merely keeping a bunch of shareholders and investors happy. It’s about ensuring every one is happy and consumers first and foremost. So can that even be possible I hear you asking?

Why not? The rate of change in technology, software, CRM and the growing number of online contacts a company receives, it should no longer be impossible to consolidate all these connections into user profiles that can be used, not for endless marketing campaigns and bombarding users with offers, but as a means of going back to basics: of listening and anticipating and respecting, being deserving of that emotional bond people have with you. And for that, you as a company have to behave more like a trusted reliable friend that some faceless bully in the playground that sometimes has a great offer to tempt you with and next minute leaves you in some quagmire of call-centre hell and bad service. The question is as a company: are you worthy of your consumers’ affinity?

Visions of the Future: Understanding Trends

Back to that time of the year again, I’m busy collaborating with people across the company and externally to pull together insights and inspire a new bout of business development for next year. It’s a fascinating subject, mapping the competitive landscape around any company, because some things you can control and knowing about them in advance will really help and other things, well, they just happen and sooner or later some of it or all of it will have an impact on you too, whether you like it or not.

For my own sanity’s sake I keep following a 3-pronged approach when it comes to understanding trends, an approach I originally came across courtesy of Unilever and having chewed on it for quite some time, I’ve come to the conclusion that it is a very powerful way to understand the difference between cause and effect in the arena of trends.

The word ‘Trends’ in itself has become somewhat of an overused term and tons of institutions now deliver trend reports of various calibres, sometimes causing more confusion than clarity and this because everything is muddled together: Macroeconomic drivers meeting consumer anxieties in some niche expression through one single on-line service provider isn’t exactly a trend, it is an expression, which may be the correct expression to capitalise on a nascent consumer trend, but it’s longevity as a business is dependent on other factors in addition than the survival of the potential trend that spawned it. Thus it has to be evaluated as an expression, not as the mother trend – if that makes sense?

Back to the 3-pronged approach: Firstly we must seek to understand

  1. Drivers
    • External drivers - these are out of the control of individual
      consumers, but somewhere along the line they may have an impact on your
      life. Examples are the global economy, climate change, political risk
      and so on.
    • Internal drivers – These are value, aspiration, needs and demands
      driven and influence the life of consumers.
  2. Trends – trends are really about how consumers respond to the above drivers through their behaviour. It’s not about whether black is in our out, it’s more about understanding that fundamentally our needs don’t change that quickly, but external and internal drivers will create new opportunities for those needs to be met, which conveniently leads us onto the third point:
  3. Expressions – These are ways in which the trends are expressed in consumers’ day to day lives, examples illustrating how businesses for instance are exploiting the trends today.

So bearing this distinction in mind, it is easier when you come across anything labelled a ‘trend’ to understand whether this is in fact an external or internal driver, a consumer response to the former in the form of behaviour or indeed an expression of the trend in the form of a business.

By keeping a keen eye out for the drivers, both internal and external over time it becomes possible to stay ahead of the curve so to speak, to anticipate trends and expressions, rather than merely notice more and more obscure new businesses cropping up. This is hard and of course it helps constantly being on the look-out for many different kinds of information, sources and so on, but also consciously engaging in monitoring something will gradually make you more sensitive to small changes and being able to identify the crucial indicators in a field that tell you when something is about to change.