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Customer Engagement: Why Your Customers’ Emotions Matter

06.22.2009 · Posted in Management Articles

Adam Smith, the grandfather of capitalist economic thought, established that the nature of the marketplace naturally guides consumers to seek the best products at the best prices. In his seminal work “An Inquiry into the Nature and Causes of the Wealth of Nations”, Smith argued that the invisible hand of the market powered by individuals acting according to self-interest naturally creates wealth. rnrnIn Smith’s model, an item’s true price is determined by the cost of the labor required to produce it. As Smith wrote, an item’s “real price is the toil and trouble of acquiring it.” Production costs, material costs, and labor costs would be included in this “toil and trouble” of creating a product. Market price fluctuations occur due to varying levels of supply and demand, according to Smith, but real value (as defined by labor) does not change.rnrnAPPLYING SMITH’S THOUGHTS TODAYrnToday’s marketing models often spring from Smith’s original fountain of economic knowledge. Traditional business plans typically aim to provide a product of comparable quality for a lower manufacturing cost, thereby capturing a higher profit margin. This approach contains an underlying assumption that Mr. Smith would probably approve of: the idea that customers select products based on rational, tangible factors like quality and price. Under this paradigm, customers will transfer their patronage to any new company that provides a product of comparable quality for a lower price. In The Wealth of Nations, Adams suggests that higher profits may be enjoyed by finding especially rare commodities, or by producing an unusual (and hopefully, exclusive) product.rnrnHowever, the marketplace has changed quite significantly since Smith’s time. As manufacturing costs have dropped and consumer spending has skyrocketed in the last few decades, consumers no longer depend solely on price and quality to dictate what they buy; the emotional side of the purchasing experience has added value where Adam Smith saw none. In today’s market, consumers are usually more engaged by emotional motivation than rational drivers.rnrnCUSTOMERS MOTIVATED BY MORE THAN PRICErnIt’s no longer enough to satisfy customers, then. Customers can find satisfaction with any number of your competitors. What they can’t easily find, however, is a unique emotional experience. In this light, your company may be more associated with a feeling than with a product. Zappos CEO Tony Hseih puts it this way: “At Zappos, our higher purpose is delivering happiness. Whether it’s the happiness our customers receive when they get a new pair of shoes or the perfect piece of clothing, or the happiness they get when dealing with a friendly customer rep over the phone, or the happiness our employees feel about being a part of a culture that celebrates their individuality, these are all ways we bring happiness to people’s lives.” Happiness is one end result of Zappos’ approach–$1 billion in sales in 2008 is another.rnrnAs Mr. Hseih has discovered, customer engagement is the key to unlocking long-term customer loyalty. Engaged customers feel emotionally connected to their favorite brands. They may be aware that they could obtain a similar product for a lower price, but their relationship with a certain company makes them willing to spend more. Without a strong emotional connection, consumers are willing to quit a company as soon as a competitor offers a lower price. rnrnIn other words, Adam Smith’s ideas and observations haven’t vanished entirely from the marketplace. Engaged customers don’t totally forget about the rational side of purchasing decisions. They still ask questions like “What do I get, and at what price?” However, emotional questions also inform their purchasing decisions. They may not be aware of their subconscious need for an emotionally fulfilling purchasing experience, but their answer to “How does the product/service make me feel?” will still drive their behavior. Once a company has a good product at a reasonable price, they can see significant growth by focusing on providing an engaging customer experience.rnrnGETTING A CUSTOMER ENGAGEMENT BOOSTrnSo, how can your brand shift from the old Wealth of Nations approach to one that centers on your customers’ emotional motivation? For one, engaged employees provide exceptional purchasing experiences, resulting in more engaged customers. rnrnEngaged customers and employees alike are defined by the following characteristics:rnrn- They will go out of their way to do business with your organization.rn- They are loyal to your brand and/or organization.rn- They recommend your organization to their friends.rn- They are passionate about your organization.rnrnEngaged employees are your company’s emotional transmitters. They pass on their positive impressions about their employer to the customers that they interact with on a daily basis. rnrnHow customers feel matters. If you can make your customers feel valued and engaged during their purchase, they will return to your booth in the marketplace time after time, even if you don’t have the lowest price.rnrn~Monica Nolan, 2009

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