When businesses understand consumers’ needs more fully, they will see that behavior in the marketplace is rarely just about the impersonal economic exchange.
Many companies talk about the need to establish strong “relationships” with their customers. Some compile complex customer relationship management algorithms to develop and maintain these relationships. These companies rightly recognize that the transactional interactions of the past may be limiting in creating loyalty.
With that said, most businesses fall short in their efforts to understand the true wants and needs of their customers.
Fostering deep and meaningful relationships is crucial in business as well as in life. As in all interpersonal relationships, from friendship, to marriage, to company-client, trust and the promise of mutual benefits form the foundation for growth. When we put others’ needs first in relationships, we’re more likely to see those relationships thrive.
Emotional Needs Not Yet a Business Priority
After decades of formally documenting the stages of business-customer relationships, we’ve learned that many companies become complacent in their endeavor to understand, satisfy, and embrace the emotional needs of consumers. Companies understand the meaning of “relationships,” but rarely consider what it takes to make their audiences’ needs a priority. They seemingly cross their fingers hoping that what brought customers to their company will cause them to be loyal. Just as in most human romantic relationships, business-to-consumer relationships fall apart when one party (the business) fails to track the evolving needs of the partner (the consumer). The challenge of sustaining long-term relationships with customers forces businesses to consider short-term as the easiest route to profits.
Indeed, if a department attracts new customers, it wins the lion’s share of the marketing budget, but it is well documented that it costs some companies five to ten times more to attract new customers than to retain an existing one. On the other hand, if companies sustain relationships with existing customers, a mere 5 percent decrease in annual defections can lead to a 25 to 125 percent rise in profits. Another way of crystallizing these figures lies in the social reality of the Internet era. When we are satisfied with a product or service, we may tell three friends, but when we are dissatisfied, we’re inclined to tell (or Tweet) it to three thousand.
Even when brands claim to desire lifetime relationships with customers, many tactically distance themselves from the humanity of their interactions with them. The systemic nature of marketing strategy depersonalizes their audience by using language that groups customers into segments and targets. People are commonly referred to as buyers, shoppers, payers, non-responders, early adopters, and eyeballs. What is too often lost is the nuance that makes them human.
The routine marketing logic follows a self-sustaining strategy: measure category and purchasing behaviors, shoot a creative mix of emotionally salient messages and rational pleas at the targets, place all bets on marketing science, and presume the targets can’t help but consume. But if we truly view consumers through the lens of relationship dynamics, we’ll learn that, whether we are working, shopping, or engaging with friends and family, our psychological needs are a constant driving force. Understanding and putting this into strategic practice will eliminate the artificial two-way mirror between authentic life experiences and the ways businesses communicate.
The Powerful Role of Trust
Customer relationships, like interpersonal relationships, are built on trust. And if trust is lost, the relationship is lost as well. Marketing scholars Jennifer Aaker and Susan Fournier revealed how closely business relationships and interpersonal relationships mirror each other in an Internet-based psychology test. Over a two-month period, the researchers measured the evolving strength of their relationship with customers as they were introduced to an online film processing and digital library business. The participants were told they had been selected for a pilot program before the business was to be open to the public. They were told to take pictures, enjoy the website’s services, and evaluate their experience along the way. Some participants interacted with a version of the website that used exciting, amped-up marketing language. Other participants engaged with a company that was more down to earth, personalized, and directed at forging a sincere dialogue.
The Sincere Company
Aaker and Fournier found that relationships with the “exciting” company had the trajectory of a short-term fling, while those involved with the “sincere” company developed a relationship that deepened over time. The sincere, relationship-oriented business had raised consumer expectations of the service quality and built loyalty to the website. If the company delivers on its promises, there is no question that its personal touch will keep customers invested in the experience for a long time.
Yet there is one caveat to the research that speaks to the irony and complexity of consumer decision making. When the researchers imposed an unexpected service failure within the experiment –e.g., “Sorry, but we lost all your film!”– the relationships with the users interacting with the sincere business were harmed the most. Why? Because when a business promotes itself as an earnest entity that truly cares about its customers, and then fails to deliver on those expectations, it does more harm than simply not delivering. “Trust is much heralded in marketing, but it has a downside,” said Aaker in an interview for Stanford Graduate School of Business (GSB) News. “What needs to be understood and managed are the contracts, norms and rules that underlie the relationship between a consumer and brand, and how a brand’s actions fit or violate those norms.”
Businesses must reestablish the emotional trust that is destroyed when they transgress, commit to following through on their promises, and be prepared to stand by that attitude when crisis strikes. In the days following the British Petroleum (BP) gulf oil spill, how many times did we hear executives tell the public not to worry? While chief executive officer Tony Hayward haplessly expressed how much he’d “like his life back,” BP was writing a 187-page legal report that pointed fingers at third-party contractors, tacking an asterisk to every apology. Perhaps they should have known that what won’t work with a friend or loved one won’t work with an angry public either.
The Deceit of Satisfaction
One might assume that meeting needs is purely about satisfying the consumer. While customer satisfaction is undeniably important, we must redefine satisfaction as what really makes us deeply satisfied. Of course, companies are trying to interpret and meet emotional needs, but it is questionable whether traditional consumer research methodology is capable of measuring true need satisfaction. Consider these two points:
Roughly 80 to 90 percent of new products and services fail or drastically fall short of sales expectations in their first year.
Customer satisfaction is used by 90 percent of companies as a benchmark for success. Overwhelmingly, most companies report that their customers like their products just fine.
What’s at play with this apparent contradiction? One interpretation of the product failure data is that there are too many products in the marketplace. And, in most cases of failure, advertising and marketing efforts aren’t successfully connecting emotionally with consumers. But the customer satisfaction benchmark is confounding. If everyone says they are satisfied, why do most new products fail?
Surveys Fail to Predict Repurchase
As it turns out, positive consumer satisfaction surveys are neither a predictor of repurchase nor an indicator of whether emotional needs are met. Most companies go only so far as to ask whether their clientele is satisfied with their “experience” – most customers typically say “yes.” Then marketers congratulate themselves, only to find later that the same ‘satisfied customers’ went elsewhere the next go-round.
Again, the mental process that occurs during a customer satisfaction survey is typically a rationalization of a past experience. The brain quickly evaluates the individual’s expectations of the product, and if they were in the ballpark, the product is checked “satisfactory.” A one-time purchaser of an electronics brand may never tell a researcher, “It worked well enough. I was satisfied. But the design and overall feel just didn’t enhance my deep-seated feelings of identity and autonomy.” The consumer may have appreciated the product, but if his or her unarticulated emotional needs went unmet, the appreciation means virtually nothing for a business trying to form a base of loyal buyers.
This is a problem for businesses using a logical, traditional process to study the emotional issue of satisfaction—an approach that cannot readily deliver the accurate emotional insights required. It’s a problem of perspective. If a business is going to learn about an emotional issue, it needs to study the issue with a method that is sensitive to emotion. At the end of the day, businesses must see their customers as individuals who are always striving for a healthy sense of self-identity.
When people find a product or service that transcends the generic “satisfaction” benchmark, it’s gratifying for the consumer, and in turn, a positive for the company that provided it. Yet when a company fails to respond to the needs buried in the consumer psyche – or worse, decides for the consumer what he or she needs – the product, service, or brand can be a disappointment instead of a delight, frustrating the consumer and impeding his or her sense of self. Just as when we bicker with a partner or confront a rude friend, we can feel our needs denied by a negative shopping experience or a poor encounter with a service or sales representative. A need can just as easily be subverted by a bad product design.
But businesses, unlike friends and loved ones, don’t often get the luxury of a second chance if they mishandle a situation. From the very first ad, to the policies regulating the company’s customer service, to the tone of their chief executive officer’s talking points, the business must constantly identify how human needs evolve and build their business around meeting them. This does not mean businesses should give up broad, systemic business and marketing strategies entirely in exchange for an intimate, interpersonal approach. Businesses use quantifiable systems for efficiency and prediction, but if that is where the strategy stops, then meaningful, intimate insights into the true drivers of behavior will be lost.
A Framework for Understanding Emotional Needs
Businesses need to develop a conceptual framework for understanding emotional needs and a passion for meeting them every step of the consumer journey. For example, Facebook succeeds because it satisfies a yearning for connectivity to a group, and a need to celebrate one’s individuality through self-expression. Most business leaders claim they care about consumers’ needs, but they do not understand how such needs dovetail with their business goals.
Yet it is possible to develop a framework to help businesses comprehend the science of emotional needs and incorporate this perspective into their strategy. But first, business leaders must acquire a new perspective, rooted in the experience of human behavior.
At Insight Consulting Group, we’ve had the privilege of interviewing thousands of consumers and business professionals. These interviews often take place in front of a two-way mirror with clients observing. At the end of the session, our interpretations differ from those of our clients.
Listening with the Third Ear
We listen with what psychologists call “the third ear,” a trained lens that helps us see beyond what people say and toward a deeper empathic understanding of their emotional needs, the hidden meaning behind their conscious thoughts. What we do is akin to the finely honed listening skills top executives use to navigate corporate politics or manage tense situations. But through business psychology, we help our clients understand, connect, and persuade a diverse, complex group of people – customers.
Despite business’ growing embrace of emotion, this awareness is often the first thing shut out of their professional mindsets. Too often, we build a firewall that helps us rely on logic and reasoning to solve business problems. We stick to what is perceived to be the safest method of meeting business challenges. The sciences, including psychology, are not immune either, as they attempt to create a fact-based, quantified approach that tends to sanitize people so we forget about the humanity of consumers and filter out the raw emotion underlying the needs.
Solving business problems and generating insights is more about connecting the dots. Widening the scope, we can learn about consumer needs by peering inside the dynamics of human relationships; observing the psychological underpinnings of how and why people use products and services; and listening to others through an empathic understanding of their emotional lives.
Understanding the “Why”
When businesses understand consumers’ needs more fully, they will see that behavior in the marketplace is rarely just about the impersonal economic exchange. Rather, those functional considerations are interwoven with a deeper, emotional inner dialogue within consumers that asks not, “What does this product do?” but rather, “What will this product do for my emotional self and identity? What does it mean to me? Does it align with how I want to be seen?” Too often, this inner dialogue – a negotiation of our psychological needs – eludes standard market research tactics.
The late Sidney Levy, of Northwestern University’s Kellogg School, challenged the business community to consider the psychological processes underlying behavior. The marketplace is hardly as rational as Econ 101 would have us believe. “The ideal market is like a Heaven – perfect but dull,” he said. “The real one is the human one on earth, fraught with emotions, strivings, and the symbolic investments that make us care about what and how we market to and from others.” Price, convenience, service delivery, and overall quality are, of course, essential factors. These metrics are the conscious side of what marketers call the consumer value calculus; they are the process by which we evaluate the expected utility of a purchase.
But because much of our decision making deals in the realm of the emotional unconscious, this presents a challenge that many businesses appear reluctant to take on – paying attention to the wants of an audience implies the audience is conscious of the “why” behind their behavior. It assumes customers know why they want Product A rather than Product B. Sometimes, customers use a host of rational explanations they make retroactively to describe an immediate, intuitive, emotional response. The rationalizations often obscure the true, deeply embedded reasons for one’s marketplace decisions. Wants are merely our conscious expressions connected to largely unconscious emotional needs.
This unconscious side of the consumer value calculus contains insights that, if discovered, can allow businesses to hurdle over the competition and help their audience feel and live better. We all strive to become emotionally satisfied, and while simple interactions and transactions in the world of commerce cannot get us all the way there, they matter considerably more than we generally recognize.
In short, understanding how human needs manifest in the marketplace requires businesses to learn from disciplines that have often been overlooked in boardrooms. Drawing from sociology, ethnography, neurology and psychology, blending behavioral and clinical studies with traditional consumer insights, marketers can make an emotional-needs-based paradigm shift in perspective.
This new perspective will result in better ways to listen, observe, and understand people’s life stages. It’s time that marketers step away from their spreadsheets and enter family kitchens, local bars, and doctor’s offices to gain a deeper understanding of human needs.