The Value For Engagement

The Value For Engagement is a new marketing study and book by Donatella Padua, which looks into the elements of Trust, Social Relations and Engagement in understanding customer behaviour on the internet. Donatella is a professor of Marketing and a close friend of Intelligent Positioning’s, who heads up the IP Research Centre, the book, The Value for Engagement is published by Palgrave Macmillan.

Garry Titterton, CEO of IP wrote this foreword for the book:

Brand Trust and Its Value

Few things help an individual more than to place responsibility upon him, and to let him know that you trust him. ~Booker T. Washington

At the time of writing, the world is suffering from a severe lack of trust. The economic crisis has underpinned just how central trust is in our lives. It is at the very foundation of our existence, of how we operate in our daily lives. As social creatures, we humans, without trust in our relations with others, lack the all important feelings of security and optimism that drive our sense of wellbeing. It can be argued that when people have a sense of wellbeing, it leads to peace and prosperity and without it, suspicion and conflict sow the seeds of disharmony.

Trust creates a sense of community and helps people to contribute with greater confidence within the macro and micro environment in which they live. Today, we have the rapid adoption of the Internet that provides people with the opportunity to explore knowledge and to communicate with each other in a way barely imaginable a generation ago. We have seen how people in repressive societies have communicated with dramatic immediacy to the outside world, the violence and atrocities committed against their citizens that conventional media may never have had the opportunity to expose. In more prosaic terms it has enabled people to shop whilst remaining in their homes. From the dramatic to the common, the internet has brought people an ability to express themselves.

With this new-found liberty has come the call for regulation of the Internet’s operations. The Internet is fundamentally an anarchic experiment that needs disciplines to ensure that its vast potential is not hijacked by the irrelevant, the thoughtless and the deceitful. From Governments to individuals, brand companies to consumers, there is the need to use the Internet with responsibility and insight. The issue of engagement is central to gaining the maximum benefit from it. People from liberal to repressed societies are no longer prepared to be pushed into positions they are uncomfortable with, from governmental policies to purchasing decisions. They want to be a part of the decision making process and are now demanding change and an important tool to voice these opinions is the Internet. It is democracy written large, at times resembling a library full of wisdom and erudition and at others a wall of graffiti expressing frustration, anger, and resentment.

This book investigates this new dynamic within the specific context of the brand and the consumer, offering an insightful model for companies to re-evaluate brand /consumer relations, putting the emphasis on dialogue and placing a central emphasis upon engagement. This model demands that the brand custodians employ the core elements of trust to make their brands evolve into being more sensitive to their consumers’ needs, engaging them in a faster, deeper dialogue to anticipate needs and identify problems with integrity, transparency, benevolence, and competence. By engaging in this model, the author demonstrates how greater value will be created for both the consumer and the brand company.

Focus on value. Brand competition is increasing both locally and globally due mainly to the universality of the Internet. The developments of search combined with the speed of local search, thanks to mobile devices, means that identifying customer movements and satisfying their needs has never been more important. However, to monitor customers in an effective way it is important to have a clear idea of what you wish your customers’ experience to be. In 2008 the Yankee Group carried out a global study of 150 plus service providers in the wireless, wireline, cable and satellite markets of the USA, UK, France, and Germany. The research found that just under 50% did not have a clear definition of what the customer experience should be.

Many companies still think that price is the overriding factor. This is a myth. Price is just one factor in the value chain. To support this premise, the 2010 Harris Interactive Customer Experience Impact Report* looks at how much consumers are willing to spend to ensure a superior customer experience and the overall influence customer experience has on a company’s top and bottom line.

In terms of the benefits of providing an exceptional experience, the report found that:

  • 85% of respondents stated they would be willing to pay up to 25% more to ensure a superior customer experience.
  • 55% became a customer of a company because of their reputation for great customer service.
  • 55% are willing to recommend a company due to outstanding service, more so than product or price.
  • 66% of respondents cited customer service as the biggest driver for encouraging greater spending.

As for the other side of the coin – the effect of bad service – 79% of consumers that had a negative experience with a company told others about it.

In a blog by Matthew Moore February 2011, he highlights that it makes sense to try and give both existing and new customers the best possible experience and supports his argument with calculations from Satmetrix/Bain&Co who have stated that acquiring a customer can cost up to 5 times more than retaining a current one, and a 2% increase in customer retention can have the same effect on profits as cutting costs by 10%.

Integrating Value

Many companies are missing the importance of entire customer journey. In research done by Forbes in 2011, amongst brand companies, they found that while nearly two thirds of respondents said that they segment and target customers based on monitoring the customer experience within the an integrated view of customer behaviour, that view is not necessarily complete. Just 30% of respondents had a view of mobile behaviour and just 34% look at social media behaviour. In other words, the vast majority do not monitor or understand the customer journey within two of the most important and fastest growing segments within the media landscape. These segments are growing rapidly because this is where consumers can have a dialogue with each other and with brand companies. This is where trust is established. They are the antithesis of the outdated marketing model that pushes the product and pulls in the consumer. All the current evidence indicates that brand value is created by understanding the consumer through a dialogue with them. Tracking their complete media journey, their conversations, and brand experience through the key periods of awareness, favourability, consideration, intent to purchase, conversion, and post sale service, will provide a more integrated view of how value is created and how it needs to be improved. This is because, done well, it provides information and guidance on what customers feel they want but more importantly initiates the process of anticipating customer needs, both tangible and intangible, that will provide a richer experience for them long term. That fuller experience will help to build their trust in the brand and enhance confidence in its integrity. Value creation is inextricably linked to engagement. Without trust neither can be built or sustained.

Trust is a Choice

Trust is built up moment by moment, engagement by engagement. The consumer has long been aware of the warning, caveat emptor, whilst the brand company views transactions through the constraint of caveat vendor. Trust has been elbowed out of the relationship by the word “beware”, a caution that has served many consumers well over the years. This distrust has eroded both economic and emotional value. It has paid a disservice to the brand companies and caused many of them to suffer at the hands of consumers, who were once loyal, migrating to competitive brands.

Companies need to be more transparent in their dealings with customers and demonstrate greater integrity. A case in point was the recall crisis Toyota faced in 2010 because several of its marques had design flaws, costing the company an estimated $2 billion. What it cost in customer confidence was probably much more, having a profound effect on the relationship between the brand and its existing, as well as prospective, customers. Toyota made the mistake of seeing the recall issue as an engineering problem with accelerators and brakes. However, what was behind the obvious design incompetence was a collapse in trust. They should have reacted far sooner with a campaign to re-establish in the consumers’ minds that Toyota stood for quality and reliability. The management of Toyota prevaricated and were accused of a cover-up. Trust evaporated and with it sales.

The management of Toyota would have been well advised to have studied the experience that Johnson & Johnson had with their brand Tylenol and used it as their problem solving model. When someone tampered with Tylenol products in 1982, the company reacted swiftly and produced what many regard as a classic case study in crisis management. J&J withdrew all products immediately. J&J set a standard for crisis communication when they assumed responsibility by ensuring public safety first and recalled all of their capsules from the market, despite the fact that the bottles were tampered with after reaching the shelves.

Due to this responsible action, the consumer rewarded J&J with a rapid recovery in the sales of Tylenol once the problem had been resolved. Integrity was reciprocated with trust, a precious consumer gift that had considerable impact both rationally and irrationally.

If that situation had occurred today with the Tylenol brand, the problem would have been exacerbated by the immediacy of social media. This places an even greater emphasis upon brand guardianship and open and transparent dealings with both the media at large and the consumer in particular. This need for transparency and integrity are at the very core of the Value for Engagement model that this book offers as an insightful alternative to the clumsy and undemocratic push and pull model** adopted as standard practice amongst many brand companies historically and currently.

*(survey conducted online within the United States between June 30-July 2, 2010 among 2,217 adults (aged 18 and over) by Harris Interactive).

**A push promotional strategy involves taking the product directly to the customer via whatever means to ensure the customer is aware of your brand at the point of purchase. A pull strategy involves motivating customers to seek out your brand in an active process.