Direct mail legend Charles Stryker recounted a famous story in 2014 about data that every leader managing digital customer engagement should know.
Years ago, the US Postal Service discovered they were spending millions of dollars a year to deliver mail to deceased people. Charles was hired to help them get a handle on their address records and create a “Do Not Mail” list. The work involved A/B testing to ensure he made correct assumptions about the data. To test early iterations, Charles sent direct response mailers to groups of people known to be dead, and similar groups that he could prove were alive. The results were astonishing.
The dead people responded at nearly twice the rate of the living.
Multiple tests produced the same results. Researchers eventually determined what happened: successful mailers went to households where the husband of the family died, and their elderly spouses were taking great care to go through the mail of their deceased partners. The widows wanted to make sure there wasn’t anything important in those letters—and probably were emotionally connecting with their husbands through that simple task.
As we think of today’s complicated digital journeys, where we seem increasingly dependent on algorithms and attribution models for targeting and measurement, are we forgetting the real, human element of customer experience? The human element is fundamental to delivering a 360-degree experience. We must understand both people’s expectations, and how high the bar has been set for customer engagement.Real customers, engaged with your brand: Enter data authentication. In a cookieless future, data authentication is key to creating customer relationships and understanding the intent of collected data in downstream systems.
Digital customer engagement: Amazon set the pace; everyone else is behind in the race
Today, brands must consider Amazon the gold standard for customer experience. You buy almost anything in the world available for sale on Amazon, do so quickly with one-click ordering, pay seamlessly, expect ultra-fast shipping, track your orders, easily return products, and get relevant product recommendations. The more you buy from Amazon, the better it knows you. The experience of being an Amazon customer is so powerful that over 200 million people have paid $139 a year to belong to Amazon Prime to get free next-day shipping, and each subscriber spends an average of $1,400 per year. More eye-popping Amazon stats: 175 million people subscribe to Prime Video, 55 million subscribe to Prime Music, and the company controls up to 85% of the e-book market through its Kindle reader and store. What’s the secret sauce? Data gravity: the notion that the more data you have, the more you’ll attract.
Through purchases, streaming choices, music listening, and reading habits, Amazon learns a lot about us. Using that digital customer engagement data, Amazon personalizes our experiences so that we’re willing to give them even more information. This becomes a virtuous cycle. After a while, the cost of switching to another provider seems too high. To acquire all that granular data, there’s a value exchange. For $139 per year, you get unlimited free shipping, which JP Morgan estimates to be worth about $1,000. With Prime Video, you get one of the largest libraries of video and music content in the world, and Amazon keeps its content pipeline fresh by funding original content – to the tune of $13 billion in 2021 alone. The result of the data gravity effect? Amazon’s revenue for the twelve months ending June 30 was nearly $486 billion, netting more than $33 billion in net income.
The data gravity effect: When less is more
In the post-cookie world, brands should rethink their approach to customer data collection by amassing less, but more meaningful data. Of course, not every company has 1.5 million employees, thousands of data engineers, and endless amounts of customer data. But every one of your customers wants exactly the type of customer experience they get at Amazon. They want BOPIS options at their favorite retailers. They want a Dunkin Donuts App that remembers their favorite breakfast sandwich and how they like their coffee. They want Uber Eats to show their highest rated meals from their favorite restaurants, make it easy to order them again, discounts for their loyalty, and—more than anything—to be rewarded for coming back.
This kind of digital customer engagement is incredibly important for the younger generations of consumers. Looking at just the U.S. population, more than 200 million people are deeply digitally embedded Gen Xers, millennials, and Gen Zers. While Gen Xers might have gotten their first iPhone at the ripe old age of 42, they became the first generation to massively adopt technology, and are now the demographic with the most disposable income. Millennials, the first digital natives, became young adults during the social media revolution, dated using Tinder, and used Facebook when it was still considered cool. The oldest Gen Zer was born after the founding of Netflix. Generation Z consumer behavior: What brands need to know Gen Z consumers are beginning to flex their economic muscles, bringing different perspectives and expectations than previous generations. Brands need to adapt.
In short, most consumers today bear almost no similarity to older generations when it comes to digital customer engagement and the way they consume media, purchase products, socialize, and interact with brands. They’re used to heavily personalized advertising and marketing, and their expectations of what “good” means have been driven by the world’s largest companies with the most access to technology and data. This is the reality for every company trying to provide a customer experience today. Digital natives: How to win the trust of Gen Z and Millennials73 percent of digital natives are involved in B2B product or purchase decision-making, and about one-third are sole decision-makers. Learn how to win their trust.
The shifting paradigm for digital customer engagement
Only a few years ago, brands had a difficult, but simpler, remit: build the brand and the consumers would follow. Absolut Vodka was about as undifferentiated a product as anything on the market, but great packaging and a clever ad campaign made it a power brand. It thrived because the world worked on the principles of Byron Sharp, who posited that a marketer needed two things to succeed: availability in the consumer’s mind and availability of the product on the shelf. For decades, most brands had the perfect formula for creating demand: produce a great piece of content in video or print and create massive awareness through advertising. Brands that succeeded in creating availability in customer’s minds (mindshare) and had enough presence on store shelves (retail availability) tended to grow.The battle for consumer hearts and minds was waged with brand advertising and scaled product distribution. When the customer got to the store shelf, the biggest factor beyond price for choosing Tide detergent over Wisk was brand loyalty that one-to-many advertising campaigns created.
That system is dying rapidly, as mass media channels become fragmented into thousands of websites, apps, streaming media channels, and experiences we don’t even understand yet.As a marketer, you can’t buy eyeballs like you used to .This changing paradigm is largely responsible for average CMO tenure shrinking from 44 months in 2017 to only 40 months today. CMOs must be prepared to insert themselves along steps of the consumer journey and capture each tiny piece of digital exhaust that consumers’ gadgets and gizmos throw off, helping to inform their understanding of how they engage with a brand. This is key to building a customer 360 view for modern digital customer engagement. Connected business benefits: Intelligent customer service, happy customersConnected business benefits include happier customers and happier employees – that’s the philosophy of intelligent customer service.
Forget about delighting customers. Instead, solve their problems.
But today’s consumer not only demands personalized engagements across channels – but they also want them to be effortless. Back in 2013, Gartner surveyed 97,000 consumers to understand how customer service interactions with brands impacted loyalty. The results were surprising. Many brands made gigantic investments trying to “delight” their customers, spending as much as 20% more in operational costs, but people didn’t care. Customers just want their problems solved. The study also showed that customer satisfaction scores (CSAT) turned out to be a weak indicator of loyalty – up to 20% of “satisfied” customers planned on moving on to another brand anyway. Also, customer service interactions themselves were four times as likely to drive disloyalty than loyalty, mostly because only unsatisfied customers end up talking to a service rep.
Brands must rethink their approach to digital customer engagement to reach the high bar of digitally native consumers. Nothing has changed since that study, except that we now understand that the delight strategy doesn’t work – customers just want an easy way to solve their problems and move on.What drives loyalty? The simple things:
- Not making someone repeat themselves
- Being able to check out from a hotel without visiting the front desk
- Having self-service options
As we explore what customer 360 really means, we need to look beyond typical customer interactions in advertising, marketing, sales, and service. We need to think about the mechanics of how customers and brands interact in processes like booking a hotel room, returning a product, renting a car, or approving a B2B purchase. We must change our definition of customer engagement to be more comprehensive.
[This post was originally published on The Future of Customer Experience]