How to manage challenging consumer behavior
Companies of the 21st century face strategic challenges when creating integrated marketing communication. Under the impact of digitalization, new media has arisen, which has forced marketing managers to engage with consumers differently. Today’s consumers create heaps of user-generated content and have the ability to co-create an organization’s brand, which means that interactivity has become key. While this shift in interaction means that the consumer has become empowered, how does the organization deal with new challenging consumer behavior?
The power of Consumer Brand Engagement
Let’s start with the brand, and more specifically: Consumer brand engagement (CBE). CBE can be viewed as a kind of relationship marketing, where the bond between the consumer and the brand is strengthened through engagement.
I would argue that CBE has become a vital part of the marketing agenda, but marketers differ on the term: Agencies argue that dialogue-based communication and co-creation are favorable, as they are heavily inspired by creative experimentation and the emotional appeal of consumers. On the other hand, marketing directors of companies tend to be more driven by short-term performance logics with measurable and revenue-driven outcomes. Thus, focusing more on controlling the brand.
Although no agreement has been reached in terms of how much the consumer should co-create the brand, one thing is for sure: Organizations need to enter the dialogue with consumers in order to stay relevant in a complex world of fragmented media.
Challenges of a more complex journey
In regard to this, marketers must aim to develop a stronger understanding of customer experience and the customer journey. Digitalization has changed the customer journey remarkably, as consumers are able to engage with companies through several different touchpoints (brand-owned, partner-owned, customer-owned) in all three different phases of the customer journey (pre-purchase, purchase and post-purchase).
Although scholars argue that information-processing theory is central to understanding consumer behavior, the reality is that the customer journey has evolved and companies are in less control. Consumers seek communities and generate content online more than ever before, which makes it even more challenging to adapt to marketing activities. It also means that consumers of today are more discharged from physical stores. In the retail industry, this has resulted in behaviors such as showrooming.
Addressing challenging consumer behavior
There is a growing tendency of the phenomenon, where shoppers are receiving service and view products in-store, and go on to buy them cheaper online from competitors. Such consumer behavior obviously represents a challenge for more traditional organizations, especially with emerging online competitors, who can cut prices, as they are not bound by the cost of physical stores.
It also affects loyalty, because how can these companies in fact create long-term loyalty when the customer has become so informed, hyper-connected, and empowered by technology?
A place to start is by optimizing the customer experience – developing the current customers into loyal ones could be better for business than just acquiring new customers. Research on loyalty in the retail industry actually shows that 75% of customers leave a company due to bad service. It comes down to having a bad experience, which is tied to emotions, not just price.
Therefore, companies need to identify key trigger points, also known as ”moments of truth”, that lead customers to continue or discontinue in their purchase journey. Think about it: Where is the make or break interaction in your customers’ journey?
For a retailer, such a moment could be in the interaction with the sales personnel. We meet the organization in fragments and the seller is a key facilitator of the brand. Although not much research has addressed showrooming, I think the sales personnel play a vital part in managing a difficult touchpoint.
Reflecting on brand loyalty
Generally, brand loyalty is about giving the consumer an incentive to repeat business with the organization. In the 21st century, a common way for marketers to capture this favorable repeat-purchase consumer behavior is by investing in loyalty programs. While loyalty programs are great for gathering consumer data and recruiting existing customers, they assume that customers only purchase from the one brand and that customer defection can be avoided altogether. I think the reality is very different and that consumers become loyal to a selection of different brands.
That being said, I think an important part of creating loyalty comes down to raising consumer involvement.
When organizations generate involvement, the products and services tend to be perceived as more relevant. That is why the company’s ability to create relevant content is key, as it forms a motivational state for the consumer that drivers behavior.
This links back to the customer journey, as communication has different roles for each phase on the customer journey. For instance, search engine marketing or bloggers could inspire consumers and build awareness for the opportunities and benefits of products in the pre-purchase phase, while communication in the post-purchase phase should encourage consumers to give feedback and become loyal followers of the organization.
The discipline of content marketing is vital to this understanding, as the aim is to create engaging content for the right customers at the right time and place.
Media fragmentation has become a key factor too. Today, we have several different mediums to choose from (e.g. mobile, web, etc.), which means that it is more complicated to plan marketing activities. Therefore, I think it is vital for organizations to adopt a broader, more holistic, omnichannel approach in order to reach the consumer. I believe the integration between offline and online marketing is so important to strengthen the brand experience.
Measurement is key
Another important aspect of creating a loyal customer base is measurement. The Net Promoter Score is a key tool in order to detect focus areas. NPS not only evaluates the willingness of the customer to recommend the company’s products and services, but it also shows how well the company delivers on its brand promise, which in turn can tell the customer’s loyalty to the brand. An important point in this regard is that marketers must use the “voice of the customer” to aspire other consumers. Generally, consumers seek social confirmation, so endorsements can be a great tool to add trust, as consumers have moved from trusting in institutions to trusting in their peers.