The world has changed when it comes to data-driven, one-to-one communications. Customers, once ignorant to the value of the personal data they were handing over to brands, now expect equality between the value they receive from allowing access to their personal information and the value brands derive from using it.
It can be a difficult and delicate balance to strike. But gone are the days of accessing, tracking and using customer data while providing nothing relevant in return.
Within this new environment, however, opportunity exists for marketers who want to help brands build meaningful relationships with customers and effectively deliver a clear value proposition.
The challenge before brands is complex yet key: Match the value they deliver with the value they receive and work to increase both.
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Loyalty programs – the birthplace of value exchange
This is not a new concept. Exchange of value is the basis for most continuity [aka loyalty] programs that exist today. We allow our favourite restaurants to collect data on us in exchange for points or offers. For customers, these points represent economic benefit in the form of free stuff or discounts. For brands, they represent continuity of purchase. This exchange works well for frequently purchased products such as food or gasoline. Many of us would be happy to drive a few extra minutes to get to the brand that allows us to get points. This is not as effective for higher value, less frequent purchases like hard goods.
If you think about value at a basic level, consumers start decision making [especially those with minimal investment] at a basic price, performance, convenience level. Loyalty programs were an [often successful] attempt to try and create this continuity by giving consumers a reason to make this choice in their favour. Creating a more equal value exchange saw consumers showing preference to specific brands that rewarded them for choosing them more frequently. Many of us will cross the street to a brand that offers points.
For the most part, these programs fail to address the more emotional aspects of value and in the end become continuity vs. true loyalty drivers. The other downside is that once a points-type program is put in place, it’s hard to pull it back and potentially alter the value to something more emotional and personal.
The real power in these programs is the data collected and the permission consumers give for these brands to engage. These set us up well to design these programs to drive value at an individual level. The real win comes for companies to move beyond economic benefits to experiential and emotional benefits. A great example is seen in airline programs – they have been successful at moving beyond preference by creating value beyond price – going well beyond economic or commercial benefits by including value in the form of priority service, exclusivity and upgrades.
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The challenge before brands is complex yet key – match the value they deliver with the value they receive and work to increase both.
Value comes in many forms
To understand the value that organizations can deliver to customers it’s helpful to group them by customer need states.
At the core there are three commercial forms of value – economic, efficacy and effort, which lead to more rational decision making based on the amount of investment a customer is willing to make in the decision. Many decisions end here. If I need gas or a coffee, and there’s a location nearby, I’ll probably not drive 20 km to a different location based on a small savings or to get points. On the other hand, I’ll wait in line overnight two hours from my home to buy concert tickets or pick a less-than-ideal departure time to reach a new tier in my airline program.
By utilizing relevance, engagement and exclusivity, brands have been moving fast to deliver a more experiential form of value to consumers. Driven by the influx of choice that consumers can now access through digital channels, brands must up their game beyond commercial value and provide seamless shopping experiences, better service and more effective product delivery.
As people shop and buy brands to fulfill their own identity needs, true loyalty rests in the coveted form of value that engages consumers at the emotional level, delivering status, self-esteem and empowerment benefits.
It’s not quite Maslow – but it’s close.
Striving for a balanced exchange
As brands strive to move up the value pyramid and work through the process of assigning customer lifetime value [CLV] scores to individual customers, the natural extension of this is to find ways to use the data we’re collecting to create value for our customers. Here are a few ways to get started:
Emotional value via data-driven creativity
Move beyond the traditional advertising definition of creative as beautiful art and clever words. View creativity as the intersection of science and art – a manifestation of how we use data and technology to make ideas, design and words more powerful by delivering them to the right audience at the right time to create a strong emotional connection.
Data can help identify individual customer needs and motivations, what messages are relevant to them and even when they’re most interested in engaging with us or when they’re tired of hearing from us.
Relevancy value via data-driven personalization
Consumers want relevant interactions. They know you know them and want you to use that data to provide value to them. Today, relevance is value. That means communicating less with interactions that mean more. Think suppression and make it your friend. This will be counter intuitive for organizations that believe “more is better” and are hard-wired to flood the market with messaging and communications.
The switch to a value orientation isn’t easy. We need to stop thinking in terms of economic exchanges alone and start thinking about our relationship with customers as a mutually beneficial exchange of value.
Equalizing value via data-driven allocation
Stop giving all of your customers the same thing. Stop giving your loyal customers less than switchers. We’ve all had the negative experience of this inequality. Personally, I’ve been with my cable company for over 30 years and have spent close to $100k in that time with not one advantage. They don’t respond faster to my issues, still make me wait, sometimes for hours, on the phone – not one benefit. And yet, someone switching every year gets a better price than me. Does this make any sense? This ridiculous practice needs to stop. Start matching value delivered to customers with the value we receive in return.
Delivering a new value focus
To deliver this we need to develop content/personalization at scale. This will require a new way of working and a new tool set. We’ll have to let our customers decide [through their behaviour] and realize that being customer centric, not product centric, is the new norm.
Quality of engagement vs. quantity of interruptions will be the winning balance.
We need to become obsessed with measuring CLV; we need to understand current and potential customer value; we need to increase CLV by matching delivered and received value.
The switch to a value orientation isn’t easy. We need to stop thinking in terms of economic exchanges alone and start thinking about our relationship with customers as a mutually beneficial exchange of value. Data isn’t something to be collected but something to be utilized to create and distribute that value.
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