Leveraging Customer Behavior from the Inside Out and Outside In
In 2006, American Express became the first company to take on musician and activist Bono’s challenge (Figure A.1) to help the international fight against AIDS, tuberculosis, and malaria. It introduced American Express Red, a credit card in the United Kingdom that would pay 1% of the credit card charges to a global fund. The donation would increase to 1.25% after charges exceeded ₤5,000 a year.
Figure A.1. American Express took up musician and activist Bono’s challenge to help the international fight against AIDS, tuberculosis, and malaria.
That’s one example of the ways businesses are responding to the how customers actually make supplier and purchase decisions in today’s environment. Those of us who study and consult on loyalty behavior optimization are finding that, when customers are considering alternative suppliers or making final purchase decisions, the intangible, emotional, and relationship benefits must be actively considered. Tangible, functional, and rational elements of the product or service, though also important, tend to be somewhat more one-dimensional and non-differentiating.
And it absolutely requires that the meld between the (emotional and relationship positioning) messaging and the experience that companies create be as seamless as possible, totally supporting the value and brand promise. If companies want customers to bond with them on the outside, they must, therefore, begin with the right impressions, the right media, the right processes, the right people with the right training and mindset and the right strategic experience, at the right time, coming from the inside.
When organizations are marketing to customers, they must understand that customer commitment and bonding behavior can result in one of two ways. In the first, companies endeavor to manage and influence attitudes and perceptions of customers (and prospects), as well as where, how, and when communication takes place. We call this “inside-out” customer commitment and bonding.
In contrast, “outside-in” commitment and bonding occurs when customers informally influence the behavior of others (customers and prospects) on behalf of selected, (strongly preferred) suppliers. This takes place through one-to-one or group communication, including direct or indirect recommendation or tacit endorsement.
American Express Red is a good example of a company developing “inside-out” commitment. After studying the interests of its customer base for some time, and noting behaviors of an important segment that the company wanted to reach on a more inclusive, lifestyle-relationship basis, executives developed a value proposition specifically for high net worth “conscience consumers” (what some might call “cappuccino liberals”), people who feel strongly about social causes but have neither the time nor the real motivation to get directly involved.
This market segment in the United Kingdom was estimated at 1.5 million and was projected to grow to 3.5 million by 2009. Thus, the company has created and sculpted a program expressly for a targeted, emerging customer niche; and the challenge is to make certain that every message and experience supports that concept.
Another example of “inside out” was Commerce Bank (Figure A.2), which called itself “America’s Most Convenient Bank.” Before being acquired by TD Bank (in 2007, and renamed in 2008), it was the fastest growing financial services company in the United States of America and had more than 400 “stores” in eight states along the Eastern Seaboard. It had a unique retail concept, built on an advanced service model (including seven-day branch banking, extended weekday and weekend hours, and staff trained at WOW University).
Figure A.2. Commerce Bank culture is an example of inside-out customer management.
Commerce Bank had a highly proactive, customer-centric culture, with programs including financial training for kids, aimed at building lasting, family-based relationships. Until shortly before being acquired, the company did almost no traditional media advertising; and this only changed because operations had moved into so many markets, and so quickly. The company’s model centered on small businesses and families, with a very localized, community-oriented focus, featuring the benefits of a proactive staff offering friendly, high-end service and convenience. Though Commerce Bank used Kelly Ripa (a South Jersey native) and Regis Philbin as spokespeople in its advertising, the emphasis was less on their celebrity status than it was on building awareness of Commerce’s array of differentiated service features.
The way customer bonding is measured (summarized as the active expression of brand commitment) enables any organization to identify what is driving both true bonding behavior—leading to high wallet share—and indifferent, negative, or even sabotage behavior. If, outside-in, bonded customers can be ambassadors for a business through their positive word-of-mouth and other predispositions to behave, saboteurs can undermine a business through negative informal communication and other behaviors.
Research into the underpinnings and drivers of customer loyalty behavior shows that commitment and bonding can identify the strength of a brand or company’s value proposition franchise, how well it performs on an “inside-out” basis. Commitment, with bonding at the top end of this response to the rational and emotional components of value, is the most actionable method of understanding what steps need to be taken, and in what order of priority, for organizations to optimize both employee and customer behavior. For employees, this is a key part of the “inside out.” For customers, and their marketplace actions, it’s all about the “outside in.” Successful companies have learned how to leverage customer behavior, from the inside out and the outside in.