Category Archives: The Principle of External Reinforcement

How should you be the customers’ advocate and trusted advisor, so they make a decision “with” you instead of “about” you? Be your customers’ reference point and one of the centers of their universe. If they have to look beyond you for validation, you’ve lost the advantage and submitted yourself to an unforced error from your competitor. How can you embed yourself in their decision process – explicitly or implicitly – and help them along this journey?

The new principles of customer experience design

It’s pretty common now to think of user experience (website or mobile design) in terms of customer experience design (how customers experience your overall brand). The Omni Chanel trends have made this even more necessary in today’s world.

Values to customer needs

 

The way I think about it is that customers (on the right hand side) have both primary and secondary needs. Traditionally we focused on their primary needs which was about the products’ direct value proposition – basically costs, features and customer service. In the new connected world, the secondary needs become really important as well – ability to share, being part of a community, reinforcement of choices, motivations for buying, education, ability to track orientation to personal life goals, safety, and security among others.

From this, we can easily see that conventional marketing and customer engagement when it comes to customer experience design have been very “projection focused”: who we are , what our products are, how great we have done, what we have done, who we work with etc. In other words, we rely on a brain dump on the customer and expect them to decide. We put the burden of choosing us on them.

I outlined these aspects more directly in my post on the The Principle of External Reinforcement. Here, I’ll discuss the following framework which is more focused on assessing how current channels are meeting these emerging needs.

Analysis of channels to meet customer needs

 

Part A is very familiar. The way we have always analyzed our channels (web, mobile etc.). This traditional channels analysis wants to push content to customers, and make it easy to navigate. And that content is all about us, the seller.

Part B is the new way. It focuses on being a partner to the customer, not a seller. It seems very counter-intuitive but if you think about your own journey as a customer, you’ll see why this method is fast becoming the bulwark of customer engagement.

  • We no longer want to have to figure out how a company’s various products play with each other. We know its important, but we’d appreciate if they would do it for us, instead of just making sales pitches.
  • We’d like to know whether the products are even applicable to us. And if yes, how exactly will we benefit. We’d love to be advised rather sold the biggest possible deal.
  • For once, we’d appreciate tools that don’t sell, just help.
  • We’d like the seller to understand and sell us in context of what we already do, or have done with them. Otherwise, we have to go back and research this on our own anyway.

The reason behind the new way to engage customers is obvious. As humans, we trust and connect with channels that lead us to the “right” decision. Channels that successfully accomplish this become our go-to partners. And in this social world, that positioning also results in customers themselves becoming a contributor to that advice. We love to get, and we also love to help. It’s just human nature.

I thought of these following simple industry scenarios to support this emerging model for customer experience design:

Banking

There’s a reason that when we have to get a new credit card or an account, we look to third party sites and opinion to give us feedback. But if the banks get rid of their marketing and try to educate us on what fits us best, and given the fact that the products are largely commoditized, my guess is that the first bank to do this will win big. And more so, when I already have a product from a bank. The effect will be to become a reference anchor in our minds, something that many banks are failing to do today.

Retail

Sending me coupons and promotions is great, but it’s only half the job done. How about if retailers help me decide what I should buy and what I should stay away from – even if they don’t sell what I really need.  By entering in to a partnership with me, they might cut down dramatically on costs, and by knowing what I want (and my shopping basket), they may also be able to transform their inventory management.

Services

The biggest things I look for as a customer is credibility (familiarity, expertise, experience, past results). In addition to spending money on jazzy marketing and taking me to ball games, how about focusing on educating me better on my needs. Helping me meet other customers like me, and sharing best practices and means to achieve my goals will make me  more likely to bring you in.

Evaluating your channels and customer experience by using the new model will throw up insights that will bring you closer to your customers. You’ll be thinking about what they need, rather that about how to present more about yourself.

 

 Based on the principles in my book Dancing The Digital Tune: The 5 Principles of Competing in a Digital World.

Customer partnership is about going beyond advertising and offers

Recently, a reader of my book asked me about The Principle of External Reinforcement. Her point was that most organizations are now anyway helping people buy what they need. So what exactly is the purpose of this principle?

Customer engagement - External reinforcement

First, if you are already doing that, then its awesome. It doesn’t really invalidate the principle, only helps support it, right?

Second, and more importantly, The Principle of External Reinforcement is about helping customers with their needs from a consultative perspective. Its not only about providing options and offers to buy.

Customers browse the websites of service providers and products to see if a product is a fit for them, and then of course buy from us if all works out. However, too often we get too wrapped up in selling (which is not necessarily a bad thing), versus helping customers do what’s right for them. By failing to partner in their quest, we are unable to secure the all important reference anchor position in our customers minds.

Here are some examples we discussed:

1. The mortgage calculators on lenders’ websites are a way to help customers decide. This is an example of a simple mathematical tool which gives customers quick information and can then lead into more detailed discussions. The further we take this tool, the more sticky our position becomes in the minds of the customer. By outlining best practices, things to avoid, how to refinance etc, we end up creating a situation where perhaps a half a point of rate difference will still win the customer for us. Although we necessarily don’t have to add a premium to the interest rate to justify the approach. The additional references and conversions will more than make up for the minuscule incremental costs of this approach. In addition, adding multi-channel customer engagement to the mix will realize the ROI many times over. Consider how retention rates for add-on services suffer at many financial services companies just because the customer is unaware of the real benefits of the add-on?

2. Another example the reader provided was of travel sites such as Expedia. “Don’t they already provide hotels, cars, flights etc – everything that I need?”, she reasoned. Sure they do, but by the time we get to sites like these, and perform our search, we are looking for “the right price”, not planning how to make the best of our vacation days. We look to external sources to do that. My analogy would be to ask the question: what does it take for a great piece of content like “how to spend 3 days in New York City” to become an actionable customer engagement tool on the website? In short, external reinforcement is about satisfying the questions a customer might have that will cause her to look to additional sources of information. She might still look at many sources, but a source that resonates with her with a customer partnership oriented approach will stick. And most likely, the transaction will be made there because of the obvious benefits such an approach will bring – for example, linking with local tourist guides? In addition, maintaining the context of a customers travels will lead to even better engagement because once a NYC trip is over, our promotional campaigns will send “NYC offers to send to friends”, and “Vegas offers for you” instead of the other way around. It’s an entire marketing and customer engagement overhaul.

3. Consultative sales in the enterprise software market are another great example. As new products are developed everyday in a changing digital world, customers are struggling with what’s the best approach for them when it comes to technology architecture and investments. As customers make these decisions, software product companies are really leaving the decisions in the hands of consultants to help the customers decide. However, once an opportunity is qualified, can the “sales” conversations themselves become consulting calls by partnering to help customers assess their entire business process? Is there the risk of a lost sale if the product does not fit the need? Yes, but its most unlikely that decisions are that cut & dried if you have something worthwhile to sell. In case it doesn’t still work out after all this, is it really to be regretted? On the other hand, creating such a mutually beneficial relationship with the customer will make it tough for them to take an adverse decision. After all, enterprise technology decisions are comfort decisions as well – customers are looking for a quality partner that will help them go the distance when it comes to realizing their ultimate business goals.

So The Principle of External Reinforcement is about understanding the context, and helping the customer make the right decision for herself. It’s not just about putting more marketing offers on the table. Its about creating a fertile ground for customer partnership, resulting in a win-win for all. Increasing loyalty is a function of great customer service, which in turn is a function of how well we understand our customers to help them make the best of their investments in our products.

 

 

 

 

 

How to enhance customer engagement by reinforcing the choices our customers make

We all know that product or service reviews are helpful in positively influencing the propensity of customer to buy.  However, most research in this space has focused on the product and the moment of purchase. Lets evaluate some very important dimensions of customer engagement.

If we put ourselves in our customers’ shoes, we realize that a product feature specific review is only partially helpful towards the goal of true customer engagement. In most cases, customers are looking for “fitment” in addition to quality and price. In addition, customer evaluation of a product does not start when they search for a product. It starts much before that. For example, when customers are first made aware of a need, or when they make a shortlist of product that they think may meet that need. The presence of reviews help all along no doubt, but they the customer is left to decide on their own. We need to initiate customer engagement much earlier in the cycle, and base it on information broader than the product itself. We must look at the customer need and context.

 

Customer engagement - External reinforcement

In The Principle of External Reinforcement, I outlined a framework of customer partnership towards driving customer engagement. In summary, the principle tackles the question: How should we help given a customer’s context? 

As the figure illustrates, a customer journey is only partially met when the customer engagement is centered on our own products and services. Customers expect that we will position ourselves in a positive light. A typical response is to cut through the clutter and go directly to the details of the service or product they are looking for. Once that is accomplished, customers will look for external reinforcement – best practices, what else is available, what they should be looking for before they decide etc. It is here that traditional engagement models fail. By focusing only on ourselves, we fail to become the reference point in the customers’ minds. It is definitely desirable to be validated by external sources, but by not engaging the customer on the additional dimensions, we miss the opportunity to create a benchmark in their minds, and fall short of our customer engagement goals.

As customers, while we all have different ways to research and engage in conversations, satisfying this need for external reinforcement is one of the foundations of how companies need to engage, sell and service in a digital world. The need for external reinforcement must be addressed at all times by engaging in a conversation not only with the customer but also with their network. By conversation I mean providing a contextual environment to better trigger and satisfy explorations by customers, noting their actions, understanding them, interpreting them, and then reacting in an appropriate manner over multiple channels and media by including their social and other networks. The Principle of External Reinforcement is about striving to understand the context of a customer’s needs and buying stimuli, and by constantly acting to ensure our actions are in tune with how the customer’s environment is structured, and changing. This framework then lays a strong foundation for customer engagement.

Our journey as customers has important implications for who will succeed in winning our business, and that of our networks, now and also in the future. In fact, one of the first things we do when we look up a product online is to look at comparative ratings and product reviews by others. If we find helpful reviews, research tools, and satisfactory educational product information on the website we initially visit, and if the purchase timing is right, then we are likely to make a purchase right then, or at least come back to the same website and make our purchase – and perhaps many subsequent ones. Similar criteria exist for B2B sales as well although complexity and length of the sales cycles and mediums of information vary significantly.

However, to be able to drive customers to our product, and to make them come back to us again and again as they decide, they need to be hooked onto the source (or seller) as a “partner.” The seller must become the anchor. Otherwise, as customers, we continue to research and look elsewhere for an anchor – online or physical. It’s a perfectly natural and an expected course of action. How this customer experience, and hence customer engagement, unravels is the key to defining our chances of buying the service or product from a particular source. If the initial engagement lets us go without establishing a connection with us, then it gives up the control, and the need for external reinforcement prominently steps in. That’s the very reason why marketing is different from sales. It must create a strong relationship with the customer in addition to raising awareness, running promotions and offering other incentives. When boundaries between marketing and sales are diffused, we lose control of the customer conversation, as well as effective customer engagement. And we end up fighting a faceless, commoditized battle. Yes, the outcome of marketing may be to set up the sale, but that’s not its purpose. It’s a crucial difference in the digital world.

These validation questions also imply that traditional customer engagement approaches that focus on showcasing the product itself are inadequate. Sure, most sales today are provided through attractive offers and promotions, but it is still a numbers game. Relevancy and effectiveness – and hence total cost of sales – can be vastly improved by carefully addressing the needs for external reinforcement.

  • Help customers make the right decision about their choices
  • Help customers make a conscious choice about us
  • Help customers feel good about their choices
  • Help customers with changes in circumstances

When we base the customer relationship on value as measured by them, the customers are proud of their choice of product and about working with us. This automatically helps retention rates, decreases service costs, as well as increases the total lifetime value of the customer measured by repeat or cross-sell / up sell.

Based on The Principle of External Reinforcement in my book “Dancing The Digital Tune:  The 5 Principles of Competing In a Digital World