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Beyond Loyalty: Engagement/Wallet Share

In two earlier posts we discussed 1) including a loyalty proxy as part of your brand perception research and 2) determining the extent to which your desired brand image is reflected in how customers actually perceive the brand.

Now, we expand the research plan to move beyond loyalty and brand perception, and investigate customer engagement, or the extent to which customers are engaged with the brand through share of wallet.

Wallet Share

Comparison to Competitors

The first step in measuring customer engagement is capturing top-of-mind comparisons of your brand to competitors.  There are many ways to achieve this research objective, perhaps the simplest is to present the respondent with a list of statements regarding the 4-P’s of marketing (product, promotion, place and price) and asking customers to compare your performance relative to your competitors.

The statements you present to customers should be customized around your industry and business objectives, but they may look something like the following:

  • Their products and services are competitive
  • They are more customer-centric
  • They have lower fees
  • They have better service
  • They offer better technology
  • They are more nimble and flexible
  • They are more innovative

Similar to the brand perception statements discussed in the previous post, these competitor comparison statements can be used to determine which of these service attributes have the most potential for ROI in terms of driving loyalty, again, by cross tabulating responses to the customer loyalty proxy.

Primary Provider

The next step in researching customer engagement is to determine if the customer considers you or another brand their primary provider.  This is easily achieved by presenting the customer with a list of providers, including yourself, and asking them which of these the customer consider their primary provider.

Finally, we can tie industry comparisons to primary provider by asking why they consider their selection as a primary provider.  This is best accomplished by using the same list of competitor comparison statements above, and asking which of these statements are the reasons they consider their selection to be the primary provider.

Similar to the brand perception statements discussed in the previous post, these competitor comparison statements can be used to determine which of these service attributes have the most potential for ROI in terms of driving loyalty, by cross-tabulating responses to these statements to the loyalty segments.

 

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Build Call to Action into Your Brand Perception Research

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These days, post-transaction surveys are ubiquitous.  Brands large and small take advantage of internet-based survey technology to evaluate the customer experience at almost every touch point.  Similarly, loyalty proxy methodologies such as Net Promoter (NPS) are very much in vogue.  However, many NPS surveys are fielded in a post-transaction context (potentially exposing the research to sampling bias as a result of only hearing from customers who have recently conducted a transaction), and are not designed in a manner that will give managers appropriate information upon which to take action on the research.

At their core, loyalty proxies are brand perception research – not transactional.  We believe it is a best practice to define the sample frame as the entire customer base, as opposed to customers who have recently interacted with the brand.  Ultimately, these surveys are image and perception research of the brand across the entire customer base.

Happily, this perception research offers an excellent opportunity to gather customer perceptions of the brand, compare them to your desired brand image, as well as measure engagement or wallet share.  An excellent survey instrument to accomplish this is a survey divided into three parts:

  • Loyalty Proxy: Consisting of the NPS rating or some other appropriate measure and 1 or 2 follow up questions to explore why the customer gave the NPS rating they did.
  • Image perception: consisting of 3 or 4 questions to determine how customers perceive the brand.
  • Engagement/Wallet Share: consisting of 3 or 4 questions to determine if the customer considers the brand their primary provider, and to gauge share of wallet of various financial products & services across the brand and its competitors.

This research plan will not only yield an NPS, but it will provide insight into why the customers assigned the NPS they did, evaluate the extent to which the entire customer base’s impressions of the brand matches your desired brand image, as well as identify how the brand is perceived by promoters and detractors. This plan will also yield valuable insight into share of wallet, and how wallet share differs for promoters and detractors.

Such a survey need not be long, the above objectives can be accomplished with 10 – 12 questions and will probably take less than 5 minutes for the customer to complete.

In a subsequent posts, we will explore each of these 3-parts of the survey in more detail:

 

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Contact Center Purchase Intent Drivers: Empathy & Competence

Historically, bank contact centers have served primarily as service hubs, serving customers who call for information or are seeking assistance dealing with a problem in need of resolution.  As banks continue to transition into an omni-channel model where customers can interact with the institution across a broad spectrum of channels, the contact center is transitioning into a sales hub, where customers who have researched a product online may still want to speak with a person prior to completing the purchase.  As a result, contact center agents will require a new set of sales skills.

To help understand some of the new skill sets required of contact center agents as they transition from a service to sales role, Kinesis conducted mystery shops of six institutions with national scope to identify what customer experience attributes will yield the most ROI in supporting this sales role.

Our conclusion is customers want empathy and competence.  They want agents who both care about their needs and can satisfy those needs.

Kinesis performed an analysis of purchase intent to identify the attributes with the most potential for ROI in supporting a sales role.  We asked shoppers to rate the experience across a spectrum of service attributes on a 5-point scale where 1 is poor and 5 is excellent; as well assigning a purchase intent rating on a similar 5-point scale.  We then cross tabulated the results by purchase intent to identify which attributes have the largest gap between shops which reported positive purchase intent and those which reported negative purchase intent.

Mean Attribute Ratings By Purchase Intent

Confidence in the Agent, valuing as a customer, interest in helping and explain the products in understandable terms are the four attributes with largest gaps between shops with positive purchase intent and negative, followed by professionalism and job knowledge. Friendliness/courtesy was the attribute with the smallest gap.  While friendliness is important, when it comes to driving purchase intent, the attributes with the largest gaps are those related to care and competence.  Customers want agents who care about their needs, and are capable of delivering on those needs.

 

In a following post we will look at the relationship of specific sales and service behaviors to purchase intent.

Click here for a cross-tabulation of the raw data by purchase intent.

 

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Contact Center Purchase Intent Drivers

Previously we explored which service attributes will yield the most ROI in terms of driving purchase intent.

Previously, we also explored the relationship of specific sales and service behaviors to purchase intent.

Cross Tabulation By Purchase Intent

Greeting Increased Purch Intent Decreased Purch Intent
Greet by identifying the name of the institution 99% 97%
Greet by identifying themselves 100% 97%
Ask name 78% 71%
Ask how they could assist 100% 98%

 

Hold Increased Purch Intent Decreased Purch Intent
Ask permission to be placed on hold first 85% 73%
Give the reason for being placed on hold 100% 88%
Give an estimate of how long you would be on hold 56% 27%
If the actual hold time exceeded the estimate, representative returned to the call to of the status 88% 50%
Thank for holding upon returning 96% 81%

 

Transfer Increased Purch Intent Decreased Purch Intent
Explain the reason for the transfer 99% 98%
Ask permission to transfer 84% 65%
Stay on the line until the transfer was answered by another representative 53% 33%
If hold time exceeded 60 seconds, return to explain delay and ask if you want to continue to hold. 35% 7%

 

Service Increased Purch Intent Decreased Purch Intent
Listen attentively 100% 88%
Use name at least once during the call 66% 44%
Use proper grammar 11% 96%
Speak clearly 98% 72%
Allow customer to speak first and finish your thought 99% 93%
Clarify all requests prior to processing the transaction 100% 80%
Maintain a friendly demeanor and pleasant voice throughout the call 100% 91%
Describe products or services in a manner that was easy to understand 100% 70%
Suggest additional products and/or services 71% 34%
Avoid bank jargon or other technical financial terms 100% 95%
Ask for business 88% 47%

 

Conclusion Increased Purch Intent Decreased Purch Intent
Thank for calling 98% 92%
Ask how else they could assist 95% 65%
Thank for choosing the institution 92% 66%

 

 

 Mean Attribute Ratings Increased Purch Intent Decreased Purch Intent
Job knowledge 4.9 4.0
Friendliness/Courtesy 4.9 4.3
Interest in Helping 4.9 3.8
Explaining products in understandable terms 5.0 3.9
Level of confidence in the representative 4.9 3.2
Valuing as a customer 4.9 3.5
Professionalism 4.9 4.0

 

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Emotional Intelligence: Build Bonds Between Your Brand and the Customer

Though it does not pre-assign seats or provide onboard meals and at times has a lengthy wait and check in process, consumers year in and year out rank Southwest Airlines at the top or near the top of customer service.

Why is Southwest consistently near the top?

There are many reasons.  The most significant being alignment of customer experience to both their brand and customer expectations; however, I believe a key component of Southwest success in customer service is the emotional intelligence of their employees.

What is Emotional Intelligence?

Emotional intelligence is defined by four personality characteristics:

  1. A strong sense of self-empowerment and self regulation;
  2. A positive outlook;
  3. An awareness of feelings (both their own and customers); and
  4. A master of fear and anxiety and the ability to tap into selfless motives.

Each of these characteristics provide a clear benefit to the customer experience:

Personality Characteristic Benefit to the Customer Experience
Self-Empowerment and Regulation Make Decisions in the Moment

 

Positive Outlook

 

Constructive Responses to Challenges
Awareness of Feelings Empathy and Better Communication with Customers

 

Master of Fear/Anxiety and Selfless Motives Express Feelings of Empathy and Caring

 

Leading customer experience brands position the employee to constructively respond to challenges, make decisions in the moment, empathize with customers, and perhaps most important, not only feel but express feeling of care, concern and empathy to customers.

Much of the benefit of emotional intelligence is derived in  “moments of truth” where some experiences in the customer journey have far greater importance than others.  These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share.  Perhaps the most common moment of truth is when something has gone wrong, the customer is unhappy or scared, and the relationship is at risk.

How do we build emotional intelligence?

First of all, emotional bonding cannot be scripted.  Attempting to script such a connection will inevitably come off as hollow and insincere lacking authenticity and empathy, completely undermining the desired customer experience.  Rather, emotional bonding must be a result of a spontaneous series of events that emerge from the emotional intelligence of employees.

The obvious starting point in building emotional intelligence is hiring frontline employees with the requisite emotional intelligence skills.   Emotional intelligence can also be learned.  However, it is a “soft” skill, unlike “hard” skills such as math; it can’t be taught in structured sessions. Rather, emotional intelligence is learned like almost all other human behaviors primarily though observation, experience and imitation.

 

Four Steps to Build Emotional Intelligence

Give people meaning in their work:  Inspire frontline employees with a purpose beyond a paycheck.  This clarity of purpose should include both what they are supposed to do and why they are supposed to do it.

In empowering frontline employees to serve customers, brands should arm them with statements of general principles and values rather than scripted procedures, which undermine empowerment.  Reinforce these principals often so in the instant, when they are in a moment of truth with a customer in need, they have an appropriate framework from which to resolve the issue – and bond the customer to the brand.

Most frontline employees want to help customers; however, their motivations may be varied.  Leading customer experience brands allow their employees to discover their own motivations for looking out for the customer’s best interests.

Create learning opportunities through experience:  Humans are programmed to learn through self-discovery.  Self-discovery reinforces the learning process by instilling a sense of accomplishment or pride.  These positive feelings associated with self-discovery are a strong psychological reward, which reinforces the learning process.  While self-discovery is not a top-down process, managers can foster self-discovery through feedback, encouraging employees to reflect on their own successes and failures, and anecdotes about other employees.  Case studies are not just for MBA students.

Align customer experience systems and processes:  It is imperative that systems and processes support the emotional skills desired from employees.  Systems and process must constantly reinforce the overall message of emotional intelligence and emotionally connecting with customers.   In empowering employees to respond to moments of truth, management must strike a balance between financial considerations and the things that matter to the customer.  Good customer experiences are not good because they are good; they are good because they are profitable; however, there is no benefit to being penny wise and pound foolish.  Finally, processes need to be streamlined to give employees both the time and ability to rise to the situation.

Enlist leaders and mentors:  Emotions are learned through modeling.  Children don’t learn to react to certain stimuli just because a parent tells them what to feel.  We learn how to react to certain situations through trial and error and observing role models.  First, it is imperative that all managers and leadership model appropriate emotional skills.  How can you expect emotional intelligence from the frontline if it doesn’t exist in leadership?  Second, identify employees with the appropriate emotional skills and position them as role models within the organization.

Key to success of any customer facing brand is alignment of the customer experience to both the brand promise and customer expectations.  Most of time, this is not difficult. Appropriate systems procedures and even automated delivery channels can achieve this end.   However, in moments of truth, where there is a high degree of risk associated with the outcome of the experience, leading customer experience brands rely on an emotionally intelligent frontline staff to align the experience and bond the customer to the brand.



 

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Implications of Mood Effects on Customer Experience Design

In an earlier post we explored how customers experience all aspects of their relationship with a brand through the lens of their emotional state, and observed that all brands must be prepared to meet each customer in their specific emotional state – be they happy, excited, depressed or angry.

Customer Experience Design

Research has determined that, not surprisingly, people are motivated to maintain positive moods, and mitigate negative affective states. When feeling good we tend to make choices that maintain a positive mood. Customers in a positive mood are more loyal, and more likely to interpret information favoring a current brand. Meanwhile, people in negative affective states make choices that have the potential to change or, in particular, improve their moods.

A key to maintaining positive moods is arousal, or more specifically, the management of arousal. Let’s take a look at how arousal management influences consumer choice. Consumers in a positive mood prefer products congruent with their state of arousal. Excited or happy consumers want to stay excited or happy, while relaxed and calm consumers what to stay relaxed and calm. Consumers in a negative mood prefer products with the potential to change their level of arousal.

In considering the role of customer emotions in their relationship to a brand, it is important to understand the implications of customer emotions on design of the customer experience. It is impossible, of course, to plan every customer experience or to ensure that every experience occurs exactly as intended. However, brands can identify and plan for the types of experiences that impart the desired emotional state on the customer. It is useful to group these experiences into three categories of interaction with the customer: Stabilizing, Critical, and Planned.

Stabilizing

Stabilizing interactions promote customer retention, particularly in the early stages of the relationship.

New customers are probably in a positive state of valence, with either a high state of arousal (happy/excited) or a negative state of arousal (relaxed/calm). Remember, people are motivated to maintain positive moods, therefore, the objective of these stabilizing interactions is to maintain this positive mood.

The keys to an effective stabilizing strategy and maintaining these positive moods are education, competence and consistency.

New customers are at the highest risk of defection. As customers become more familiar with a brand they adjust their expectations accordingly. It is important that expectations be set appropriately to eliminate conflict with reality. Conflict between expectations and reality early in the customer relationship runs the risk changing the customer’s mood from positive to negative. They are more likely to experience disappointment, and thus more likely to defect.

Education influences expectations, helping customers develop realistic expectations. It goes beyond simply informing customers about the products and services offered by the company. It systematically informs new customers how to use the brand’s services more effectively and efficiently, how to obtain assistance, how to complain, and what to expect as the relationship progresses. In addition to influencing expectations, systematic education leads to greater efficiency in the way customers interact with the company, thus driving down the cost of customer service and support.

Critical

Critical interactions are service encounters that lead to memorable customer experiences. While most service is routine, from time to time a situation arises that is out of the ordinary: a complaint, a question, a special request, a chance for an employee to go the extra mile. We call these critical interactions “moments of truth.” The outcomes of moments of truth can be either positive or negative – they are rarely neutral.

Because they are memorable and unusual, moments of truth tend to have a powerful effect on the customer relationship. We often think of moments of truth as instances when the brand has an opportunity to solidify the relationship – earning a loyal customer, or risk the customer’s defection. Positive outcomes lead to positive states of valence (excited, happy, relaxed, calm) with greater wallet share, loyalty, and positive word word-of-mouth endorsements; while negative outcomes generate negative states (anger, frustration, depression); and result in customer defection, diminished share of wallet and unfavorable word-of-mouth.

We are in an era of automated channels. Automated channels are essential for meeting customer expectations and reducing transaction costs, but technical solutions are not, by themselves, able to drive an emotional connection between customers and the brand – particularly in moments of truth. Employees, emotionally intelligence employees, empowered to resolve the issue are critical in driving an emotional connection. In a future post, we will discuss the concept of Emotional Intelligence of frontline employees in handling moments of truth.

An effective customer experience strategy should include systems for recording critical interactions, analyzing trends and patterns, and feeding that information back to the organization. Employees can then be trained to recognize critical opportunities, and empowered to respond to them in such a way that they will lead to positive outcomes and desired customer behaviors.

Planned

Planned interactions are intended to increase customer profitability through up-selling and cross-selling. These interactions are frequently triggered by changes in the customers’ purchasing patterns, account usage, financial situation, family profile, etc. CRM analytics combined with Big Data are becoming quite effective at recognizing such opportunities and prompting action from service and sales personnel.

Customer experience managers should have a process to record and analyze the quality of execution of planned interactions with the objective of evaluating the performance of the brand at the customer brand interface – regardless of the channel.

The key to an effective strategy for planned interactions is appropriateness. Triggered requests for additional purchases must be made in the context of the customers’ needs and permission; otherwise the requests will come off as clumsy and annoying. By aligning information about execution quality (cause) and customer impressions (effect), customer experience managers can build a more effective and appropriate approach to planned interactions.

 

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Loyalty & Wallet Share

Loyalty. There is almost universal agreement that it is an objective – if not the objective – of customer experience management. It is highly correlated to profitably. It lowers sales and acquisition costs per customer by amortizing these costs across a longer lifetime – leading to extraordinary financial results. In retail banking a 5% increase in loyalty translates to an 85% increase in profits.

Loyalty

Loyalty is Emotion Driven

Banks often see themselves as transaction driven; delivery channels are evaluated on their cost per transaction. As a result, there is a lot of attention given to and investment in automated channels which reduce transaction costs and at the same time offer more convenience to customers. Win-win, right? The bank drives costs out of the transaction and customers get the convenience of performing a variety of transactions untethered by time or space. However, while transaction costs and convenience are important, loyalty is often driven by an emotional connection with the institution. An emotional connection fostered by interaction with actual employees at moments of need for the customers –moments with a high level of emotional importance to the customer – moments of truth.

Moments of truth are atypical events, where customers experience a high emotional energy in the outcome (such a lost credit card, loan application, or investment advice). In one study published in McKinsey Quarterly, positive experiences during moments of truth led to more than 85% of customers increasing wallet share by purchasing more products or investing more of their assets (Beaujean et al 06)

Impersonal alternative channels lack the ability to bind the customer to the institution. It’s the people. Effective handling of moments of truth requires frontline staff with the emotional tools or intelligence to recognize the emotional needs of the customer and bind them to the institution.

 

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Emotional States and Problem Resolution

Previously we discussed the concept of “moments of truth” where some experiences in the customer journey have far greater importance than others. These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share. Perhaps the most common moment of truth is when something has gone wrong, the customer is unhappy or scared and the relationship is at risk. These events could be the result of: service delivery failures (unavailable service, unreasonably slow service, or other core service failures); customer needs and requests (special customer needs or customer preferences); or an adverse outcome (loan denial or loss of investment principal).

Also, in an earlier post we introduced a model to define emotional states with two dimensions:
1) valence (the extent to which the emotional state is positive or negative) and
2) arousal (the extent to which the energy mobilization of the emotional state is experienced on a scale of active to passive or aroused to calm).

Arousal Valence Quadrants

Together, valence and arousal can define all human emotions. States of high arousal and positive valence are excited or happy; low arousal and negative valence are bored or depressed; while states of positive valence and low arousal are calm and relaxed, and negative valence and high arousal are angry or frustrated.

Not surprisingly, people are motivated to maintain positive moods, and mitigate negative affective states. People in negative affective states desire choices that have the potential to change or, in particular, improve their moods. For example, researchers have demonstrated a preference for TV shows that held the greatest promise of providing relief from negative affective states. People in a sad mood want to be comforted; anxious people want to feel control and safety.

Beyond solving the problem, the objective in dealing with an upset customer is to help relieve their negative affective state. If they are angry, attempt to calm them; if anxious, provide comfort. Time and time again, our research across many brands reveals that beyond resolving their problem as efficiently as possible, what customers want is empathy and reliability. We want to talk to someone who both understands how we feel and is reliable. They both have a solution to the problem and what they say will get done, gets done.

Strategies in CX Design

Anticipate potential needs for recovery: In designing tools to monitor the customer experience, managers must be aware of potential moments of truth and design tools to monitor these critical points in the customer journey. Some of these tools include: monitoring customer comments from comment cards or online forms to identify instances where the customer is either extremely happy or dissatisfied; monitor social media to identify common causes of moments of truth; survey tracking specifically focusing on the responses from dissatisfied customers; and mystery shopping to test the response to specific problem scenarios.

Decentralize decision making & empower front-line employees: In empowering frontline employees to serve customers, brands should arm them with statements of general principles and values rather than scripted procedures, which undermine empowerment. Reinforce these principles often so in the moment, when they are in a moment of truth with a customer in need, they have an appropriate framework from which to resolve the issue – and bond the customer to the brand.

Train the frontline: Training the frontline to handle problem resolution requires training not just in decision making, but also emotional intelligence. Can emotional intelligence be taught? Yes, but it requires a unique approach of self-discovery. Self-discovery is not a top-down process, however. Managers can foster it through feedback, encouragement to reflect on their own successes and failures, and anecdotes about other employees.

Specifically, tactics frontline employees can employ to handle upset customers include:

• Acknowledging the problem;
• Empathize;
• Apologize;
• Own the problem;
• Fix the problem;
• Provide assurance; and
• Provide compensation.

Customers experiencing a problem want to change their negative affective state. When dealing with an upset customer it is incumbent on the frontline to help relieve this negative state. Time and time again, in research study after research study, Kinesis finds that the two service attributes that influence customers in a positive way when they encounter a problem are empathy and reliability. Customers want to interact with employees who understand their feelings and are able to resolve the problem.

 

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Emotional Role in Sales & Acquisitions

Previously we discussed the concept of “moments of truth” where some experiences in the customer journey have far greater importance than others. These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share. The purchase and sales experience is one such moment of truth. One study published in McKinsey Quarterly has determined that the purchase experience of financial services motivated 85% bank customers to purchase more financial products or invest more assets with the institution. (Beaujean et al 06)

We also introduced the concept of defining emotions using two dimensions of mood: valence (positive or negative) and arousal. Again, as we previously observed, modern research into brain activity during the decision process suggests that decisions are made within the brain before we are consciously of them. Emotions provide a short cut to acting on decisions, and rational thought appears to justify decisions after they are made on the subconscious level.

So…given that emotions play a key role in financial decisions, what are the emotions bankers encounter as part of the sales experience?

The emotions financial service customers experience vary by customer, financial need, circumstance and product/service sought, however the emotions a prospective customer may experience include:

• Excited
• Convinced
• Enthusiastic
• Expectant
• Hopeful
• At Ease/Satisfied
• Distressed
• Anxious

These emotions map to the valance and arousal dimensions as follows:
Arousal_Valence_Map_Sales_Emotions

So…what do we do with this enlightenment?

First, knowing that people are motivated to maintain positive emotional states and change/mitigate negative emotional states, it is important for the banker to recognize the prospective customer’s emotional motivation and offer solutions which will achieve either of these ends.

Kinesis has conducted research into purchase intent as the result of financial service sales presentation which may be instructive. Click here for this research.

Time and time again, in study after study, we consistently observe that purchase intent is driven by two dimensions of the customer experience: reliability and empathy. Customers want bankers who care about them and their needs and have the ability to satisfy those needs. Specifically, our research suggests the following behaviors are strongly related to purchase intent:

 

Empathy

Interest in Helping

Discuss Benefits & Solutions

Personalized Comment

Listen Attentively

Express Appreciation

Reliability

Promised Services Get Done

Accuracy

Friendly & Courteous

Professionalism

 

Both empathy and reliability require employees with Emotional Intelligence.  These are employees with a positive outlook and a, strong sense of self-empowerment; self regulation; awareness of feelings (both their own and customers); master of fear and anxiety and the ability to tap into selfless motives.

Sales presentations are moments of truth with the potential to leave a lasting impression on the customer with significant long-term implications for both customer loyalty and wallet share – with obvious financial benefits for the institution.  We’ve found that branches with above average frequencies of behaviors associated with reliability and empathy experienced a 26% stronger three-year branch deposit growth rate than branches with low frequencies of these behaviors.

Next, we’ll take a look at moments of truth in the context of problem resolution.

 

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Mood Effects on the Customer Experience

Customers experience all aspects of their relationship with a brand through the lens of their emotional state. Be they happy, excited, depressed or angry all brands must be prepared to meet each customer in their specific emotional state. It’s a challenge – but also an opportunity. Ultimately, loyalty is emotionally driven. Brands that can react to and manage customer emotions stand to reap the rewards of customer loyalty.

To understand the role of the customer’s mood in managing the customer experience, it is instructive to consider how two affective states work together to define mood. The following model tracks mood across valence (the extent to which the emotional state is positive or negative) and arousal (the extent to which the energy mobilization of the emotional state is experienced on a scale of active to passive or aroused to calm).

Arousal Valence Quadrants

Together, these affective states of valence and arousal can define all human emotions. States of positive valence and high arousal are excited or happy; negative valence and low arousal are bored or depressed. States of positive valence and low arousal are calm and relaxed, and negative valence and high arousal are angry or frustrated.

Here is a detailed map of a variety of emotions across these two dimensions.

Map of Emotions to Valence & Arousal

Research has determined that, not surprisingly, people are motivated to maintain positive moods, and mitigate negative affective states. When feeling good we tend to make choices that maintain a positive mood. Customers in a positive mood are more loyal, and more likely to interpret information favoring a current brand. Meanwhile, people in negative affective states make choices that have the potential to change or, in particular, improve their moods. For example, researchers have demonstrated a preference for TV shows that held the greatest promise of providing relieve from negative affective states. People in a sad mood want to be comforted, anxious people want to feel control and safety.

Key to maintaining positive moods is arousal or more specifically the management of arousal. Let’s take a look at how arousal management influences consumer choice. Consumers in a positive mood prefer products congruent with their state of arousal. Excited or happy consumers want to stay excited or happy, while relaxed and calm consumers what to stay relaxed and calm. Consumers in a negative mood prefer products with the potential to change their level of arousal. For example, in an experiment, participants were offered the choice of an energy drink or iced tea. The following chart illustrates participant’s preference by the state of arousal and valence:

Tea_Energy_Drink_Preference

Participants in a positive mood, preferred the drink congruent with their level of arousal, those in a positive low-arousal state preferred iced tea, and those in a positive high-arousal state preferred an energy drink. On the other hand, those in a negative mood preferred a drink incongruent with their energy state, those in a negative low-arousal state preferred an energy drink, and those in a negative high-arousal state preferred iced tea.

Understanding the role of arousal management in customers’ innate desire to maintain positive moods and mitigate negative moods has far reaching implications for just about every element of the customer experience from sales, to problem resolution, to customer experience design, hiring, training and customer experience measurement. In future posts we will explore these implications for each of these elements of the customer experience.

 

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