Consumer Research


image

Saving to Keep Up With the Joneses

In the Wall Street Journal, Carolyn T. Geer highlights recent surveys of investors by entities including T. Rowe Price and ING.

The Question: Does the knowledge that your friends and neighbors are saving more than you cause you to boost your savings?

The Answer: It works, but the effectiveness varies very much with the approach.

The “Lake Wobegon Effect”

People have a natural desire to avoid being average and ordinary. This phenomenon is known as the “Lake Wobegon Effect,” named after a fictional town created by writer and radio host Garrison Keillor, where:

All the women are strong, all the men are good looking, and all the children are above average.

The question is for financial consumers is: Will consumers be more inclined to maximize their 401(k) contributions or increase their insurance coverage amounts if provided peer comparisons?

What the Studies Show

Matt Fellowes, founder and chief executive of HelloWallet, which works with employers to provide financial guidance to their employees via the Web and mobile devices, confirms that peer comparison is one way that economists and others are attempting to modify financial behavior. He believes that cluing investors in on their peers’ financial decisions can influence the decisions they make about their own money, if you show them convincingly that what they’re doing doesn’t meet the norm, but “it doesn’t work for everyone. It’s not a silver bullet.”

According to an ING study of U.S. consumers:

  • More than half of respondents say they would be motivated to save more for retirement if their sagings didn’t measure up to those of their peers.
  • Yet one-third say they would not be motivated to save morel.

Why the mixed results? Apparently, the approach can be quite effective if done right, but the wrong approach can also be demotivating. Stanford University economist John Beshears and colleagues say that when some employees are told of their co-workers’ higher savings rates, they are actually less driven to save. But the companies that have studied the effect also say that the approach can be fine-tuned to avoid demotivation, which I will explain below.

Marketing Applications

Web-Based Tools: ING has created a free, Web-based tool that lets investors measure themselves against others on a range of saving, spending and personal-finance matters called INGCompareMe.com. Deb Dupont, director of the ING Retirement Research Institute, conducted a test market of the concept with employees of several of its retirement-plan customers, that yielded the following results, which were promising enough to launch the tool:
  • 21% increased their contributions or joined a plan.
  • HelloWallet members showed similar results, according to Matt Fellowes.

The Right Approach: Two Important Variables

The right approach needs to take into consideration two important variables:
1. Don’t Demotivate: Fellowes explains that you must be careful not to use “shock and awe” tactics that demotivate consumers:

We’ve tried: ‘You are $5 million behind on your retirement savings! What is your problem?’ But emotionally what happens is people shut down and move on.

2. Don’t Set The Bar Too Low: One problem with peer comparisons that reference  average workers is that it can set the bar too low.

To strike the perfect balance, “HelloWallet has reframed the issue for consumers as follows:

You are making $5,000 a month now. In retirement, you’re only going to be making $2,000 a month, based on your current savings rate. On average your peers will be making $4,000, but the very best savers among them will be making $7,000.

This highlights what the best, most financially healthy people in a peer group are doing and provides a more realistic target, while piggybacking on the natural desire to avoid being ordinary.

Assisting Complex Financial Product Decisions

Having applied this approach in product comparisons, I have found that the approach can be a valuable aid in helping consumers make complex financial products. In particular, I find that when presenting consumers with their choices, it is even more helpful to include not only a comparison to average consumers but a “best practice” comparison. For example, employers considering an employee benefit program can be shown what kinds of benefit plans their most successful competitors are adopting. Individual consumers considering a plan of insurance can be shown what kinds of options successful peers have chosen.

Choice Architecture: Marketers and sales professionals can improve the effectiveness of their approaches by making use of an effect known in behavioral economics as “choice architecture.”

Marketers and sales professional should be aware of certain behavioral tendencies that tend to impede decision making involving complex insurance and other financial products.  Consumers are reluctant to make a switch to a different insurance carrier or among different plans when the choices are complex – something known as status quo bias. Inertia, or the tendency not to change, is especially significant when choices are complex.

Other studies show that by reframing the choices for the consumer, you can help guide decision making for consumers facing complex decisions in selecting better plan options.

Implications For Financial Marketers

The implications for companies in crowded markets such as insurance and investment products and services are great. It can mean steering consumer toward decisions that will ultimately save them and the company money and improve consumer outcomes.

Companies like Progressive Insurance, for instance, use comparison shopping tools to differentiate themselves in a crowded field as a more consumer-oriented and trustworthy choice. Their “name your own price” message conveys that the consumer can save time comparison shopping through the use of their online tools. Their perky spokesman, Flo, and her price gun personify consumer values such as friendly, good spirited personal service and a personal touch. This is all intended to break down consumer resistance to switching companies, and has generated incredible recognition.

The response to these advertisements demonstrates that the message can generate strong brand associations with core consumer values that can be illustrated in sensory terms.  But an important question remains – how to turn brand recognition and leads into conversions?

In other words, once the consumer reaches out to their local agency or makes an online query, how can the sales professional better parlay this into a consistent consumer experience that results in conversions to more profitable product lines and cross selling opportunities/share of wallet.

This is where choice architecture can be vital. In providing comparisons with other carriers, the sales professional has invaluable opportunities to more effectively clue in consumers on their peers’ financial decisions and influence their buying decisions.

Related Articles:

For more information about how behavioral economics can help guide consumers’ buying decisions, with research results from Sibson Consulting, reference my related articles below.

Advertisements

The Washington Post’s Wonkblog reports that a new poll from Public Policy Polling found:

  • 39% of Americans have an opinion about the Simpson-Bowles deficit reduction plan.
  • 25% also have an opinion on the Panetta-Burns plan.

Of course, there is no “Panetta-Burns” Plan.  But that didn’t stop people from expressing opinions about it. The survey results:

Panetta-Burns’ nonexistent policy proposals were supported by 8% and opposed by 17% of the voters surveyed.

Simpson-Bowles’ real policy proposals had stronger favorables, with 23% support and 16% opposition.

Related:

 of GetElastic put together this informative infographic on the culture of multitasking and what it does to our brains. See the links below for more research on the subject – in between clicks, that is. 😉

multitasking-infographic

Related

Top 5 Challenges Marketers Face

Hubspot’s analysis of the top Challenges for B2B vs. B2C shows that the most common challenge across both segments is driving awareness and traffic, in other words, optimizing the top of the funnel to grow their reach. Here are the top challenges:

The top 10 challenges across both B2B and B2C companies are:

  1. Awareness/traffic (22.5%)
  2. Lead generation (16.2%)
  3. Social media (6.3%)
  4. Targeting (5.4%)
  5. Branding/brand recognition (4.5%)
  6. Converting leads to customers (3.6%)
  7. Keeping up with marketing trends (3.6%)
  8. Increasing/proving ROI (2.7%)
  9. Content creation (1.8%)
  10. Budget (1.8%)

The top 5 B2B marketing challenges are:

  1. Awareness/traffic (22.5%)
  2. Lead generation (16.2%)
  3. Social media (6.3%)
  4. Targeting (5.4%)
  5. Branding/brand recognition (4.5%)

The top 5 B2C marketing challenges are:

  1. Awareness/traffic (19.6%)
  2. Social media (17.9%)
  3. Targeting (10.7%)
  4. Budget (8%)
  5. Lead generation (8%)

The HubSpot Inbound Internet Marketing blog’s Sarah Goliger identifies 5 Major Challenges Marketers Face (And How to Solve Them). While we all face different challenges, there are some areas that any marketer can improve on. HubSpot’s quick 3-question quiz – “What’s Your Biggest Marketing Opportunity?”  can help you hone in on where you might best focus your efforts to improve the effectiveness of your marketing more effective.HubSpot’s analyzed their results to identify some of the most common challenges marketers have told them that they face, and suggests solutions.

1. Generating Awareness and Driving Traffic 

Challenge: To beging generating leads to convert into customers, you need to get your audience’s attention. This means generating a large enough volume of interested prospects by understanding which channels can get you the highest return.Solution: You first need to determine if you are using the right social networks where your natural audience is.  Some suggestions include using tools to “widen the top of your marketing funnel, such as:

2. Targeting Effectively 

 Challenge: Hubspot recommends that you identify your buyer personas. In other words, make a clear determination of who it is you should be marketing to:

Offer some sort of value to them (fulfill a need or desire – for instance, to learn or understand something about your industry or alleviate a problem that your product aims to solve.)

Make your message relevant to your audience.

Solution: Start by developing a detailed picture of your target audience, building buyer personas through a 3 step process:

  • Segment by demographics.
  • Identify their needs.
  • Develop behavior-based profiles.

Then determine what each buyer persona is looking for for and how you can provide value to that persona and tailor your content to make your message relevant to every individual lead.  Hubspot provides  and developed a  to help you research and create detailed buyer personas.

3. Using Social Media to Generate Customers and Revenue

Challenge: Increasingly, companies understand the business value in social media marketing. The problem is, they don’t know how to convert social engagement into dollars – the science of targeting, engaging, and nurturing a social following that can be a source of quality leads for conversion.Solution: Managing media marketing requires that you:

  • Recognize influencers.
  • Segment groups of users based on their social activity and interests.
  • Properly time and manage appropriate follow-up communication.

Social media lead intelligence about a lead’s behavior and interaction with your company in social networks will enable public facing representatives to have more meaningful and targeted conversations with specific, tailored information about that person’s activity. Personalized conversations based on information that is personally relevant to the customer lead to higher conversion rates.

4. Keeping Up With Marketing Trends and Strategies

Challenge: Marketing has increasingly shifted its focus from print media to online media, and social media is becoming a dominant platform for two-way communication and feedback collection. How can you keep up with new technologies, trends and strategies in this quickly changing environment?Solution: Effective marketing means investing in consumer research and ongoing marketing resources to know:

  • Where your audience is.
  • How to provide value to them.
  • What the best tools and methods are for doing so.

5. Proving ROI

Challenge: The proliferation of advanced analytics tools means that marketers are held to a higher standard. You must be able to measure the value of your efforts in terms of leads, customers, and revenue, tying every single lead, customer, and dollar back to the marketing initiative that created them.

Solution: Some suggestions Hubspot presents are as follows:

  • Closed-loop marketing cuts through the vagueness of marketing myths and assumptions and reveals real data about the results of your marketing efforts.
  • Advanced marketing analytics can track which marketing activities are generating leads, customers, and revenue.

Closed Loop Marketing means developing a loop of two-way messaging with customers. Done effectively, messages are pushed to the customer based on insights on customer preferences, or accessed in a self-service model. Data is gathered during the interaction leading to a cycle of continuous improvement. Enhanced knowledge about the customer and customer preferences allow you to refine the message or content to improve subsequent interactions.

In other words, it is about relationship building using data gleaned from customer interactions through various communication channels to support the continuous refining of relationships:

  • Selection of the channels and messages are driven by customer preference and receptivity.
  • This provides an improved customer database for refined segmentation by behavioral attributes.
  • Data about which content was presented, duration, frequency,which customers, feedback, responses to surveys, and click stream data, along with additional data sets such as sales, market share, sales growth provides you with the analytics to compare data sets for cause and effect in order to recommend corrections to the next approach.

In Closed Loop Marketing, when the insights gained during a customer interaction are used to make a change in the sales and marketing approach in order to improve a subsequent interaction, the loop is closed. Additionally, this intelligence can be extended to:

  • Multichannel Marketing – closed loop marketing with multiple interconnected channels.
  • Continuous Loop Marketing – allowing for improvements to happen on an ongoing basis, rather than one time only.

Online and Offline Marketing Are Merging

According to New Media and Marketing.com, an online survey of 1,500 holiday consumers conducted by market research organization Ipsos OTX and Google conducted show that that online and offline shopping are merging into a new consumer buying process.  According to the study,

  • 51% of surveyed consumers intend to research a product online and visit the store to buy it.
  • 32% plan on researching an item online, inspecting it in the store, and then completing the transaction online.

The study attributes this largely to the comfort consumers now have about buying online, including the convenience of shipping and not being greater faith in credit card information security, and the desire to make a more educated purchase. Increasingly, rather than go to the store to get educated, they want to go to the store already educated.

The Growing Role of Social Media

The study finds that consumers are seeking recommendations, but social media adds a personal touch to support a buying decision:

  • 24% of consumers will turn to social media for their holiday shopping this year.
  • Only 11% will rely on blogs or message boards. Although both sets of

It Depends on the Product

This doesn’t apply for all products, including everyday groceries and impulse items, where few consumers would bother to do extensive research.  The rule of thumb:

  • The higher the cost of the product the more time online or the more the product requires a change to behavior the more time they will spend researching it online.

Companies like Target do merchandising well, and should continue focusing there. However, for products like those offered by Apple, the web presence is integral, and Apple’s website is ranked one of the top eCommerce sites within the US.

This infographic from Infoys shows  the strength of offline marketing and how an offline strategy can run in conjunction with an organization’s online marketing efforts:

Superheroes Teach the Art of Storytelling

Bryan Eisenberg of ClickZ recently attended Comic Con, and interviewed  Shane Gibson, chief social officer for Wizard World and Comic Con to discuss the power of these iconic brands and to discuss social media marketing with these audiences. The takeaway, according to Bryan, is the level of engagement people have with the characters.

Great content marketing planning follows the structure of a powerful story; using an inciting incident that compels you into the narrative arc, strong characters including a hero (protagonist) and an enemy (antagonist), and a sense of conflict and resolution.

Brand Persona As a Superhero

People relate to comics in very personal ways. They represent a form of wish fulfillment. Through them, we can safely explore our own hidden aspirations and desires – reflections of our values and beliefs. For instance, teenagers can relate to Spider Man as an insecure teen with problems just like them. Batman gives voice to our inner frustrations and deep seated need to prevail over what oppresses us. Superman or Wonder Woman express the strength of character within. During times of national trial, as in World War II, comics reflected our inner need for patriotic heros. Through the Hulk, Wolverine, and Daredevil we can come to terms with and prevail over our flaws.

We are likely to identify with certain heros more than others, since we see ourselves, our values and beliefs personified in them. A brand persona that can capture these feelings is highly successful. In Apple, we see ourselves empowered by technology and on the cutting edge of change. An automobile brand or brand of perfume magnifies our sense of what we long to be and feel ourselves to be deep within.

What is a Content Marketing  Persona?

A Content Marketing Persona is a related, but slightly different concept. These are a means through which we can better understand the customer’s perspective. If we know what our customers need in order to achieve their goals, we can better understand about their journey through the buying process.

While a Brand Persona is an image that our customers can identify with, a Content Marketing Persona is a reconstruction of our customer’s inner voice – the whole person that our customer is – how the customers see themselves now, what they aspire to become, and what they face as they make their way through life. In short, the Brand Persona, as opposed to a static, if evocative image, is a full and complex story.

Content and social media marketing should be focused around the conversations we are having with your customers, and the only way to deepen the conversation is to mirror the customer, just as we do when we have a meaningful conversation with a friend. As Bryan puts it:

Too many companies and their agencies are so wrapped up in their own sales processes they forget that customers have a different angle of approach to the problem or need that they could solve if they took the right perspective.

To truly communicate with your visitors, you must put yourself in their shoes…There are many segments and your personas can represent these segments…Personas will allow you to evaluate your content and identify the gaps in your content strategy to meet your potential customer’s needs.

Expected Result: More Relevant Conversations and Interactions

Once you begin to develop customer personas and write from these perspectives, we can begin the process of planning content marketing scenarios that will draw people to participate in the conversions and experiences that are critical to the success of our business.

 

Marketing Models That No Longer Work

 of Newmediamarketing.com provides a list of 10 Marketing Principles That Aren’t True Anymore. His core observation is that mass marketing models no longer optimally address the new attitudes and behaviors of the socially connected consumer.  For instance, while TV drives awareness, it is increasingly the Internet that drives conversion.
Of the 10 marketing principles that Rich finds increasingly irrelevant, I will highlight those that I consider to be the top 3.  It is important to consider these consideration points in the context of your own product and marketing environment because principles that work best for one type of product marketing environment may not work as well in others.

3 Marketing Principles To Rethink

1. Mass Segmentation Models – The old mass segmentation models are giving way to micro-segmentation.  Here’s why:  because people have more in common with those they follow on social media than their demographic peers, and because everything happens in real time online. Consequently:

…it’s more a relevant message to a relevant audience at a relevant time.

Customer segmentation is the practice of dividing customers into groups relevant to a particular line of business in order to decide how to relate to customers in each segment. The goal is to maximize the value of each customer to the business.

Micro-segmentation groups small numbers of customers into more precise segments, based on factors, including behavioral predictions in order to direct specific marketing actions to each micro-segment. The goal is to maximize the effectiveness of every contact with each customer.

The Process: For example, customers of an online gaming company might be segmented into Lifestyle Stage Groups, such as: 1) fun; 2) new; 3) active; 3) star; 4) churn; and 5) reengaged. Deeper dives into each Lifestyle Stage Group can be made by segmenting these customers into Segmentation Layers, using cluster analysis on sets of attributes that share a common context, including behavioral and demographic. By associating each customer with a string of different clusters, customers are then grouped together as micro-segments.

Intended Results: Micro-segments, which typically contain very few customers each, allows for highly personalized predictive analysis and marketing action optimization.   Tracking and analyzing how different marketing actions affect the spending behavior of different micro-segments makes it possible to predict the effectiveness levels of different marketing actions on different segments. As a result, marketers can better determine which marketing approaches will have greater impact on each group of customers. Further, since the micro-segments are dynamic, and there is movement through the Lifestyle Stages, dynamism of the customer path can be factored into the analysis. As explained by micro-segmentation company, Micromove:

Most companies  view segmentation as a method of clustering similar customers together at a given point in time, but they completely disregard the path or route that each customer has taken to reach his or her present segment. By analyzing customers based on their movement among segments over time, [micro-segmentation] achieves far more accurate segmentation than any other known method.

Focus on Customer Lifetime Value in segmentation allows for better targeted marketing based on more precise predictive customer behavior models.

2. The Purchase Funnel (Reach and Frequency)

For products where the purchase process is more complex, building awareness through reach and frequency is only a first step. In line with the Consumer Decision Journey as defined by McKinsey, to improve conversion, you need to rethink the “purchase funnel” in favor of a more complex consumer decision model.

My article, The Customer Decision Journey: Research Overturns the Marketing Funnel shows that the old consideration funnel has given way to a decision loop (“the consumer decision journey”) that takes place in a less linear and more complicated purchase environment where there are numerous touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. 

consumer decision journey

McKinsey’s David Court has a presentation showing what this means for marketers. He explains:

You have a trigger of some sort, where people start across the decision journey — they are now going to move towards purchase. The first stage is initial consideration. In many industries, people actually start in their initial consideration of a brand with a relatively narrow list, we believe because of the busy lives and bombardment of media — it’s just very difficult to get through all this clutter in this consumers initial consideration set. However, once the consumer decides they are going to buy a product, they move into a stage that we call active evaluation. It is here that the number of brands they are considering increases. Which is exactly the opposite of the premise of the funnel, going from broad to narrow. This is the stage when the consumer is intent on purchasing and they are actively researching the product.

3. Acquisition Only

Your business model will naturally continue to depend on new customer acquisition goals, but not exclusively. Marketing models based on new customer acquisition alone that do not also have strategies for retention and engagement break down over time, and the reason that pyramid schemes ultimately collapse is that there are a limited number of new customers to be sold.

Brand loyalty is important because brand enthusiasts will reengage and repurchase, and influence others to whom (s)he is socially connected to purchase and engage. So it’s vitally important today to keep the customers you have happy by delivering on all brand touch points, and creating a social context for them to become brand ambassadors.

Apple is the oft-cited example of a company whose brand loyalty-oriented model has been extremely successful. While not the PC market share leader, Apple has leapfrogged other PC makers in profitability because their customers are willing to pay more for a better brand experience. 

Lessons For Marketers In The Age of Socially Driven Conversion

Strategy: Traditional messaging is geared toward trying to get into the consumer’s initial consideration stet. However, rather than continue to push ads and promotions out to broad groups of consumers, marketers need to be sure that their marketing activities are aligned against how their consumers research and buy products.

Consider the likely results if the customer reaches out during the active evaluation stage but is not provided the facts and testimonials that (s)he is looking for to make the purchase decision. The budget spent on gaining recognition and getting into a customer’s initial considerations set will not only fail to result in conversion, but will effectively deliver the client to a competitor who delivers on the customer’s pre-purchase expectations.

In essence, this means that the customer has moved past a brand’s promise to a brand’s value in the consideration phase.  So marketers have to bridge the gap between consideration and conversion sooner by developing ways for people to talk about your product, and making word of mouth work in the age of socially driven conversion.

Social engagement doesn’t mean that, as Rich Meyer puts it, consumers necessarily “want to have a relationship with their salad dressing or butter…You also need to think more about your brand as media than just providing sales information online.”

In other words, since the joy of the purchase itself is often more than that derived from the product itself, what value are you delivering in the customer’s purchase experience? You need to emotionally connect to your customers and give them an emotional reason to select your brand.  The choices consumers make are not rational ones.

Tactics: Tactics include being represented on independent internet sites where people go and research and buy products. If you don’t have enough presence on those types of consumer driven approaches, when the consumer is reaching out during active evaluation, you’re not there for them to find.

Rich Meyer summarizes the customer-centric approach in the age of socially-driven conversion extremely well:

I believe the greatest strength any marketer can have is his, or her, ability to understand the dynamics of their brand/product from a consumers POV.  This means understanding what are the key drivers to conversion and where and when consumers want to interact with the brand.  I love Oreo cookies but I don’t want to friend them on Facebook.   Organizations that prepare for change and implement new marketing thinking will be ready to leverage new business and customers.

« Previous PageNext Page »