It’s mid-November, and that means retailers’ annual holiday promotions are reaching a fever pitch.
Discount department store Kohl’s will kick off Black Friday at 5 p.m. on Thanksgiving day. It plans to encourage spending by offering deep discounts and making it easier for shoppers to see how much they’ll save. Sears, Kmart, Best Buy and Amazon have all also launched aggressive price-cutting campaigns.
I have led hundreds of successful Customer Experience (CX) program successes. I have also led a couple that failed. What’s the difference between the successes and the failures? A few things, but one of the most significant is the way an organization’s culture is centered. Organizations fail to improve their CX when they lack customer-centricity.
Customer-centricity requires you to put the Customer at the center of everything you do. This concept is difficult for many organizations. They are focused on sales or margins or operational efficiency, and, to be fair, these areas are crucial to any business. However, putting the customer at the center of everything you do doesn’t have to conflict with sales, margins or operational efficiency. In fact, customer-centricity will result in improvements to these areas.
Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy
Richard Branson and Herb Kelleher never studied HR theory or staff management principles. That said, they’ve proven to be pretty good at it. Both understand (in the case of Sir Richard at Virgin Group) and understood (in the case of Herb Kelleher at Southwest Airlines) the value of putting people and customers first, HR practice second.
As my colleague Colin Shaw has written about Branson and Virgin, with respect to the company providing a year of fully paid leave following the birth or adoption of a child: “…Virgin values their people and their emotional state while working there.” In the same post, Colin acknowledged the value of employee ambassadorship and the direct connection between employee experience and customer experience. He also noted that few companies successfully meld value optimization approaches for both groups of stakeholders: “Despite much evidence that points to the link, many organizations continue to keep the two areas separate in their efforts. However, the separate area strategy is not the direct path to success for either.”
We all have habits, good and bad. Few of us remember how they formed. Few of us know how to change them—especially those bad ones. However, understanding how habits develop and their influence on our behavior can be a powerful tool for tuning up our Customer Experience.
The scientific definition of a habit is anytime your mind prepares you to respond in a certain way based on some environmental cues or stimuli. When you discuss habits in relation to the two systems of cognitive behavior, or what we call the Intuitive System (emotional and fast) and Rational System (logical and slow), the Intuitive System governs habitual behavior.
How the Helpful 8-year-old Forms Habits
My co-author of The Intuitive Customer (Palgrave Macmillan, 2016), Professor Ryan Hamilton of Emory University, compares the Intuitive System to a helpful 8-year-old. Like the 8-year-old, the Intuitive System wants to help, to make things easier, but it doesn’t always have all the information it needs to help for real. In other words, it almost gets things right some of the time and does pretty good the rest of the time. Habits are an example of when the Intuitive System is trying to help.
For example, when I go to pay for something, I always reach for my American Express (AmEx) card. I automatically go to the part of my wallet where I keep it and use it for my purchase. I do not consciously choose it every time; I just do it. That is an example of a habit. I have a stimulus, e.g., it’s time to pay for something. My Intuitive System activates my habit, e.g., it tells my subconscious mind to reach for the AmEx.
Now, before I had the AmEx, I reached for another card. Reaching for the AmEx, in the beginning, was a deliberate process. The stimuli would occur, meaning it would be time to pay, and I would think as I looked through my wallet, “What card should I use?” Then, I would choose the AmEx because I liked the rewards they provided. Over time, my helpful-8-year-old Intuitive System noticed that when it was time to pay, I was consistently reaching for my AmEx card. So, when it was time to pay the next time, my Intuitive System responded by automatically having my subconscious reach into the wallet for the AmEx. This instance is an example of when the 8-year-old is helpful. However, when the helpful-8-year-old Intuitive System has me reach for the cookies after lunch, it is not helpful!
The Three Parts of Habit: Cue, Routine and Reward
Now, the scientific definition only explains part of what makes up a habit. Pulitzer-Prize winning reporter Charles Duhigg wrote The Power of Habit a couple of years ago that gives a more robust definition of habits, describing the three parts of habits. These are the Cue, Routine, and Reward. This video demonstrates the concept in action:
Customer habits are an enormous driver of consumer behavior. As an example, Ryan habitually buys toothpaste on a particular aisle at the store (Cue). His Intuitive System knows where it is on the shelf and what color the box is and he grabs it (Routine), and moves on without giving it much thought (Reward). Moreover, because he doesn’t think about it, the toothpaste competitors present in the aisle don’t have a chance.
Disrupting the Cue
Understanding the three parts of the habit as Duhigg described can help the competitor brands get Ryan’s business. If they can intercept Ryan before he reaches the aisle, say with an end-cap display or another attention-grabbing device in store, the competing toothpaste brand could disrupt the Cue and redirect Ryan’s Routine behavior. It is vital, however, that the disruption of the Cue communicates the new anticipated Reward.
The fact is I don’t see a lot of organizations research customers’ habits. Don’t get me wrong; they do research; just not research about Cues that drive customers’ habits. Instead, organizations ask customers questions about customers’ likes and dislikes or price preferences, etc. However, habits are a powerful driver of customer behavior, so recognizing what is triggering your customers’ habits is essential to comprehending their behavior.
Have you gained from studying your customers habits? Let us know in the comments below.
Learn more about habits and how they affect customer behavior in the recorded webinar we did as part of ourIntuitive Customer Conversations webinar series. These FREE and informative webinars are designed to expand on the ideas behind understanding customer behavior.
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Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy
In the movie ‘Gladiator’, corrupt Emperor Commodus puts Maximus, the gladiator/general who is his enemy, into the Coliseum with a former champion and several huge tigers. Commodus’ goal is to assure Maximus’ death in front of thousands of spectators. To Commodus’ dismay, Maximus defeats them, angering the Emperor by sparing the life of the former champion. Entering the arena, Commodus dejectedly says to Maximus: “What am I going to do with you? You simply won’t…die.” Customer satisfaction is a lot like Maximus. Though severely injured (like Maximus before killing Commodus) as a concept and metric, there are those who, perhaps with the best of intentions, are endeavoring to keep satisfaction alive.
Maybe this is because ‘customer satisfaction’ is such a ubiquitous phrase that it’s thought to be a standard for understanding behavior and designing experiences. Maybe it’s just analytical complacency. Whatever the reason(s), customer satisfaction isn’t dead, but it is badly infected and impaired with very serious conceptual and interpretation issues – and, like a mortifying wound, has had those issues for some time. While creating a strong and positive emotional connection between customer and supplier is, indeed, a foundation of customer loyalty behavior and an extended customer life, those labeling ‘satisfaction’ as an emotion, or conflating satisfaction to be an emotional factor to interpret decision-making and behavior, are, from my perspective and with ample proof, doing little more than putting a small Band-Aid on an injury that can never heal.