Emotion has the strongest impact on customer loyalty
Brands over-rely on big data to understand customers
Feelings (emotions) are 1.5 times stronger in influencing customer buying decisions and loyalty than any other factor, according to a Forrester Consulting study commissioned by customer insights technology firm FocusVision, which investigated the motivations underlying customer decision-making.
The study, How Customers Think, Feel, And Act: The Paradigm Of Business Outcomes, identified that the way customers think and feel about a brand predicts why they act, empowering brands to predict business outcomes. The company's conclusion is that, when a brand understands their "Customer Truth" - that is, how they think, feel and act - they can connect their story to their customer's story and drive business outcomes like revenue, advocacy, and loyalty upward.
Today, companies over-rely on big data to understand their customers. Brands have misconceptions of which data properly measures how customers think and feel. As a result, 56% of brands say their strategy is informed nearly or fully by big data. This over-reliance has led to challenges in customer understanding, technology, and organizational communication. The study found that brands using small data as a basis for their knowledge of how customers think and feel are more likely to say they know why one customer chooses to buy while another doesn't.
Brands currently rely on metrics like loyalty (60%), revenue growth (60%), and brand awareness (46%) to track their success with customers. As stated in the study, "Our research is conclusive: How people think and feel determines how they act. What appears to be a simple notion has eluded marketers for decades; dyed-in-the-wool brand marketers have been reluctant to let go of inside-out marketing principles focused on product, pricing, and promotions. In the last several years, a growing movement of psychology-influenced marketing, behavioral economics, and proof points like Forrester's Brand Energy framework illustrates the importance of emotions in consumer decision making. The first step to collecting the right data and performing the right research is to frame the issue correctly, and organizations looking to impact consumer decision making must afford primacy to how people think and feel."
The study found that:
- There is a disconnect between how brands perceive customer behavior and how customers actually feel
While over half of brands believe they understand how their customers think and feel, only 38% strongly agree they know why one customer chooses their brand while another does not, despite realizing how their business benefits from this knowledge. - Small data is better at translating Customer Truth
52% of brands agree that small data is better than big data at helping brands understand the why behind a customer's actions, but nearly half of brands agree they don't have enough small data insights on their customers. - Customers will seek out and pay for personal brand connection
91% of brands believe customers want convenient and highly personalized experiences with a brand and 93% agree that consumers are more likely to spend money with a brand they feel connected to. To accomplish this, brands must know their Customer Truth to understand why customers act and create this connection.
Zlatko Vucetic, CEO at FocusVision explained: "The findings of this study reinforce that data-driven brands need to operationalize how to look at Big and Small data holistically. In turn, they will gain a deeper customer understanding and create a more sustainable business model from loyal brand advocates, not just one time purchasers and create predictability in their business--a goal for every business today."
The study was the result of two surveys: The first included 522 US consumers who were asked to recall and describe how they thought, felt, and acted throughout a memorable brand experience. The second surveyed 228 US B2C marketing and customer insights decision makers, including CMOs, to gain insight into how they seek to understand their customers and what key challenges are holding them back.
Sources: FocusVision; Forrester Consulting / The Marketing Factbook.
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