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The Digital Marketing Alienation Problem

by | May 3, 2023 | Consumer psychology, Marketing and strategy, ROI

Consumer alienation can happen quickly. Does anyone remember New Coke? More often, it happens slowly, almost imperceptibly, because alienation is obscured by our broader human experience which is found in our collective consciousness.

While consumers seek novelty and variety, there is a saturation point. Evidence indicates that buyers are increasingly detached from brands, products, and even entire categories because of the way they are digitally over-marketed.

What do we mean by “consumer alienation”? In brief, it is the process by which consumers lose interest in brands and services due to (1) the failure of marketers to communicate with buyers and prospects in a way that is trustworthy and respectful; and (2) the emotional connection between buyers and brands has been damaged. Digital over-marketing only compounds these problems.

When companies excessively use digital marketing approaches, we (collectively as marketers) do nothing to cement the emotional bonds we hope to establish. Rather, we put people into predictable “sales funnels” (which are quite transparent to consumers, by the way) that treat consumers very robotically.

When hundred of companies use the same approach; consumers are overwhelmed. A consumer quickly realizes that they are cogs in a much bigger marketing machine (many brands x many campaigns x many time periods). Then, without a clear message and against a backdrop of digital noise, brands lose the stickiness needed to build ROI over the long term. As prospects fall further into the sales funnel, they filter out more, and fall further away from your brand. At Surveys & Forecasts, LLC we focus on important marketing developments like these with many of our clients.

Digital Marketing Creates Consumer Alienation

I suppose that we can’t blame marketers. Digital marketing reaches a target audience pretty efficiently and can promote your business when the message is clear. However, marketers are tempted to use all available resources (e.g., personal information) to stimulate consumers buying. This morphs into “depersonalization”. Consumers then feel alienated because personal information and preferences are used excessively without clear consent.. When every company and brand uses their information to market to them, trust in all brands is quickly eroded.

A brilliant colleague of mine has conducted many studies to prove that marketers can achieve significant increases in ROAS when media dollars are targeted at moderately active buyers within a category (i.e., the “moveable middle”). Yet one wonders about the linkage between heavily digitally targeted (or perhaps over-conditioned) buyers and the impact on their emotional connection to the brand long-term. Does over-targeting and over-marketing create alienation?

Sales Funnels and Trust

Sales funnels are powerful tools for marketers, but they have their drawbacks. They cause consumer alienation and can reduce trust between companies and customers by aggressively encouraging buyers to take incremental steps towards a purchase decision. Typically this starts with low-cost items (i.e., freemium trials) but quickly moves to full-priced subscriptions or premium services. This process is known as “nudging”, because it nudges you into buying more than you might otherwise want. This assumes that consumers will behave robotically rather than as intelligent beings who make reasonably rational buying decisions. The approach is fundamentally cynical, and has consequences for companies, brands, and society-at-large. Increasingly, consumers are asking: am I being manipulated yet again?

Is Technology a Solution?

Tech has the potential to improve digital marketing practices. AI and machine learning can be used to target consumers in a more modulated, ethical, and dare I say emotional way(!) with more deeply personalized, yet appropriate, marketing messages. Tech and the use of AI is already leading to consumers being over-served content that they don’t want or need. Social media platforms like TikTok, Facebook, and Instagram offer little transparency around ad serving or data collection practices.

Marketers have access to an unprecedented amount of personal data about consumers. Should they use all of it? While I am a free thinker, to avoid manipulation perhaps some regulation is needed to place limits how much information marketers can collect from users — and what strategies they are allowed to use when targeting consumers. Consumers have the power to vote with their feet and their dollars by choosing brands that respect their privacy and do not digitally abuse them.

Avoid alienating your customers with excessive digital marketing efforts by making sure that you understand what consumer alienation really is and know how it affects relationships between your buyers and your brands. Digital marketing methods can be used to create positive experiences, but only when they’re ethical, responsible, and not excessive.

To talk more about customer alienation — please reach out.. For more information about our services and customer feedback programs, please visit the Surveys & Forecasts, LLC website or get in touch at info@safllc.com.

Customer Value vs. Valued

by | Sep 20, 2021 | Customer experience, Customer satisfaction, Marketing research, NPS, ROAS, ROI

Customer Valued?

In our age of automation and AI, marketers risk becoming detached from how their business practices, products, and services are perceived by their customers. Marketers have it all wrong by focusing solely on customer satisfaction or a willingness to recommend: these measures do not capture the customer’s relationship-based perspective. Customer satisfaction or willingness to recommend are thin, shallow, “last click” based, and largely transactionally-oriented.

The customer can be momentarily satisfied with their last transaction (product or service): it delivered a promised benefit. But that is, by definition a transactional experience, and often devoid of any emotional richness.

In working through these distinctions with our clients, the notion of customer value (or customer lifetime value, aka “CLV”) can be the polar opposite of whether the customer feels valued.

From a financial or marketing perspective, a company’s approach to customer value is formulaic: extract maximum value from the customer. The metrics take many forms: ROI, ROAS, narrowly targeting, and upselling to name a few. But this “share of requirements” approach (i.e., siphoning off more revenue from the same customer) is entirely transactionally driven. There is no “emotional stickiness” created with the customer from a single transaction, or even from multiple successful transactions.

From the customer’s perspective, feeling valued creates an emotional connection which is deeply internalized and an incredibly powerful sticky magnet for retention.

As a CMO, how would you answer this question from the customer: “Does this company appreciate my business?” If you don’t know, consider path-to-purchase or other in-depth insights work. Test new programs. Test reward structures. In what ways can your company demonstrate to the customer that their business matters – that they themselves are valued?

Even highly satisfied customers can be quickly dislodged by a competitor who can, for example:

  • Offer products at a lower price
  • Offer products with more features/benefits
  • Offer products that appeals to more users
  • Offer products that have more use cases
  • Deliver products in less time
  • Leverages variety-seeking behavior or changing tastes

In email automation and drip campaigns, we have learned that with more personalization comes better response – and a greater likelihood of consumers responding to offers. But everything now comes through as personalized (except for the occasional misfire, like “Dear {FirstName}”), which slowly erodes that competitive edge. But all of this plays in the transactional space, devoid of motivation or emotion.

In our client work on customer value, we have noticed that measures related to the customer’s perception of his/her worth to the company is a far better predictor of customer retention than “shallow” measures of satisfaction or willingness to recommend. One measure (NPS), in particular, is especially weak in this area. Correlations with purchasing are always the lowest. This really should come as no surprise, since it is a thin ‘report card’. Management teams gain some comfort by following the herd who also uses NPS, but it provides little actionable insight into the underlying value equation.

We urge CMO’s and marketing leaders to think about longer-term results and to focus on the customer’s perception of their relationship, rather than the transactional value extraction approach embraced by many marketing organizations today.

As Peter Drucker famously noted, the purpose of business is not to make a profit; it is to create a customer.

The ROI of Customer Satisfaction

The ROI of Customer Satisfaction

by | Aug 25, 2020 | Business strategy, Customer satisfaction, Marketing research, ROI

I have seen many CSAT programs change a company’s culture by quantifying problems and isolating their causes, thus boosting retention and profitability, and moving from reactive to proactive.
Conversely, some companies don’t think that customer satisfaction (or “CSAT”) programs can add value because “we know our customers”. This comment conveys a misunderstanding of what a well-designed CSAT program is, and the value that it can bring to an organization.
 
In the short term, maintaining the “status quo” is a cheaper alternative, but it avoids the broader discussion about total (opportunity) costs. How much revenue are you leaving on the table by assuming that you know what the customer wants?
Here’s a basic example. Let’s say you run a $50MM company. What would you be willing to spend to prevent 10% of your customers from leaving?
 
At a 30% gross margin, you saved $1.5MM in profit. A CSAT program that costs $50K a year has an ROI of 30x! Now do you get it?
 
Even if we are conservative, a 5% reduction in defection produces $750K in savings, and an ROI of 15x – still impressive! By improved problem detection, by alerting key people about problems in real-time, thus cutting response time, we help mitigate customer defections and avoid a significant amount of lost business.
 
What are the fundamental problems with what I call a “status quo” approach? Here are a few:
  • Markets are changing. Your competitors are not standing still; they will continue to innovate, merge with others, or be acquired. Markets themselves morph from regional to national to global, and regulatory frameworks change.
  • Customers are changing. New customers replace old, and this year’s buyers are demographically, attitudinally, and behaviorally different from last year’s buyers, who will be different next year’s. How are you planning for that?
  • Expectations are changing. Customers are constantly evaluating their choice options within categories and making both rational and emotional buying decisions.
Maintaining the “status quo” is NOT a strategy: it is a reactive footing that forces you to play defense. In a status quo culture, you are not actively problem-solving on behalf of customers, nor are you focused on meeting their future needs!
Consider a couple of scenarios in which a CSAT program could add value:
If you run a smaller company, most of the company’s employees (including management) are interacting with customers every day. The company also gets feedback, albeit subjectively or anecdotally, every day. Corrections to sales or production processes can be done rapidly, and the customer is presumably happy. But even in smaller companies, there is limited institutional memory (i.e., a standard way to handle a problem or exception). One solution may reside with Fred in finance, another with Pat in production, or someone else entirely. There are no benchmarks to compare performance (other than sales). It is likely that the same problem will surface repeatedly because line staff or did not communicate with each other, or it might appear in another form in another department (i.e., a parts shortage caused by an inventory error). Unless management is alerted, larger “aha” discoveries are missed. This can cost hundreds of thousands of dollars in lost revenue.
If you run a large company or a major division, the gulf between customer feedback and management grows wider. News about problems may not reach management because they are viewed as unremarkable. And a company doesn’t have to be huge for these dynamics to occur. The evidence shows that by the time a company reaches just 100 employees, it behaves much like a multi-national enterprise. In a small company, it is everyone’s responsibility to fix a problem; in a large organization, it becomes someone else’s responsibility. The opportunity loss becomes even greater because there is no system in place to alert key staff or a specific department. As a result, millions of dollars in revenue can be lost.
A well-designed CSAT program that alerts the appropriate people or department can add significant value. At Surveys & Forecasts, LLC we offer basic CSAT programs (with key staff alerts, dashboards, and an annual review) for just $1,000 a month.
Get in touch to learn more! We’d love to work with you and help you improve satisfaction, retention, and save your organization some significant money.
Surveys & Forecasts, LLC