Consumers Want "Reciprocity of Value"
Consumers Want "Reciprocity of Value"
Can marketers get the customer data they crave? Yes. Customers are willing to share personal information with their preferred brands in exchange for “reciprocity of value”—in other words, what they consider to be communications and offers of equal value.
This reality, what we call the Reciprocity of Value Equation, is based on learnings from more 130 voice-of-the-customer (VoC) research studies we've for companies such as Disney, IBM, MassMutual, and Microsoft. What's more, we found this to be true among B2B and B2C decision makers.
The Reciprocity of Value Equation represents an enormous opportunity for marketers to transform how they engage with customers and prospects. Consider these finding from the VoC research:
1. Consumers recognize that to receive or access increasingly relevant information they must share increasing amounts of information regarding their preferences.
2. If they trust the brand, and see a useful value proposition, consumers will opt-in to sharing increasingly detailed personal preference information in exchange for the brand's promise to deliver relevant information and offers. This sentiment emerged with equal frequency and conviction among B2B and B2C respondents. This was also expressed equally strongly by both prospects and customers.
3. This reframes “data privacy” concerns into the exchange of the information that improves the customer experience. This information is constantly changing, growing, and being enriched through knowledgeable two-way interactions with consumers.
4. As a result of these interactions, consumers are more likely to open, engage with, and respond to, communications and offers.
5. The power of this preference driven engagement and high-quality preference databases drives consistent double-digit increases in response, revenue, and retention.
The results speak for themselves
Following are the double-digit increases in response and revenue achieved by companies that launched VoC research–based Reciprocity of Value–driven programs:
After implementing a customer engagement strategy based on VoC research and Reciprocity of Value, Microsoft saw:
- Opt-in rates up to 95%
- Open rates greater than 50%
- Response rates performing in the double-digits
- Revenue 2X greater than the control group
Online music company Songza learned from VoC research that to break through the cluttered category of online music services it needed to offer a competitively differentiating customer experience. So, Songza created its Concierge feature, which matches listener's moods, activities, day of week, and, time of day to expertly-curated playlists. Listeners provide detailed use and preference information to receive the curated music. (Full disclosure: Songza CEO Elias Roman is my son)
As a result of the Concierge customer engagement program, Songza achieved the following results:
- Retention tripled
- Monthly active users tripled
- Time on site increased by 75% (from 40 minutes to more than 70)
Gilt Groupe, the flash-sales success story, uses VoC insights to deliver increasingly personalized customer experiences across a range of offerings, including women's and men's fashion, home, kids, travel, food, and local services.
The online retailer uses various sources to capture data about customers' purchases, browsing, waitlists, email click habits, and preferences. It uses all this information to create a broad range of personalized emails—sometimes with as many as 2,500 versions—that target customers based on their personal preferences. That personalization has helped Gilt's annual sales skyrocket to more than $600 million in just a few years.
What does this mean for you?
In 2013 customers will flex their muscles in unprecedented ways. Technology has made them more knowledgeable, more empowered, and more impatient with companies that don't meet their expectations.
Customers will expect:
- Offers and experiences that are tailored to their individual interests.
- High-value products at competitive prices.
- Stellar service—which is a powerful competitive differentiator.
Accurate, in-depth data will be essential to delivering a competitively differentiating and personalized experience. The most powerful data to drive this level of personalized experience is data that customers or prospect choose to share with you. But, in this environment of increasing privacy concerns, they will only share this depth of information in exchange for significantly improved offers, communications, and experiences.
The challenge and the opportunity for you as marketers, is to learn how to earn the right to engage your customers and prospects in a Reciprocity of Value relationship where they will provide increasing amounts of personal or business information in exchange for trusting you to deliver significantly improved customer experiences.