Knowing customer affinity with the brand
It is a fundamental truth that not all customers are alike. Every business owner knows this, just as every business owner knows that the value of each customer will depend, in large part, on his or her affinity with the brand. Of course, much has been written about building brands and brand equity, but in comparison, little has been said about knowing brand affinity at the individual customer level.
However, while brand affinity may be an emotional connection that is difficult to quantify without having a detailed interview with each customer, there is a way to approach this measure by assessing what you can observe fairly easily through the assorted contacts a customer has with the brand. That is, it is possible to approximate brand affinity at the customer level by examining information not only about a customer's purchase transactions, but also about the customer's non-financial interactions and other dealings with the brand.
We have consolidated this information into a score we call "brand engagement," which in its most successful derivations can reveal something about how much the customer trusts the brand and perhaps even where the brand fits in the customer's hierarchy of brand choices.
Obviously, this measure, even if only meaningful in relative terms, can be very important in determining key business decisions.
For example, a brand engagement score could help determine where to allocate marketing investments, whom to target for new or existing products, how to tailor marketing communications and where to aim customer relationship programs.
Fortunately, with today's technologies for tracking customer activity, both online and offline, a lot can be gathered regarding the day-to-day relations that a customer has with a brand. It may not be perfect data, but it is a lot better than it used to be and a lot more than marketers typically use to understand who their customers are and to drive customer value.
Significantly, too, rather than the length of historical data, it is the diversity of the information that is key in calculating an effective brand engagement score. The nice thing about this is that companies that may only have a small amount of historical data are not precluded from developing their own brand engagement scoring algorithm.
To see how this score is different and what decisions it might influence, let's consider the case of a business-to-business marketer in the office supplies industry. Traditionally, a company in this industry might make its marketing decisions based on a narrow set of data elements it maintains on each of its business customers, such as the recency, frequency, amount of purchase transactions, customer tenure and product ownership.
For instance, longtime business customers who have purchased in the last month, who have bought more than twenty times over the last year, and who have spent more than $25,000 during that period, might be deemed to be top customers. The main assumption in creating a score from this data is that prior purchase history is a good predictor of future revenue.
But prior purchase history isn't always a good indicator of future revenue, especially long-term purchase behavior, and if the company is really more interested in a customer's "connectedness" to the brand, then other aspects of the customer's behavior become important, such as the type and frequency of channel interactions (particularly Web visits), the willingness to supply personal information, responsiveness to solicitations and customer service usage.
As research and market tests we have done have shown, differences here can be significant and, usefully, these differences can be converted into a convenient to use score.
Moreover, to the extent that brand engagement is an indicator of a customer's willingness to refer your brand to others - which has been strongly correlated with loyalty - then it becomes a valuable piece of information that should be maintained just like customer lifetime value, share of wallet and other traditional customer-level measures.
So, our office supplies company may be better served in making marketing decisions based on the brand engagement scores of its business customers than relying solely on a more restrictive RFM measure. It could use the brand engagement score to target a new line of products at likely early adopters or to assign dedicated sales reps to high scorers who also have high revenue potential.
In short, since high brand engagement scorers are essentially saying "I think your brand is great," then unquestionably the company should look for ways to build upon their connectedness to the brand.
Overall, the lesson for marketers is now that the data are available to estimate customer-level brand affinity through brand engagement, find out how your customers stack up and just how far you can use this powerful new measure to advance your relationships with your customers.