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Unlocking the mysteries of customer relationships

by Kenneth Simonsen , 10.11.2014

Companies have more data than ever on their customers, but that information is failing to be turned into meaningful customer relationships or ‘relational intelligence’. In an article published in the Harvard Business Review, our very own John Wittenbraker shares our approach to CRM and urges marketers to rethink their approach to relationships with their customers. This requires a fundamental shift in approach, one that some FMCG players have adopted very successfully, and that others may wish to follow. I hope you’ll be able to read the article in full. I’ve summarized the key findings here:

Through two decades of research on brand relationships for numerous clients in a variety of sectors, we have found that consumers are frequently frustrated by companies’ inability to understand and meet their relationship expectations. The first step is to recognize that people have different needs, not identified through the usual demographic and purchasing pattern segmentation, but through relationships – from fling, secret-affair, master-servant to marriage relationship. This means knowing what the customer wants and meeting that expectation. We analyzed the relationships between consumers in China, Germany, Spain and the US in more than 200 brands in 11 industries and identified 29 types of relationship – both positive and negative.

Developing a relational radar

Companies need to understand what types of consumer they attract. Listening to and capturing data allows companies to convert customers’ signals into knowledge about the state of the relationship – and whether they want to increase or reduce their engagement, if they are in distress and how they are responding to the company’s actions from pricing changes to privacy terms.

Following extensive ethnographic research, Frito-Lay identified that most Cheetos customers were adults using the brand to feel playful and naughty – a ‘secret-affair’ relationship. Swatch on the other hand enables ‘flings’ with inexpensive, highly fashionable designs. Fashion company Eileen Fisher found that their stalwart 50-something customers were ‘old friends’ but the younger demographic it was targeting wanted a different sales approach that more distant and transactional.

Understand the rules

By understanding the nature of relationships, brands can manage them in ways that advance strategic goals. But beware: the research identified unspoken rules that brands mustn’t break – such as what the consumer and brand will give and get from the relationship and how and when the consumer and firm will engage. Each of the 29 types has its own rules in the study. Here’s an example of just one: ‘buddies’.

Here the customer is looking for sustained interaction but doesn’t want a close or emotional relationship. He or she expects that the company will not make demands or limit his or her freedom to associate with others. So beer lovers want to choose from a large selection of brews to suit different occasion and resist individual brands’ efforts to win their loyalty.

Once you understand the rules, you can shift customers towards desired relationships. Virgin Atlantic has directed its flyers towards a buddy relationship by adding singing and dancing to its compulsory safety rules, making for a more positive bond with the company.

Making it happen

Organizationally, this approach goes beyond the traditional role of marketing into the whole company with IT and customer service and marketing at its core. In this new scenario, the role of employees is central, and companies that have embraced this approach, including Frito-Lay, Harley Davidson and Icelandic telecommunications company Siminn have re-engineered departments and businesses to do so.

To read the short abstract go to HBR or contact Kenneth Simonsen at kenneth.simonsen@gfk.com for the full version.