Tell It Like It Is

Corporate communications and advertising contribute to building brands and setting customer expectations of the brand promise. When done well, the brand image they build is compelling to the consumer and creates a compulsion to purchase the product or service. Companies that over-promise in their communications, however, can pay a high price in terms of loss of satisfaction and customer loyalty.

While satisfaction is an important dimension of loyalty, other elements, including communications, also affect loyalty. Brand communication, the customer relationship, and experience delivery are linked to building customer loyalty.

It is also true that satisfaction can be lower if expectations have been set too high for a given level of service. Over-promising in corporate communications can affect satisfaction and, ultimately, loyalty by creating a gap between the expectations over-promising messages create and the actual level of service the company can deliver.

In our book, Loyalty Myths, we identify 53 loyalty myths and seven loyalty truths. With regard to the relationship between loyalty and the brand, the simple loyalty truth we believe in is, "customer loyalty and brand imagery are far from independent; you must manage them hand-in-hand." This represents a shift from brand-centric marketing of the past: "customer-centric strategies tend to focus on improving customers' levels of satisfaction with the product and the customer experience." ¹

The way we perceive a brand is influenced by the way the brand is communicated. For instance, if you go to carry out administrative formalities at a government office, you will not react to the waiting time the same way you would react in a bank. Our experience of a product or service is influenced by the expectations that prior brand experience or brand communications have set up.

Some companies build their communications in response to customer needs monitoring and base their communications on quality of service and satisfaction. Examples of this strategy can be seen in services obtained without an appointment or at short notice, such as those in the automotive industry that deal with windshield replacement or exhaust pipe repair. Advertisements for these services are led by what customers expect, with importance being placed on timeliness of repair. Communications generally focus on availability (e.g. hours of operation, locations etc.), speed of service, and quality of service provided. In other words, communications focus on what really matters to customers. These are examples where brand is derived from a fully customer-centric strategy.

In another successful example, an electronic and white goods retail giant bases much of its advertising strategy around its long-established reputation for outstanding after-sales. It is a key differentiator and crucial to their brand image. Communications therefore often focus on ideals of reliability and confidence in their product. Ads are often executed with quirky images such as a company service van parked by a lone cottage on an Alpine precipice, clearly illustrating their determination to provide great service regardless of effort. Importantly, the ad image remains within the bounds of credibility; credibility being an important element of their brand promise.

Communications strategies that do not derive from customer-centric corporate strategy, on the other hand, can set the stage to create unrealistic expectations in the customer's mind. For example, banks often attempt through their communications to give themselves a very human face and proclaim the quality of their welcome, friendliness of staff, and ease of use of services. The pleasant picture created by their communications can backfire if the promise is not followed though by the service delivered either in the branches or via the call centre.

Additionally, companies attempting to re-brand themselves should first ensure that the customer experience can live up to the promise before they communicate it. If communications promise a level of customer service that is not delivered, then customer satisfaction is damaged and dissatisfaction is amplified by the expectations set by the company's communications.

More importantly, however, is that a failure to understand customer needs frequently exhibits itself in a lack of clarity in communication, both in mass media and in transactional communications. In R&D work conducted by Ipsos, we looked at the needs of both high and low value customers and what drove both their loyalty and their likelihood to increase share of spend (value) with a company. In the case of banks, one of the main barriers to up-selling or cross-selling was a lack of familiarity with what the bank offered and what it stood for.

Banks with a wide range of financial services frequently confuse customers at the mass media level and fail to deliver clear communications at a personal or transactional level. This affects perceptions of the bank's ability to meet needs, but also reduces the level of trust customers have that the bank will treat them fairly. Where banks have clear niche products (e.g. mortgages, investments, or savings), familiarity is likely to be higher and is less of a barrier to increasing share of wallet.

Businesses are increasingly using their storehouse of customer information to be more proactive with communications, to tailor them to target and meet individual customer expectations and needs, and to deliver the messages in a manner the customer wants, be that mail, email, or SMS, for example. The company must ensure that it is properly interpreting its CRM data in order to effectively reach out to individuals. Inappropriately targeted communications can also have a negative impact. Relationship marketing is based on promises, and a company that does not to adhere to their promises risks losing or alienating the customer.

Similarly, a company's communication on price, if not completely transparent, can quickly lead to customer dissatisfaction. I am sure we have all experienced the resentment that can flare up when the promise of price is not delivered.

Several advertisements have been based on "gaps" between what their competitors were promising and actually delivering. For example, one such advertisement showed a bank employee calling a customer at home and hearing "If you want to speak to Tom Taylor, please dial 1; if you want to speak to Lara Taylor, please dial 2; if you want to speak to our children Sarah and Ted, please dial 3. You can leave a message at anytime by dialling * and then 6...." The conclusion was that customers wouldn't treat their bank this way, and the bank being advertised wouldn't treat their customers that way either.

Another advertisement showed customers entering a branch and being told by the employee that they would benefit from the new customer tracking system. They then had scan-code identification stapled to their foreheads and were asked to queue in a long line.... There, too, the message was that in the bank being advertised, they really treat you well and not as an anonymous number. So some firms can subtly convey the message that they have understood where their competitors over-promise, which communicates the fact that themselves won't do so.

Therefore, it is important to look at customer strategy and customer satisfaction in tandem and ensure their alignment. This is the main reason why Ipsos Loyalty, through our Loyalty Optimizer product, developed a way to integrate attachment to the brand, relationship to customer service, and customer experience to model loyalty. Understanding the broader drivers of loyalty such as familiarity and trust and understanding how delivery at each touch point impacts familiarity and trust means that the type of actions recommended are far more finely tuned in their ability to build both loyalty and value.

(Click to enlarge image)

Constant monitoring of satisfaction, brand attachment, and customer expectations allows companies to adjust their priorities and gives quantified evidence to support business decisions. This being said, a little bit of common sense can help companies avoid excessive promising in advertising campaigns, easily summed up in that old maxim, "Don't make promises you can't keep."

To learn more about Loyalty research in North America, please contact Curt Carlson, Senior Vice President, Ipsos Loyalty.