Making an emotional connection with customers can be difficult. But CVS strove to do it by refusing to sell cigarettes.
If you have a product category worth $2billion to your business, it is a pretty bold move to terminate it entirely for ethical reasons. However, this is exactly what happened at the start of 2014 when CVS, one of the largest drug store chains in the United States, decided to stop selling cigarettes – an unquestionably strong piece of leadership that we can all learn from.
Cigarettes had slipped into CVS’s range of products in the past for purely commercial reasons, and quickly grew to generate some $2 billion-worth of turnover. But CVS took the decision that the continued sale of cigarettes is no longer compatible with their mission statement: ‘to help people live more healthily,’ so made a logical but extremely difficult move, hoping that they would win back part of the lost revenue by the more active promotion of ‘stop smoking’ products.
Should you always give customers what they want?
Today, perhaps more than ever before, companies with strong leadership are thinking about ethical matters. During his impressive presentation at a recent Belgian marketing congress, Jef Colruyt, CEO of the Colruyt chain of supermarkets, expressed a similar concern. Is it right for his company to carry on selling Coca-Cola, when it is an important contributory factor in many people’s obesity problems? His question was ‘It is what the customers want, but is it responsible for us to give it to them?’
The decision by CVS to stop selling cigarettes was not taken lightly. The sale of cigarettes was an essential part of CVS’s everyday commercial life. It brought in money and it brought lots of people into their stores. When the idea was first suggested some years ago, it was immediately dismissed. At that time, the company’s major decisions were taken exclusively on the basis of the figures.
Today, perhaps more than ever before, companies with strong leadership are thinking about ethical matters.
However, as the years passed, the company’s culture gradually matured. Decisions were increasingly tested against the long-term aims of the company as expressed in its mission statement. Of course, the figures were still important, but no longer exclusively so. Moreover, the core decisions were no longer just a matter for the CEO, but for the whole management team.
The landmark decision launched the culture at CVS into a new phase, in which the company was prepared to take on difficult decisions, recognising that difficult decisions can sometimes also be good commercial decisions.
Above all, taking the ‘right’ decision has the potential to touch the heart of the market. The world always admires organisations that can hurt themselves to benefit their customers, their staff and society at large. You create an emotional bond with consumers through their hearts, not by appealing to their reason.
The case for 'Heartketing'
Customer confidence can melt like snow in the sun. The classic 80/20 rule, which states that 20% of customers generate 80% of your turnover, is no longer valid. Instead, it has evolved into a 50/50 rule.
There are various reasons for this. First, in many cases, customer expectations have grown faster than the level of service. Secondly, the classic loyalty programmes are no longer having the same effect. In his book How Brands Grow, Byron Sharp has shown how these programmes do not result in loyal customers, but simply generate profit margin costs. Finally, digitisation has made a number of new and highly customer-oriented alternatives available to shoppers.
For a long time marketers thought that customer loyalty could be bought – but it can’t.
As a result, the traditional marketing approach of recent years no longer succeeds in binding people to companies. To successfully achieve the human transformation of the customer relationship, it is necessary to find a different way to make that all-important emotional link.
I coined the term heartketing on my blog in 2013. The word symbolises a new attitude in the relationship with the customer. Levels of customer loyalty have declined largely as a result of the over-rationalisation of the customer relationship. For a long time marketers thought that customer loyalty could be bought – but it can’t. A personal emotional attachment to the company is valued much more highly by customers than loyalty programmes.
Adding a human touch to the customer relationship can best be achieved by appealing to the consumer’s heart, rather than his wallet. Doing business more with your heart and less with your head can breathe new life into your customer relationships.
Prof. Steven Van Belleghem is author of When Digital Becomes Human, published by Kogan Page, priced £19.99. Follow him on twitter @StevenVBe, subscribe to his videos at www.youtube.com/stevenvanbelleghem or visit www.stevenvanbelleghem.com