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Nudge theory: A back to basics approach for CRM?by
5th Sep 2012
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Matt Button discusses how you can design effective customer journeys and acquire, nurture, convert and retain customers through a series of gentle 'nudges' that act as a value exchange between businesses and their customers.
Let’s start at the beginning and imagine that you have a brand and a good proposition but no customers. In terms of CRM strategy, this means you have a blank sheet of paper. You need to devise a strategy and create a framework in which to find, acquire, nurture, convert, retain and ultimately generate loyal advocates for your brand.
But where to start? Part of the art (and science) of building a strategy lies in the ability to focus on core issues and subsequently ask and explore fundamental issues. So, in building your strategy, ask yourself these two fundamental questions; each of which is deceptively simple but also very challenging:
What do you want to do with your customers? And what do your customers want to do with you?
By answering the first question, you can quickly get to the core of what’s important to you. So, for example, do you want to get more? Get them to spend more? Or buy more often? Perhaps you want them to buy something new? Or feel differently about you? Of course, the possibilities are endless.
Your answers to the second question can quickly expose a lack of real customer insight but also highlight what kind of relationship you currently have with your customers. For instance, is it a long term relationship? Is it purely functional, based on price for example? Or convenience? Or does your brand fulfil some deeper need? The most effective strategy will spring from where the answers to these two questions lie.
Designing customer journeys
So now you have an idea of where your strategic priorities lie. Next, you need to build a customer journey that will enable customers to find your brand, understand and trust you, and show/register an interest. It is then hoped that they go on to buy something, stay interested and engaged, and eventually tell others about it and become loyal advocates. Each of these are quite distinct steps, though these often prove to be the failure of many brands who quickly dash from finding a customer, straight to attempting to convert them. But is this the most effective way of securing loyal advocates? Ask yourself, how many times have you signed up for emails from a brand only to subsequently be subjected to its ‘one size fits all’ weekly e-newsletter that always seems to feature a sale or some other kind of tactical sales promotion?
Instead, look at the sales process from your customer’s perspective: how and where do they find your brand? What do they have to do to find out more about you? How easy is the process? What data is being collected (and more importantly, how is this data then used)? Is the process designed with the customer’s interests and motivations in mind? Does it reflect the brand’s values/personality/ethos or is this an entirely rational process designed to convert the customer at the earliest possible opportunity?
The most effective CRM strategies are designed to ‘nudge’ prospects and customers in small steps along this journey. They start at the beginning with a clear prospecting process, moving to acquisition, welcome, nurturing through to conversion, retention, loyalty and advocacy. These steps are designed to build relationships over time. Of course, some customers will dive straight and convert immediately, but the majority won’t. There will be far more disinterested, unengaged (but potentially valuable) prospects than engaged customers. This step by step approach acknowledges where the customer is and is designed to move them closer to your brand.
This nudge approach can also serve as a value exchange between you and your customers as you attempt to nudge customers along the journey. For example, at the beginning of your relationship, you may only ask a prospect to give their email address to sign up for more communications from you. Over time, as the relationship progresses, you can ask them for more details about themselves so you can learn more about them. But you need to offer them something in return. Everyone likes to talk about themselves and you can gather very valuable insights from well-crafted surveys for example. But they have to benefit the customer just as much as you. This doesn’t necessarily mean you have to give them a discount or offer in return, customers may just be as motivated by a piece of knowledge or even gossip.
Seeing your customers in 3D
Let’s now imagine that you have a database that contains your transactional data (purchases, spend, products, date etc) along with some demographics (name, gender, postcode etc). Whilst this is all good and useful stuff, this is still a two dimensional view of your customers. This view can become even more powerful when combined with a third perspective: an understanding of the attitudes towards your brand and sector and their motivations, for example, what makes them interested, what inspires them, what needs can your brand meet?
Understanding your customers’ needs will make your strategy much stronger and effective as it will allow you to find out why your customers buy your brand and more importantly why they don’t. Addressing these underlying issues is an important factor when developing your strategy, as these motivations are often deep rooted and can be fundamental to a customer’s personality and outlook.
Nevertheless, it’s the combination of these three dimensions that is so potent. Transactional data will identify which customers are currently the most valuable, demographics will help you find the most potentially valuable, and the behavioural data will help you express and position your brand in a way that is more relevant and engaging.
Now we have a clearer, fuller picture of our customers, we can understand them better and use this understanding to engage them and convert them. But what happens then? Do you have a strategy and process in place to turn customers into advocates for your brand?
There are many different ways to tackle this, but I suggest two approaches. Firstly, you have to give your customers a reason to sing your praises. This sounds like common sense but is certainly not common practice. One way you can do this is to take an under-promise/over-deliver approach and ensure you deliver a day early. You could also inspire your customers and show them how others use your product, or you could let them know that they have bought something that is worth sharing with others.
Secondly, you can make it easy for customers to become advocates: show them how and give them the tools to tweet, post pictures, videos or comments or pins. Direct them to your social media sites and encourage them to give their feedback and share it with their friends. And then make sure you react and respond to this, even if the feedback is negative. The way you respond will have a positive effect on the outcome.
A successful and effective eCRM strategy starts with really understanding and examining what your customers want from your brand. After all, the aim is to build a relationship which implies a two-way, reciprocal connection. The starting point of your strategy will be where your customers’ needs and your brand offering intersect. Once you have established your starting point, you can start setting realistic goals, designing customer journeys step-by-step, building up your customer data, understanding customers’ motivations and making it easy for them to be advocates.
Matt Button, head of marketing strategy at leading eCRM agency Underwired.
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