Understanding Customer Loyalty as Confirmation Bias
A business can understand customer loyalty as a manifestation of the positive side of Confirmation Bias. This bias is inherent in people's mental model, and is the tendency to interpret new evidence as confirmation of one's existing beliefs or theories.
“The human understanding when it has once adopted an opinion draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects and despises, or else by some distinction sets aside and rejects.”
— Francis Bacon
You can think of confirmation bias in a negative manner, as a way to prevent you from understanding the world correctly by blinding you to a proper understanding of the evidence in front of you. And you would be correct to look at it in this way. In the real world of contradictory ideologies,
Confirmation Bias is the mental approach that allows two people with opposing views on a topic to see the same evidence and come away feeling validated by it. Unchecked, it can create a dangerous thought bubble that isolates and destroys your ability to relate to the world.
In the context of this conversation, however, we are looking at the positive side of Confirmation Bias. (The technical term for this use of Confirmation Bias is Apophenia).
Looking at the Shapes of Clouds and Mountains
Confirmation Bias has a positive aspect to it. It has to do with patterns and reassurance. The mind is designed to seek patterns in the world and it will create and sustain them automatically, often from evidence that does not support such patterns. For example, people who see figures in the shapes of clouds are using a form of confirmation bias to ‘trim’ what they see to belong to a category of things they know about (sheep or cows or whatever object is on their minds at the time). The trimming process removes whatever elements in their mind would interfere with the creation and maintenance of this mental image. The ‘mental trimming process’ is reinforced via confirmation bias to make the image become clear in their minds, even though it does not exist in the real world.
In the case of looking at the shape of clouds, this is a very mild process and does not involve confrontation. Someone else may disagree with an individual about the shape they see in a cloud, but this will likely not become cause for a duel to the death. However, It is possible for one person to transfer to another person the ability to see the same object in a cloud by telling them about it in a cooperative manner. By describing the shape of the cloud in terms of the elements of the object desired, one person can ‘make’ the other person see what they believe they see in the clouds.
The same process also happens when viewing the shapes of some mountains. People describe shapes and can transfer this description to another person’s view of the same mountain so they both ‘see’ the same thing, even though it is clear ‘the thing’ they are looking at is not really a part of the mountain (or the cloud) in the least.
Triggering Confirmation Bias To Create Customer Loyalty
To apply Confirmation Bias within a customer centric Digital Investment Plan, a business can add a ‘crazy’ element to their marketing approach. By committing a potential and/or existing customer to perform this ‘crazy’ action, the business triggers Confirmation Bias, as the individual will be naturally driven to justify their action to others.
The elements of the Digital Investment Plan come into play to create and maintain the justification details that a customer can use to confirm their beliefs about the action they have performed.
The trigger for confirmation bias can be a story told about the product and its details, or a story about how the product fits in the customer’s world. In other words, the trigger can be a real thing or a story that organizes the world into a shape that helps explain a little part of the world.
Depending on the type of customers in the business target audience, the elements may be 'crazy' or they can be as simple as a higher price than average to trigger a justification discussion.
By designing the Digital Investment Plan from the start to include these triggering elements, a business can run effective campaigns to create confirmation bias driven discussions between customers and non-customers, establishing a high probability of getting loyal customers to stick with the product while at the same time having them advocate the product (in the same way that people share their description of the shape of a cloud) with others.
Confirmation Bias discussion from Science Daily
Pareidolia: Seeing Faces in Unusual Places
Being Amused by Apophenia
Principles Behind The Digital Customer Investment Approach to Customer Centricity
The term Digital Customer Investment (DCI) separates its concepts and objectives from more commonly used concepts like Digital Operations, or Digital Marketing, or Digital Solutions. Any of those phrases carries with it a strong direct transactional intention that bleeds into the activities defined for Digital Customers. This pre-defined intention can act as a prison preventing innovative thinking in digital customer investment. To open a perspective to different approaches that are customer-centric in nature, I have defined digital customer investment along the following principles:
A properly applied Digital Customer Investment Marketing plan will support most of these principles from the start and use them as the basis for the creation of the messaging, measurement and implementation of the plan.
See if this sounds familiar:
Going forward, we need to drill down into the customer priorities and engage a deep dive into our big data storage. This action will attack the issues we have found in customer satisfaction, which have not been addressed by our previous representatives. Our stakeholders are concerned about the lack of action in this matter, and want everyone to have a clear idea of the end of play situation we want to create, as well as the leverage we can bring upon the customer to deliver the new numbers that our growth planning requires. Fortunately, our thought leadership research group has come up with a set of actionable ideas that allows all of us to get in the tent and get a group aha effect going, so we are all clear on the end result we are trying to obtain, as quickly as possible.
Once you catch your breath after reading the paragraph above, you may appreciate the importance of verbal clarity when it comes to creating a plan to improve customer value recognition inside a business.
This is why the Digital Customer Investment Plan is called precisely that. It has a purpose that is easy to understand. It does not take a lot of energy on the part of a team to 'get' the objectives the plan provides and the methodology it uses. It should be self-evident. This accessibility, once the plan is created and agreed upon, allows the team to spend its energy focused on the things that matter, and not in getting into endless meetings to discuss 'what it all means' and 'what we are trying to do.'
Organizations that are small or medium sized may find this transition simpler because their focus on the customer may be more accessible to them, with fewer layers to work with and fewer years of history 'of how things are done around here' to work through.
Recognizing customer value may seem obvious, but it can become fragmented because individual areas of the organization view customer value through their own internal lenses. Accounting may view customer value in one way, while sales views a customer in a different, sales-related way, and of course, marketing views the customer in its own particular way.
Over time, this fragmentation sets in and prevents a clear view of the customer as someone who does not attend all the meetings and does not understand the internal history behind this or that decision. This is one way that organizations lose touch with their customer base.
Once this behavior sets in and is organizationally valid, the interests of the customer become secondary to the interests of the individual departmental groups laying claim to the 'real' value of the customer.
The integrated Digital Customer Investment Plan is designed to avoid these issues before they become chronic.
A few years ago we met a founder during one of our engagements. He had placed, at strategic locations throughout the company, several sayings and perspectives that, he hoped, would blend into a cultural view of where the company's principles stood and what were the overall lines that the company culture would not cross.
One of the lines we read was the title of this post: "It's not our money, it is the customer's money."
The sayings and their positioning made us ask: can you drill a customer culture or do you teach it?
At its most transactional level, Marketing is based on repetition. Most everyone who has been exposed to television commercials can recite a jingle engraved in their minds by sheer repetition from watching their favorite programs on television. Over time, the jingle has stuck, which is great for branding in the most transactional sense: you remember the brand that created the jingle (if it is mentioned in the jingle, which it should be). However, does remembering the brand also mean that you remember the culture associated with the brand? And, if you remember the jingle, does it help you select a product from a shelf, be that a mental shelf or a physical one? Or does the marketing simply becomes part of the mental furniture of the individual and is not brought up as part of the decision-making process for the product at the time of purchase?
Drilling a customer-centric culture and applying it to your marketing needs brings up the same questions. You need a certain level of repetition to make the marketing message stick. However, how do you add the elements of a customer culture to your repetitive message so that these elements will 'activate' at the point of purchase, so the customer, when faced with the decision to purchase a product, will consciously bring up the marketing information as an argument in favor of your product, vs. the competition.
What is the combination of messages that has the best probability of success most of the time in terms of getting to a conversion?
The solution isn't to simply repeat the same phrase over and over again and hope that it sticks in someone's mind. That only leads to the superficial, transactional element of remembering. To go deeper, you have to add a sense of purpose to the activities that your company performs. This demonstrates to the customer that you know what to do with the money that they are about to give you. If they agree with this purpose, and if they see it implemented clearly throughout the organization they can see, then, it is more likely that the repeating message will stick in the mind and is used as a definitive argument for generating a purchase.
The combination of messages we are looking for is precisely that: a purpose-transactional combination that, when added together over time, creates a bridge between the customer's action of paying for a product, and the satisfaction they derive from receiving it from your company. This satisfaction, which includes the satisfaction with the product or service purchased, translates into the kind of loyalty that enables people to advocate for your brand and turns them into something more than just a single transaction on a spreadsheet.
It makes your customers a partner in the purpose that animates your company in the first place.
In the lifetime of a business, managing the startup culture as the company grows can be risky. The company culture begins to strain because the elements that make a startup feel intimate and coherent begin to spread around the organization. Decision-making processes stretch beyond their initial, intimate boundaries among team members. Branding decisions now cannot be made on the fly, but require careful consideration now that people are actually paying attention outside of the initial confines of the startup hothouse environment.
As new people are added to the team, the feeling of 'this is our little company' does not seem to spread to the new hires, who come to the company (justifiably) filled with the expectations associated with an established, salary-paying organization. New hires make demands that 'older hands' may resent as they went through the process of building the initial company without a safety net, a process that new hires can no longer participate in.
Here are 5 ideas that you can apply, as the manager of a department or even the entire company, to maintain the startup feeling as you increase sales and grow your staff to keep up with the needs of the business:
These suggestions are a place to start building a company that will have a high probability of remaining productive if these principles are followed and if they are re-evaluated on a regular basis. As with any living organization, ideas can become obsolete and the only way to time proof them is to re-evaluate them against the needs of the business on a regular basis.
Sources Consulted (Highlights):
Open Plan Offices:
Entrepreneurial Spirit as You Grow
Don't treat your team as a family
Daniel Loebl is an experienced Marketer focused on expanding the recognition of customer value inside a business and keeps a 'beginner's' mind approach to business problems.