Fixing leaky websites: the five essentials to a behaviourally effective site

by Bri Williams ON 3 April 2013

In my recent post ‘Most websites are leaking money,’ I covered two of the key reasons most websites are failing to convert visitors: they don’t establish confidence and they don’t communicate value. As a result, websites are leaking money. A strange thing is happening though – marketers are getting used to conversion rates of less than 5% and we’re comforting ourselves that that is just how it is.

Well, imagine you owned a corner shop and only five out of every 100 people bought something – you’d not only be desperate for answers, you’d be out of a job. So it’s time to shake off our complacency when it comes to our websites and do something to fix the leaks.

Here are the final three essentials for increasing your website sales and sign-ups using techniques from behavioural science:

Creating a pathway

For your visitor there must be a sensible, stepped progression from one task to the next and from one page to the next. Unfortunately most websites leak because they do too much too early. Remember that websites are like dating – you’ll get much further if you listen rather than talk about yourself incessantly.

When your customer first lands on your site it should be all about them – their problem, their payoff, their confidence. Hold off on bombarding your visitor with multiple requests to do something – sign up, call now, buy this, contact us, read our history, connect with us because you risk sounding like a dozen drill sergeants screaming at a new recruit.

Two key behavioural principles will improve your website’s ability to lead a visitor through to purchase.

Completion: Once started we are more likely to follow through which is why shopping cart abandonment of over 30% is so terrifying – it’s against our nature. Design for small yeses and build toward the sale, and
paradox of choice: We desire choice but get easily overwhelmed by it, which means you can actually increase your likelihood of a sale (or sign up) by limiting the choices you require of your visitor.

Who’s doing it well? Mailchimp does a great job in helping its users not only navigate how to construct an email campaign but moving them to a paid upgrade and Anymeeting feeds people through sign up and use of their web conferencing tools before encouraging upgrade to a paid service.

Asking for action

When the time is right you need to ask your visitor to do something. Most websites leak in three ways. The calls to action (CTA) are either absent, unclear or you have too many.

When asking for action there are three key behavioural principles to use:

Loss aversion: Your visitor will carry anxiety about clicking any call to action. Your job is to overcome that by letting them know what happens when they do,
short-term bias: Instant gratification is very powerful so ‘instant access’ or ‘download now’ will be appealing, and
default bias: Visitors tend to take the path of least resistance so try defaulting selections to those options that are most mutually beneficial.

Who is doing it well? To see a great pathway and CTA visit the website of author Michael Port. You’ll be left in no doubt about what the desired action is. Local innovation gurus at Inventium do a really good job with clear CTAs that help the visitor know exactly what happens when they click.

The effort:reward equation

The final of five essentials to a behaviourally effective website underpins all the others: the effort:reward equation.

The effort:reward equation is my way of boiling behaviour down to two elements:

Effort: What you are asking your visitor to expend: time, money, thinking, energy? and
reward: What does your visitor gets in return: financial benefit, emotional payoff, convenience, status?

When effort is greater or equal to reward, your visitor will not proceed.

When reward exceeds effort, they will take action.

But don’t fall into the trap that most marketers do and concentrate on maximising the perceived reward. You are actually better off reducing effort because that not only increases your visitor’s ability to take action, but makes the reward look even more valuable. Eliminate dead-end pages, pages with too many CTAs, too many conflicting CTAs and repetitious data entry.

Key behavioural principles to apply in managing effort and reward:

Depletion effect: The more decisions we make in a day the more fatigued we become and we tend to defer to default options. On your site, the more decisions you require of your visitor the more important it will be to have easy and defaulted options because otherwise you risk them shutting off, and
Paradox of choice: Eliminate extraneous CTAs and decisions because confused visitors will flee rather than persevere.

Who is doing it well? Google is the poster child when it comes to reducing effort. What can be simpler than one search box? The reward is pretty strong too, instantly gratifying the visitor with a screen full of search results. WordPress make setting up and managing a blog simple, including allowing the visitor to switch designs for their blog live and without fear of losing content.

Five essentials to get it done

That wraps up the five essentials to a behaviourally effective website. By following the process of establishing confidence, communicating value, creating a pathway, asking for action and managing the effort:reward equation you will maximise your potential to turn visitors into customers. Your website can and should be generating more business for you, and now you have the framework for getting it done.

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Most websites are leaking money

by Bri Williams ON 1 March 2013

Most of the websites I visit are leaking money and yours might be one of them. Out of every 100 people who visit an average website, only five are becoming customers*. Worse still, three out of every 10 online shopping carts are being abandoned*. Something is broken, and it’s up to marketers to fix it.

The fundamentals have been screwed up

The task of your website is to get someone to do something. Ultimately it’s about that visitor buying something which means your task as a marketer is to create a process of behavioural change. ‘Process’ is important here because the secret lies in small, behavioural steps rather than expecting your visitor to take giant leaps.

I’ve boiled the secrets of increasing your website sales and sign-ups down to five essentials. Here are the first two. (I’ll cover the rest next time.)

Establishing confidence

When someone lands on your website you have to establish two types of confidence in order for them to proceed: confidence in them that they’ve landed where they intended, and confidence in you that you’re a site that can be trusted.

And the scary news is that you have around seven seconds to do this.

There are three principles of behavioural economics you can leverage here.

Social proof: gaining confidence from the fact that others have done business with you,
loss aversion: overcoming any anxiety through guarantees and credentials, and
fast thinking: designing content that can be processed easily rather than copy-heavy text and confusing images.

To establish the visitor’s self-confidence look at clearly naming your business in the header and matching the language on the site with search terms that they may have used.

To establish confidence in you consider how you display your credentials (years established, industry accreditations) and proof points (guarantees of service and testimonials).

Who’s doing it well? Check out Mailchimp.com, The Book Depository, Anymeeting.com and Birdsnest.com.au to see how they establish confidence.

Communicating value

“Can you solve my problem?”

The question that your visitor has in their mind is pretty obvious, isn’t it? And yet most websites fail to articulate the problem they solve and the value they offer. Instead they bang on about their history and bombard the visitor with product ranges and special offers. It’s simple too much, too soon.

Remember that your website should be like a date not a lecture.

We’ve all had bad dates where the person talked about themselves at length without pausing for breath. What happened? You got bored and left as quickly as possible.

That’s what a lot of websites do – “At XYZ company we…”, “I’m passionate about…”, “Our business prides itself on…” – Who cares! At this point your visitor simply wants to know ‘Can you solve my problem?’

As marketing professionals value propositions are our bread and butter. Look at your website now and check whether your value proposition does the following:

Articulates the problem your visitor has,
explains how you solve this problem,
describes the payoff, and
explains why only you can do this.

If it doesn’t, then you are missing one of the most essential elements of getting your visitors to buy from you.

In addition to answering the four points above, to communicate value there are three principles of behavioural economics you should aim to use in your value proposition:

Loss aversion: We hate to lose more than we love to gain so communicate what the visitor has to lose if they don’t address the problem,
Scarcity: When it’s rare it’s valuable. When Facebook and Pinterest started they used exclusivity to build desire, so what is rare about your solution? What is your key differentiator? and
Social proof: We follow what others have done so use statistics on your customer base and/or testimonials to showcase your value.

Who’s doing it well? It’s tough to find great examples of value propositions – it’s like the forgotten magical ingredient for effective websites. Evernote.com is one of my favourites and you can check out my website briwilliams.com.au to see how I’ve approached it.

The first two essentials for effective websites, establishing confidence and communicating value are make or break. If you have as little as seven seconds to get your visitor to engage, the heavy lifting has to be done above the fold.

In my next post we’ll cover three more essentials: creating a pathway, asking for action and the effort-reward equation, which together will mean your website stops leaking money and you will see your conversions skyrocket. In the meantime I’d love hear your thoughts on who you think is doing it best.

* ‘Online Retailing Australia 2011′ by Forrester Research

Myer vs David Jones: whose online store is better at eliciting action?

by Bri Williams ON 12 November 2012

There has been a bit of fuss recently over David Jones launching its online site, so it’s a good opportunity to size up whether DJs or Myer is hitting the mark from a shopper behaviour point of view.

My assessment looks at how each site influences their shopper to take action – I’ll leave it to others to compare range and aesthetics.

1. Display techniques to capture shopper imagination

A large part of the in store experience is being able to walk amongst the merchandise, letting your imagination meander as you consider an item. Online is a different experience and has to work harder to help the shopper imagine owning the item; making it ‘vivid’. Two things that help:

Use of model: including pictures of clothing on actual bodies rather than floating in a disembodied state can help shoppers see what its like ‘on’. Points to David Jones on this. David Jones 1 Myer 0.
Styled outfits: giving the shopper an idea of how things go together has the dual benefit of securing confidence that the item is versatile as well as suggesting an up sell. Despite using this technique in store through visual merchandising, neither store uses this technique online. David Jones 0, Myer 0.

2. Pricing techniques to influence purchase

We are used to walking through stores and seeing all sorts of price points and offers. The same techniques can be used online to help shoppers feel they are spending wisely. Techniques I was looking for:

Anchoring: listing a recommended retail price (RRP) alongside the sale price is standard retail practice because the higher price (the anchor) establishes the context for the marked down item. David Jones wins the cookies in this case because they list the RRP in red and crossed out for marked down items with the sale price immediately next to it. There is no confusion as to whether the deal is a good one. Myer on the other hand, carry a ‘sale’ icon (good) but list only one price on the browsing page (not good). The price turns out to be the sale price, but the shopper has to click through to work this out. David Jones 1 Myer 0.
Free delivery: if you want to get people buying online, ditch shipping charges. In general, shoppers hate paying for the services that accompany the product (like shipping and installation), and as Amazon discovered, will buy more if it means they qualify for free delivery. David Jones are promoting free delivery to all until 14 December and otherwise offering the service for free to card holders (an incentive to join). Myer seem to have a less onerous free shipping program – if you look hard enough – but are not making the most of it to influence shopper behaviour. Rather than going loud and proud with a blanket and permanent ‘free shipping’ policy (a la Zappos or The Book Depository), Myer are pandering to the few items that do not qualify and relying on the shopper to read the delivery tab under each item to work it out. While they include a ‘free shipping’ graphic on their banner ads, it is hard to read, does not link to their policy and makes it look temporary rather than a commitment to service. Neither store nails the power of free delivery, but Myer have a slight advantage. David Jones 0.5 Myer 1.

3. Behavioural cues to influence selection

When shoppers are confronted by choice, they look for cues to help their selection. Price is a big one, but here are a couple of other techniques:

Social influence: we gain confidence knowing that other people have or will approve of our decision. To help the shopper, cues like ‘best seller’ or ‘most popular’ can provide social reinforcement. In this vein David Jones use ‘Our pick’ whereas Myer do not, relying on customer reviews instead. David Jones 1 Myer 0.5.
Defaults: our tendency is to leave things as they are, and this extends to selections. In the absence of us making a deliberate choice, we default to whatever has been determined for us and Myer make much better use of this technique. For instance, the colour of an item is defaulted to the colour displayed, saving the shopper from having to make a selection. In contrast, David Jones require the shopper to select a colour even if there is only one available. Myer default the payment card type to their preferred Myer Visa whereas David Jones require selection. David Jones 0 Myer 1.

4. Navigation to influence transaction

Making the transaction easy to follow and complete is central to the experience. As Amazon has shown with their ‘1-Click’ transaction, making the process as short and sharp as possible reduces the chances of the shopper getting distracted.

Clear process: both stores use shopping bag/cart mechanisms that keep the shopper shopping until they are ready to transact, and both allow the shopper to view and edit their list as they need. I prefer David Jones’ three-step navigational guide (delivery-payment-order) to Myer’s more subtle ‘next’ process (my email-my address-my payment) because it more clearly indicates to shoppers how far they have progressed through the process. David Jones 1 Myer 0.5.
Sequence of tasks: Myer require fewer steps to be taken by their shoppers. While it’s a positive that David Jones offer a ‘guest checkout’ option for shoppers who do not wish to create an account, Myer support this same activity without breaking it out into a separate path. Similarly, Myer have made entering delivery and billing addresses much easier than David Jones who confront the shopper with over fifteen fields to complete on one page. David Jones 0 Myer 1.

5. Bits and pieces

Treatment of error messages: feeling like you’ve failed undermines your desire to interact with a site. David Jones’ error messages are technical rather than supportive and obscured at the top of the page rather than near the field that requires correction. Myer are more generous in guiding their shoppers through missteps. David Jones 0 Myer 1.
Secure payments: Myer include ‘secured by’ symbols in the payment process which serve to increase shopper confidence at the pointy end of the sale. David Jones do not. David Jones 0 Myer 1.
Online + offline: neither company makes use of its bricks and mortar presence as part of the online sale. For instance I would have loved to have seen opportunities to integrate the experience so that the shopper knows they can seamlessly work between both worlds (eg. ‘Expected delivery two days. Want it today? It’s available at X store…). David Jones 0 Myer 0.

The tally

Myer have the edge on David Jones with 6/11 vs 4.5/11 but I must say a few times through this exercise I forgot which site was which, and that sums up my thoughts on these two retail websites. Forgettable. Myer and David Jones have launched sites that are underwhelming and suggest they are there out of necessity rather than opportunity. The two department stores are used to competing with each other, where in the online space they are competing which much more sophisticated and engaging retailers such as Birdsnest.com.au and Topshop.com. There’s more to a behaviourally-effective website than listing your stock for sale, so I look forward to Myer and David Jones raising the bar from here.

Where to next for the marketing profession? 3 observations

by Bri Williams ON 19 October 2012

First, a confession: mine was not a marketing degree and I have never been responsible for a marketing campaign. Instead, in my time as a product manager I worked alongside marketers within a marketing function and, more recently, as a behavioural specialist I have worked with marketers to increase conversion through behavioural economics. I guess you could call me a ‘little m’ marketer.

You can say then, that I have been watching the marketing profession from the house next door. Seeing who comes and goes, who renovates and who lets their house run down.

My observations I share in the hope they stimulate rage. Rage against how the profession is perceived and rage against being short changed in how you can better do your job.

Observation 1: Marketers are data drunk

The life of a marketer has radically changed in the last decade, from relying on research, cumbersome segmentation models and buying lists to shaping interactions with consumers to extract their data directly.

From any theorists point of view, businesses now have the resources, smarts and justification to reconcile all this data into a meaningful, insightful source of certainty. I mean, you’d be crazy not to. And that’s why so much money is being thrown at ‘single-customer view’ and integrated management systems.

But to my eye, no one seems short of data, everyone seems short of answers. The data that is available is not providing a clear path on what marketers should do to get their buyers to take action. While it may give a picture of what people have done, it always falls short of answering ‘what will they do?’ and that’s what marketers need to know most.

Observation 2: Marketers guess

Despite all the data floating around and the theoretical frameworks of how marketing can be effective, at the end of the day, at the coalface where the marketing campaign meets its market, marketers have to guess. Why? Because marketers are in the business of influencing people, and humans don’t come with a ‘how to’ manual.

Until now, marketers have had to rely on guesswork. Educated guesswork, but guesswork nonetheless. After all, if we weren’t guessing, we’d be able to go to market every time knowing exactly what would happen. If only!

And the need to guess I think has impacted the credibility of the profession. Along with HR practitioners, marketers have been tagged as dealing in ‘soft skills’ and as a result, struggled to gain boardroom gravitas.

The perversity of this is that ‘soft skills’ are the hardest of all. Try being an accountant without access to a whole battery of codified standards that defines the outcome of your input.

Well, I think it’s time for marketers to find a way to eliminate guesswork and in so doing, stamp their authority on the science of ‘soft skills’. And the good news is the way to do this already exists.

Observation 3: Marketers spin plates

Marketers have become slaves to meeting culture, and through this, become order takers rather than order makers. Running from meeting to meeting, juggling budgets and stakeholder expectations, the life of a marketer has become reactive and problem solving rather than proactive and value generating. A lot of plates have to be spun, leaving no time or intellectual capacity to pave the way forward. Let’s not kid ourselves – marketing is fast becoming an administrative rather than creative endeavour. How depressing. Surely that’s not why we work in marketing?

Then why do I see most of the thinking outsourced to creative agencies? Why do I see marketers in the corporate sector brief a campaign and then rely on the agency to do the mental grunt work? And why do marketers not demand from their agencies an explanation of why their solution will impact the behaviour of the market? If you are relying on someone to do your thinking, at least have them explain it.

To my mind marketers are leaving themselves open to poor results because they themselves are not owners of the knowledge about what makes people behave the way they do. Rather than being experts in human behaviour, marketers seem to be deferring to others and cloaking themselves in busyness.

Well, maybe we’ve been spinning plates because an alternative has not been evident? Until now.

The new age of marketing

So what do I see when I look from the house next door? I see a new age of marketing emerging. Guesswork will be replaced by answers, opinion by science. Marketers will be the leaders in behavioural knowledge because they will have to be to generate value. They will lead their businesses in shaping results because no one knows better than they that everything in business – absolutely everything – has a behavioural basis.

The new age is here and it is available to you in the form of behavioural economics, your ‘how-to’ guide for human behaviour. It presents you with science-based answers on why people behave and expectations of how they will. If your agencies are using it, ask them how. If they’re not, ask them why. If my observations from next door have enraged, then simply let me say this: don’t get even, get answers.

The behavioural economics of plain packaging

by Bri Williams ON 15 August 2012

The Australian Federal Government has successfully withstood a High Court challenge on the constitutional legitimacy of plain packaging legislation. So with help from the field of behavioural economics, let’s now look at the behavioural legitimacy of the decision to ban all branding from tobacco packaging.

Behavioural economics

Behavioural economics is a field of study that starts with the proposition that we are all prone to make decisions that are not always in our own best interest. We sign up to gyms we don’t attend, we buy things we don’t need because they’re on sale, we volunteer our time to causes, we drive further to get four cents off a litre of petrol… we do things that an economist would say are just not rational. And smoking, something that uncontrovertibly poses a significant health risk (not to mention is very expensive), is well and truly in the irrational bucket.

Three things to be behaviourally effective

For something to be behaviourally effective – in this case getting the target to not take up smoking – there are generally three things you need to do:

Make it hard: create obstacles and/or overwhelm the decision making process,
make it socially unacceptable: create fear of being socially shunned, and
negatively impact self identity: create dissonance between sense of self and behaviour.

1. Will plain packaging make it hard to take up smoking?

Behavioural economics affirms that we are programmed to find the path of least resistance. For example, having your phone with you all the time invariably means you will check your email and social networks more often. Creating a barrier to access by leaving your phone in the other room however will reduce the likelihood of incessant checking.

And so it is with smoking. There are two parts to making it hard to take up smoking.

a. Overwhelm with undifferentiated choice

Known as the ‘choice paradox’, as consumers we seek to have an array of choice only to be overwhelmed by it when it comes to the crunch. Insurance, banking and superannuation are salient examples.

Plain packaging will play a role in confusing consumer choice. Where once a smoker could easily identify their preferred brand by the packet’s colour and logo, removal of such mnemonic devices will inhibit the ease of recall and selection. This is particularly so with an inexperienced smoker who may still be in the impulse rather than addictive phase.

b. Impede ease of physical access

Making access to cigarettes more difficult is key to reducing use. Age restrictions, requiring ID, and now having the product locked away in cupboards behind counters are great strategies to interfere with ease of access.

In this regard, plain packaging in unlikely to have any incremental impact. Since the introduction of mandated cupboards, branding has been hidden from view and so the smoker has had to ask the shop assistant to find the product. While it may slow down the attendant, plain package or branded, the sale will proceed.

2. Will plain packaging make smoking socially unacceptable?

We are enormously influenced by what others do. Known as ‘herding’, ‘social norming’ or ‘band wagoning’, we tend to stay with the pack most of the time. While we each like to think we are above average (and studies have shown that more people rate themselves an above-average driver than 50% of the population!) most of our behaviour is about adopting what is the societal norm. Hence so many have joined Facebook and LinkedIn – check out the daily commuter cycle if you don’t believe me.

Smoking has undeniably been moved into the ‘less acceptable’ than ‘acceptable’ category, and the TV show Mad Men with its constant puffing attests to how far we’ve come in a couple of generations.

Will plain packaging increase the level of social unacceptability? No. For this to happen, we instead need to rely on continued efforts. First, the separation of areas in which people can smoke so that it is undesirable to leave the gang to go and have a cigarette. And second, society has to continue to stigmatise smoking – that means not giving it credibility in films, for example.

3. Will plain packaging negatively impact self-identity?

Each of us has a sense of who we are and spends most of our time subconsciously assessing the world for how it fits with our self belief. When something doesn’t reconcile between how we see ourselves and our behaviour, we experience a psychological tension called ‘cognitive dissonance’. Because this state is uncomfortable, we do a few things to rebalance.

Ignore the new information

When confronted with information that we don’t like, we tend to ignore it. If you find yourselves switching off from Transport Accident Commission ads or avoiding doctor’s appointments, you’ll know what I mean. This is the trap the current grotesque ads on cigarette packets fall into – smokers simply ignore the ad.

Distort the new information to fit our self view

Ever sat in a meeting and had two people form completely opposing views on the basis of the same information? Chances are they have simply filtered it through their own internal narrative to make sense of how it fits with their existing ideas.

Modify our behaviour to fit

Least likely but possible, we can modify our behaviour if it is out of whack with how we are or want to be. Hello diets, hello gym.

The government will be hoping that plain packaging will encourage smokers (or pre-smokers) to modify their behaviour because there is no longer a brand to use as an expression of self-identity. However, I think this horse bolted when tobacco advertising was strangled years ago, and now the bigger identity at play is as a ‘smoker’, not as an ‘XYZ brand smoker’. In that respect, plain packaging will not adversely impact self identity because it’s the act of smoking that is the identity, not the brand.

Further, a probable scenario is that those who smoke will see plain packaging as a brutal attempt to thwart their freedom to choose rather than an act of good intent. This will likely incite anger and result in a recommitment to identifying as a rebel/individual/outsider.

So will plain packaging work?

Will it work? As a behaviourally strategy on its own, plain packaging has some shortcomings. Tobacco is an addictive product so the fact that a smoker’s preferred brand is now in an unbranded packet will not be enough to have them quit. But for people at the point of considering smoking, it may at least create brand confusion and limit any residual halo effect the brands may have. The great thing is that plain packaging is not a strategy on its own, and when viewed in the context of tobacco pricing, Quit campaigns, limits on product availability and restrictions on use, we can at least be sure that every opportunity to eradicate smoking is being considered.

Forget GIGO, marketing’s got a VIGO problem

by Bri Williams ON 25 July 2012

‘Garbage In Garbage Out’ (GIGO) has usefully served as a call to arms over the decades. Beware those who throw poor quality information into a business process because no matter how sophisticated that process, it can’t transform duds into studs. But even more concerning is what I call VIGO, AKA ‘Value In Garbage Out’. In other words, turning great inputs into ineffectual pulp. And all too often that is the bleak reality of promising marketing campaigns.

Let’s look at how to avoid the VIGO problem and how to instead ensure you deliver VIVO: Value In Value Out.

Slippery dip or pasta maker – what type of process do you manage?

In the Garbage In Garbage Out world, the process through which ideas pass is assumed to be inactive. No matter how good your brainstorming and sign off processes for example, a flawed idea will result in a flawed campaign.

To me this a bit like a playground slippery slide – you start in one place and end up in another a bit later, the experience will be either enjoyable or excruciating, but ultimately not much has changed. The slide might be an enabler, but it is ultimately passive.

In the Value In Value Out world, the process is instead an active one. Throughout the process, from identifying your objectives and intent, researching, briefing, receiving pitches, refining creative, socialising with stakeholders and signing off, you are having hard conversations, making the right decisions around inevitable compromises and seeking contrary rather than just confirmatory information.

This to me is more like a pasta maker. It starts with the raw dough being made ahead of time before it is then introduced to the pasta maker. From there it is constantly rolled and reformed until its state is transformed into something of value. And wow, it takes some time, grunt and perseverance!

In between the Garbage In Garbage Out slide and Value In Value Out pasta maker lurks the danger of Value In Garbage Out: the process that warps great ideas and churns out something that barely resembles what was intended. To me this is like the billiard table chute at the pub that croaks and clangs once you’ve potted your shot. Up on the table, there was a world of colourful possibility. However, once the ball is pocketed, and whether you potted the right or wrong ball, all you hear is the dull thud and slow roll down protracted and prescriptive alleyways before the ball sits inert ready for the next game.

GIGO VIGO VIVO

Figure 1: Summary of GIGO, VIGO and VIVO

Why does value turn into garbage?

I believe value can turn into garbage due to one thing missing in the process – the behavioural imperative. The behavioural imperative is the action you want your market to take as a result of your campaign – the answer to the ‘So what do you want me to do?’ question. If this isn’t clear to you as the marketer, your agency, stakeholders and market, then your campaign will be garbage.

Value In Garbage Out campaigns are all around us. Take the WA Government’s ‘LiveLighter’ anti-obesity ads for example, that provide shocking internal footage of what a fat gut comprises. Big on revulsion but leaving the target market short on answers about how to change their behaviour. Likewise, the anti-smoking ad that has smokers ‘nailing’ packets of cigarettes as they sit dimly lit and isolated in an empty factory. If I’m a smoker, what am I meant to do as a result? Contrast this with the ‘Stop smoking, start repairing’ Quitline ads that galvanise health benefits around the behavioural imperative; stop smoking.

A question of accountability

Value In Garbage Out is undoubtedly a key reason for campaign failure. However, where GIGO is a plain case of ineptitude, VIGO is an inexcusable result of intellectual laziness. It is a case of great input going begging because ‘life gets in the way’, or in the late Stephen Covey’s language, being too busy chopping wood to sharpen the saw.

If you’ve excused poor performance because you’ve been too busy, rushed to achieve an unrealistic deadline, had to appease stakeholders or been constrained by budget, chances are you have been VIGO’ed. And the bad news, it’s your fault.

You are the difference between GIGO, VIGO and VIVO.

Accountability for GIGO lies squarely at the input stage – the preserve of the marketer – so scapegoating your agency for not meeting the brief, stakeholders for messing with your objective or project management for not hitting deadline and budget is just not on because it’s simple: you have failed to understand how your inputs relate to your behavioural objective.

At the other extreme, accountability (and credit) for VIVO is also with the marketer. In this case though, you’ve understood how your inputs resolve your issue and what the campaign’s behavioural imperative is. You’ve kept everyone on track because you have been clear about what you need your market to do in response to the campaign.

So what about VIGO? That’s you again, although it sometimes doesn’t feel like it. Particularly in larger organisations it can be easy to let a process govern an outcome, so you have to remember that the process is there to produce the pasta, not pocket the ball.

No doubt being a marketer is a tough gig, and your outputs live in the public domain to be scrutinised, consumed or worst of all, ignored. My advice therefore is to keep it simple by focusing foremost on the central behavioural imperative. Do that and you should deliver a great outcome.

Customer loyalty programs: too much love, not enough action?

by Bri Williams ON 5 July 2012

Loyalty programs are big business. From the local coffee shop to the leading banks and retailers, everyone seems to want a piece of the ‘customer engagement’ action leading to wallets full of loyalty cards and inboxes full of VIP offers. But are the majority of businesses wasting their investment by chasing hearts and minds when they need to be chasing hands and feet as well? Too much love and not enough action?

Importance of customer loyalty programs

On paper, investment in customer loyalty programs makes sense. According to Rob Bauder, a loyal customer is up to twenty times more valuable to a business than an uncommitted customer.

Further, your customers probably think they should be rewarded for their loyalty. An Ernst and Young survey of 9000 finance sector customers reported that almost nine out of ten insurance customers believed that loyalty was important, but 41% felt their insurer did not recognise their loyalty.

No wonder MYOB reported that more than one third of Australian small and medium businesses were set to increase their activity around customer attention and loyalty in 2012, with 39% stating their top priority was to ‘Focus on customer retention strategies’.

But loyalty programs are expensive, and my concern is that marketers are not getting adequate return on investment because they are concentrating on getting people to feel engaged with their brand rather than on habituation of brand purchase. Winning hearts and minds is nice, but hands and feet are what make the cash registers chime.

Customer loyalty behavioural model

Consider the following model that looks at the emotional and intellectual dimension of loyalty programs as well as the behavioural outcome. To maximise ROI from loyalty, there needs to be a combination of both.

Maximising Buyer Loyalty

Buyer ‘stickiness’ is what I refer to as attitudinal loyalty. It means on a like for like basis, your customer will choose you over your competitor because they have more of an emotional relationship with you. This is the battleground for the ‘hearts and minds’ of your market.

Buyer activity is how often the customer does business with you. It’s the battleground for the ‘hands and feet’ of your market.

Affective loyalty programs

High stickiness but low activity is what I call an ‘affective’ loyalty program. You have encouraged your customer to like you but not actively spend money with you. You’ve left yourself open to carrying a relationship without any real benefits. In romantic relationship terms, it’s like you’re stuck being platonic friends when you want more.

If you are running an affective loyalty program, you need to focus on driving more activity from your customers. Researchers at Curtin University in fact found that for small businesses to derive positive value from loyalty programs, they needed to concentrate on moving light customers to heavy or it could drive their business into the ground.

Transactional loyalty programs

High activity but low stickiness and you have a ‘transactional’ loyalty program. Here your customer might do business with you quite frequently but you have not managed to engage them, leaving you open to substitution. Now we’re in ‘booty call’ territory.

I place Woolworths and Coles in the transactional category because the core of their services are broadly interchangeable. As professor of marketing science at the University of South Australia, Byron Sharp, stated in an interview with ABC News, “shopping decisions remain far more influenced by store location and availability of parking.”

Transactional programs need to do more to engage their customers emotionally by drawing connections between the program and the customer’s identity.

Depleted loyalty programs

Low activity and low stickiness is a ‘depleted’ loyalty program. It’s one that needs radical overhaul because it’s not engaging your market and not stimulating purchase. Sorry to say, but spending money on someone who doesn’t like you or share themselves with you is well, not a relationship.

Local cafes tend to fall into the ‘depleted’ trap particularly when they use stored value rather than ‘punch’ cards. These cards might be great data sources to link the customer to the purchase but they fails the behavioural test of vividness; if you can’t see the outcome (i.e. how many coffees I need to buy to get one free) you are less likely to work towards it.

Habitual loyalty programs

What you should be driving for with your loyalty program is high stickiness and high activity, in other words, a ‘habitual’ loyalty program. Sure your customers like your brand, but they are also actively putting their money where their mouths are. Importantly your loyalty program is driving habituation rather than just attitudinal regard, meaning your customers will be extremely difficult to dislodge from the relationship because you’ve moved beyond intellectual and emotional engagement, and created a habit of buying your brand. Let’s not kid around, this is the real-deal. Warning to commitment-phobes, this is a marriage!

Retailer Myer is trying to habituate behaviour through its Myer One program. Rewards are geared towards in-store use, connecting the value of the reward with revenue generation and customers receive personalised invitations and benefits, for instance a birthday voucher to enhance stickiness. The rewards are presented in stored-value card format, which is important behaviourally in two ways. First, it is a tangible representation of value that separates it from other mental bank accounts the customer will have, increasing it’s likelihood of use as a guilt-free purchase currency and second, the customer has the freedom to choose how to spend the reward, maximising their sense of personal control.

In the past I would have also placed Qantas in the habitual box. Qantas works hard to remind customers where their points can take them (vividness), partners extensively to make points generation easy, and uses membership tiers to motivate customers to increase activity. However, expiring unused but earned points, and restrictions on use of points reduces the ‘stickiness’ dimension and leaves Qantas close to transactional. Increasingly out of sight, out of mind.

Loyalty programs can be an important source of marketing for businesses but they come with a big, fat caution: love won’t pay the bills and action can be empty. Strike a balance of both and you will successfully drive habituation and through that, healthy ROI.