Changing consumer behaviour – are we becoming more demanding?

13 April 2015

Changing consumer behaviour – are we becoming more demanding?

An eager and buzzing crowd turned out to see Professor Moira Clark present her engaging and insightful view of consumer behaviour at Henley Business School’s ICMA Centre at the University of Reading in February.

An eager and buzzing crowd turned out to see Professor Moira Clark present her engaging and insightful view of consumer behaviour at Henley Business School’s ICMA Centre at the University of Reading in February.

Professor Moira Clark, Director of the Henley Centre for Customer Management, was introduced by the Dean of the Business School, Professor John Board, who prefaced Moira’s talk by congratulating Henley on reaching its 70th anniversary year – a year which has seen the institution recognised with a top 10 ranking for the quality of its research.

The big questions

Moira began by posing the question of how consumer behaviour has been changing, and whether generational issues impact on customer service. She asked what makes for the ‘perfect’ customer experience, and whether we ourselves are to blame for the culture of mis-selling.

She detailed some of the extraordinary changes we’ve experienced over the past decade or so, including YouTube, Google maps, the failure of the banks, social networking and 3-D printing, and asked: ‘if you had known what life was going to be like now, what would you have done differently?’

‘Our lives are changing exponentially, and consumers are getting older’, Moira added, ‘and we’re getting more confident, and grumpier! While a majority of people still don’t stand up in the face of poor service, the overall number of complaints about products and services has gone up to a staggering 66 million in 2014, which is almost double the previous 12 months. By 2050, more than half the UK population will be over 50, and life expectancy is rising fast; some people even believe that within the next two to four decades the “disease” of aging will be cured.

‘How ever old we are, it seems that we love being in control. When we are ill we now Google our symptoms, because we don't trust authority in the way we used to.’

Moira identified the feminisation of marketing as another change. ‘Women are becoming an economic power but they aren't being catered for; by 2020, there will be more women millionaires than men. And while some companies still just don't get it, there are signs of recognition. In the US, one electronics brand has distinctly different stores aimed at men and women. And online too, there’s a clear difference in the way that men and women shop; almost exactly transposing the characteristics for ‘high street’ shopping, online, men browse, and women shop much more quickly.’

The generation game

The marketing industry classifies consumers according to their age, and there are distinct characteristics which are associated with each group. Understanding the specific behaviours of each group enables brands to communicate in relevant ways:

The Silent Generation (born 1925–44) demonstrates values driven by their experience of the depression, when people were encouraged to be stoic and not show their emotions. They didn't complain, and had a strong ‘waste not, want not’ ethos. They want larger print, seating, toilets, time – and tend to ignore sell-by dates!

Baby Boomers (born 1945–64), also known as ‘forever forties’, tend to be workaholics. Defined by the economic boom, they are generally optimistic, nostalgic and image conscious.

Generation X (born 1965–89) grew up in the shadow of the Cold War, and the fall of communism. They want everything now and have their Amazon account default setting fixed at ‘next day delivery’. They are pragmatic, fun, and positively like change.

Generation Y (born after 1990), also known as trophy kids, are even more optimistic, technically savvy and are independent, confident, achievement-oriented multitaskers. Having been praised at home at every stage of their childhood, they seek the same assurance at work, and are driving the gamification of work. Their buying decisions are relationship focused, even if that relationship is remote, and online.

So, what's the most perfect customer experience?

From research conducted at Henley Business School by Moira and her colleagues, it is clear that the perfect customer experience is context specific, and organisations need to engage directly with their customers to evaluate the factors that are most important to their relationship.

The research identified 119 factors that impact on the perceived quality of the experience, and it appears that there are some distinct differences between the most valued factors in B2B and B2C contexts.

For a B2B organisation, the extent of personal contact is the number one factor, followed by flexibility and an understanding of customer needs. The B2C audience, however, values helpfulness, value and customer recognition above all else.

So, what can we do to enhance the customer experience?

Creating an exceptional customer experience comprises a number of facets, but developing a real understanding of the customer appears to be a good starting point. Following on from this, it is vital to make it easy to transact.

The concept of measuring customer effort (CE) as a means of evaluating the quality of a buying experience has been around since the 1940s, and is based on the notion that the easier you make it for customers to buy, the more loyal they will be and the more likely it is that they will repurchase and spend more.

The Henley Centre for Customer Management has been working with BT on researching the area of CE. The concept is a function of the amount of time and energy a customer has to spend in an encounter with a brand or an organisation. It is a relatively simple concept, and one that staff readily understand and buy into. Indeed, the CE metric outperforms Net Promoter Scores and customer satisfaction surveys in terms of its ability to accurately predict consumer behaviour.

‘It is important to recognise’, Moira went on to say, ‘that CE is based on the customer’s perception of the time and energy they expend, not the objective measures; it is the non-monetary cost of consumption. It can include queuing and waiting time, transaction or consumption time, and energy – that is, cognitive, emotional and physical.

Cognitive energy is the amount of mental energy that is required to process information. If things aren’t simple, if there is too much uncertainty or there is simply too much choice, then cognitive effort can be high. Consumers are consistently described as having limited cognitive resources and are ‘cognitive misers’ who strive to reduce the amount of cognitive effort associated with decision-making. This is why we hate unravelling jargon or reading lengthy terms and conditions. Daniel Kahneman, the world-renowned psychologist, summed this up beautifully with the following quote: ‘Thinking is to humans as swimming is to cats; we can do it if we have to, but we’ll do anything to avoid it.’So, when we look at the mis-selling of financial products for example, a part of the explanation is that we don’t use enough cognitive energy to understand the terms and conditions. Fundamentally we need to take more responsibility for reading the small print.

Anxiety, stress, anger, fear, boredom and frustration are all psychological costs related to emotional effort. These can be the result of problems with staff or other customers, the inability to access the right people, processes or procedures, and of complaints not being properly dealt with. Greeting customers with a smile has been found to be massively powerful in improving customer satisfaction.

Time energy can be illustrated by the all-too-familiar irritation of unnecessary, snaking queue-management barriers in airports! We hate wasting time, and some of the latest teleconferencing systems have given us ways of overcoming this, particularly in early medical diagnosis.

‘So ask your customers,’ Moira pleaded the audience, ‘Are we easy to do business with?’ Make it simple for them to respond; press 1 for yes, 2 for no. If we don’t make it easy, why is this?

Simple analytics now allow companies to identify the real issues much quicker and more accurately, and social media has provided the means for them to respond instantly and achieve satisfactory closure before lasting damage is done. Indeed, we can use the online customer experience to make customers feel as if they are in control, and by doing so we can address their emotional needs.

‘Customers lead busy lives,’ Moira concluded. ‘By gaining better customer insight and by understanding what makes for a great customer experience, we can make it easy for our customers and regain their trust and loyalty.’

 

Q&A

Following Moira’s presentation, the audience was invited to pose their own questions, a selection of which – along with Moira’s responses – are summarised below.

On the subject of employee resilience

‘It’s a big issue, and we have to recognise the link between employee satisfaction and customer satisfaction, so we need to support staff much more.’

On being asked which companies are most demanding, and which do well?

‘In my view, the self-service companies such as WHSmith still have a way to go. John Lewis gets it, and they understand. First Direct also does a wonderful job.’

How good are companies at assessing the customer experience?

Most companies are very bad at analytics. They create long surveys which just serve to annoy the consumer.The Net Promoter Score system also has its drawbacks; the outcome is often linked to staff bonuses, so staff will routinely ask for a good score!’

In response to a question about whether customer service can go too far, Moira replied: ‘Companies can invest more money in better service, but it depends what we are prepared to pay for better service; ultimately, it’s more important that the service is authentic.’

Finally, Moira quoted Richard Branson, who said of his staff: ‘Train people well enough so they can leave, treat them well enough so they don’t want to.’ ‘That sums it up nicely for me,’ concluded Moira.

Professor John Board thanked Moira, and closed the event by reiterating that research doesn't just matter to businesses but also to people, and that this is what underpins the work done by Moira and her team at the Henley Centre for Customer Management.

 


 

Following the event, participants were asked for their feedback. A selection of views are printed below:

‘It’s the first time I’ve been to a Henley event and, I must say, it was excellent.’

‘What a marvellous talk – I was completely fascinated from start to finish!’

‘Moira is superb, isn’t she? She has such a depth of knowledge and puts it over in such an engaging way.’

‘We’ve really enjoyed the talk tonight. When’s the next one?!’