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Strategy

How Behavioral Psychology Affects Your Retention Strategies

Behavioral psychology is all about understanding what drives your customers’ actions - and knowing that “with great power comes great responsibility"

Matt Duczeminski
October 22 2018

“We are things that labor under the illusion of having a self; an accretion of sensory, experience and feeling, programmed with total assurance that we are each somebody…” – Rust Cohle, True Detective

On some level, all of our thoughts, feelings, and behaviors are influenced by the world around us – whether we realize it or not. We don’t just “do things” without there being a reason behind our behavior.

Your best and most consistent customers remain on board over a lengthy period of time because you’ve done something to make them want to stay on board (or, perhaps, because your competitors haven’t done something to make them want to jump ship).

The reasons behind your loyal customers’ loyalty aren’t always overt and noticeable to your audience. Some cases are rather straightforward (e.g., you offer a superb product customers love), but in other situations, their dedication depends on your ability to reach them on a more psychological, sometimes subconscious, level.

Marketing is using your understanding of the human condition to get your target audience to take a specific action. Your job as a marketer is ultimately to provide the stimulus that will elicit a desired response from your customers. In this article, we’ll take a look at some of the ways in which psychology plays a major role in a customer’s propensity to remain loyal to a specific product, company, or brand. Before we get started, though, we have to make one thing crystal clear…

A Quick Note on Psychological Exploitation

As we said in the intro, marketing is all about understanding what makes your customers “tick,” and using this understanding to impact an outcome that’s favorable for all involved parties (i.e., your company and the customer).

We present the following information not for you to use to exploit your customers – but to cater to their needs on a deeper, psychological level and provide value, not to use your knowledge of behavioral psychology to “trick” your customers into behaving in a certain way.

Using Behavioral Psychology to Foster Loyalty and Drive Retention

To be sure, there are many facets to the use of behavioral psychology in marketing.

We’re going to tackle the most common ways in which psychology is used to foster loyalty and keep customers on board over an extended period of time, including:

  • Aligning with consumer values
  • Labeling your customers
  • Forming worthwhile habits
  • Creating a sense of commitment

Without further ado, let’s get started.

Your Customer, the Hero

Continue making your customers feel good, and they’ll almost certainly continue giving you their business. But there’s more to this equation than what appears on the surface. You should aim to provide high-quality products or services that meet your customers’ expectations. But, again, this caters to your customers’ surface-level emotions and desires – which won’t get you very far. It’s not enough to make your customers “feel good”; you want them to feel like they’re making a difference in some way.

Now, there are two ways to look at this: 1. you want to position them as the hero of their own personal journey. 2. you want to position them as a hero to the world around them.

Your Customer as Their Own Knight in Shining Armor

Your customers come to you with an enemy of some kind – and they’ve come to you for help in vanquishing it. In other words, your customers want to know that they accomplished something – with the help of your product or service.

It’s your job to foster this sense of accomplishment within your customers. As market strategist Brian Gladstein writes, “You – the business owner – are not the hero. Your product or service did not make the customer successful. Your customer makes their own success. By accepting that, you put the customer first.”

So the question is:

How do you position your customer as the hero of their experience with your brand?

Storytelling.

(Source)

Storytelling is an effective way of keeping your customers engaged – but it’s even more effective when presented in personalized and relevant manner. According to the infographic above, 78% of consumers say that relevance is a “somewhat or very important” aspect of a brand’s content.

Create content that showcases what your customers can do with your services – not what your services will do for them.

(Source)

For the most part, the above example focuses specifically on empowering the customer via the company’s services – not on showcasing the “oohs” and “aahs” of the service. If your customers feel empowered whenever they engage with your brand, they’ll almost continue to do so for a long time to come.

Your Customer as a Do-Gooder

As explained by Mintel Press Office, 70% of consumers consider the ethics and values a certain company stands when deciding whether or not to do business with an organization. More than one-third of consumers say they would cease doing business with companies that operate in an unethical manner – even if they have no alternative option.

Finally, more than 33% of your consumer base cares more about the values your company stands for than the value they receive from your actual products or services.

What the stats show: communicate to your audience the social causes your company champions and how their patronage allows your company to support the cause.

A prime example of this is TOMS shoes, a company famous for its “One for One” initiative. Essentially, for every pair of shoes TOMS sells to consumers, the company donates a pair to a child in need. In fact, this initiative has expanded to include provision of clean water and eyeglasses to impoverished communities around the globe.

While TOMS creates quality products, there’s no doubt that the company’s altruistic initiatives – which the consumer plays a major role in furthering – is largely responsible for the organization’s continued success.

The takeaway, here, is that the modern consumer wants to feel as if their actions have a significant impact – whether to their own lives or to those around them. By fostering this sense of triumph within your customers, you’ll keep them on board.

Your Customer, the (Insert Label Here)

When we talk about labeling your customers, we don’t mean you should focus on creating an “us vs. them” mentality. Yes, some of the largest companies in the world do this (think “Mac. vs. PC,” “Coke vs. Pepsi,” or “Wendy’s vs. Literally Every Other Fast Food Company”); but your goal shouldn’t be to build loyalty by positioning your competitors – and their customers – as your mortal enemies.

By labeling your customers according to certain factors (such as personality traits, interests, and interactions with your brand), you can create a sense of identity among them.

This all goes back to a 2011 study by Christopher J. Bryan, Gregory M. Walton, Todd Rogers, and Carol S. Dweck, in which participants were given a survey that would determine their level of political activity and predict their likelihood of participating in an upcoming election. The researchers didn’t actually look at the results of the survey, but they told half of the participants they were more likely to vote than the average individual.

When the actual election arrived, the group that was labeled as “more politically active” had a 15% higher turnout than those who were told they weren’t politically active. Essentially, the act of labeling the individuals had the effect of a self-fulfilling prophecy.

For marketers, the implication is clear:

Your customers will act as they believe they are expected to act.

While you can get creative with your labeling (which will vary depending on your industry and your customer base), a more universal method is to celebrate your most valuable customers as VIPs . Your VIP customers are the ones who provide the most revenue to your company, consistently engage with your brand, and make product recommendations to their friends and family members.

If the results of the study above are any indication, by labeling your best customers as VIPs – then laying out to them exactly what a VIP customer is – you stand a good chance of seeing them rise to the occasion.

Forming Habits Among Your Customers

When we talk about forming a habit amongst your customers, we mean that you should aim to continually and consistently provide a valuable and enjoyable experience to them whenever they choose to engage with your brand.

The key phrase in that last sentence:

“Whenever they choose to.”

Your goal should be to build a sense of reliability within your customers – not dependency. You don’t want customers to feel like they have to engage with your brand; you want them to be confident that, when they choose to do so, they’re making the right decision.

Now, you can build upon your customers’ pre-existing habits by providing well-timed offers, as well as by appealing to their sense of urgency and scarcity.

A few examples:

  • Emailing a customer a few days before their anticipated repeat purchase time to remind them to make a reorder
  • Providing an upsell offer after a customer has made the same purchase for five consecutive months
  • Offering a discount to customers if they make a purchase within a specified period of time

(Source / Here, Starbucks tries to get customers to start making habitual mid-afternoon purchases)

Again, you don’t want to trick your customers into spending money they don’t want to spend; you want to open the door for them to expand their comfort zone – and get even more value out of your brand.

You want your brand to become an important part of your customers’ lives, to the point that they don’t need to think twice about making a purchase – it just becomes natural.

Building a Sense of Commitment

Going along with the previous section, the modern consumer is also more apt to stay on board with a given company if they feel committed to the brand in one way or another.

According to a study conducted by Rice University, there are five “levels” of commitment consumers can show with regard to the brands they patronize:

  • Affective commitment
  • Normative commitment
  • Economic commitment
  • Habitual commitment
  • Forced commitment

We’ve touched on most of these throughout the course of this article:

  • Affective commitment: the notion that consumers feel committed to brands that provide an overall positive experience on an emotional level
  • Normative commitment: the idea that consumers aim to do business with companies whose values align with their own
  • Habitual commitment: stems from the consumer’s tendency to continue doing business with a company due to routine engagements
  • Forced commitment: habitual commitment in black-hat form, in which the consumer feels “trapped” into continuing their relationship with a brand against their better judgment

Since we’ve already covered these points, let’s focus on the idea of creating a sense of economic commitment among your customers.

There are a couple ways to look at economic commitment:

On the black-hat side – it is possible to coerce your customers to stick around by showcasing: a) the amount of money they’ve spent on your products or services in the past, and/or b) the amount of time, money, and energy it’ll take them to abandon ship and find a different service provider.

Obviously, we advise against this method.

It’s poor practice to make your customers feel obligated to stick around against their will; when they eventually break free from your grasp, they’ll tell others about their horrible experiences with your brand.

The white-hat method of invoking economic commitment among your customers is to be proactive in explaining what this commitment entails. This all ties back into creating a narrative where your customer plays the role of the mighty hero.

When describing to potential and newly-onboarded customers what their journey with your products or services entails, it’s essential that you remain transparent, showcasing the ups and the downs they’ll experience along their way to success. That way, your customers will anticipate any roadblocks they may face – and understand how to navigate them (as opposed to throwing in the towel and walking away from your brand entirely).

Here’s where behavioral psychology comes in:

When individuals make specific commitments (they understand the exact steps it will take to accomplish a task), they’re much more likely to follow through with their plans. While this also applies to other areas of life (e.g., affecting societal change, breaking poor habits, etc.), it absolutely factors into your customers’ propensity to stay onboard over an elongated period of time.

Another factor to consider is that laying out small steps for your new customers to take makes them more likely to take larger leaps in the future.

This is one of the reasons a proper onboarding sequence is so important.

Again, the goal here isn’t to trick your customers into feeling as if they’re “too invested to quit now.” Rather, your goal is to gradually build them up to a point where they’re truly prepared – and willing – to make the larger commitments needed to get the full amount of value your brand has to offer.

Wrapping Up

All of human behavior can be traced back to our psychological makeup – and this holds true when looking at our behavior as consumers.

All consumer-related behaviors – from the decision to make an initial purchase, to the decision to remain loyal to a specific brand – are caused, in some way or another, by an innate reaction to an external stimuli.

As marketers – the individuals that provide this external stimuli – we have a responsibility to cater to the psychological needs of our customers – not to take advantage of them.

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