By Claire Brooks
We know that marketing strategy should identify target customer segments, right? We name these segments “millennials,” for example, or “Country Squires” (Nielsen Prizm). We analyze customer data and conduct focus groups. But do you really understand the customers of your financial organization? Can you identify not only what they think about your bank, but also how they feel? Do you understand the nonconscious emotional and cultural drivers of their financial decision-making—drivers which customers themselves can barely articulate? And can your marketing strategy adapt flexibly to cope with the pace of customer change today? This requires a new approach to customer research and to marketing strategy formation.
In recent years, there’s been a quiet revolution in the way that strategic planning is carried out. Leading corporations used to rely on rigorous annual strategic planning processes, yet in a VUCA world—one of volatility, uncertainty, complexity and ambiguity—markets and customers are now moving too fast for traditional models of strategy planning. Henry Mintzberg was the first to identify that strategy formation is quite often not the deliberate, planned approach enshrined in the annual planning process, but is emergent; a pattern of response by managers, employees, and other stakeholders (such as ad agencies), which affects strategic change. In many successful organizations, forward strategic planning is being replaced by strategic learning, an ongoing process of shifting strategy based on the knowledge and learning of stakeholders across functions. In this new business environment, marketing strategy cannot be confined to the marketing department or the c-suite. Every manager must become a strategist.
Simultaneously, there has been growing recognition that customers do not make rational decisions. Our innate appraisal systems lead us to make decisions based on nonconscious emotions and “lazy thinking” (which looks for short-cuts to aid decision-making). Our behavior is also influenced by socio-cultural norms and experiences. Even when customers appear to be making highly rational choices, emotions and culture are invisibly influencing the meaning they give to the options before them, including the way they approach money and select which financial institutions to trust. Money is a highly emotional consumable, perhaps the most emotional I’ve ever worked with. It can embody hopes and dreams, inspire confidence and trust. Or it can incite anger, fear and division. Our approach to money and to financial institutions is influenced by culture and values. For example, millennials have very different beliefs about work and community from boomers, which can influence their priorities when choosing a financial institution or making investment decisions. Customer research can no longer rely solely on data and asking customers what they think. It must inspire deep understanding—empathy—with how customers feel, behave, and actually make decisions based on nonconscious emotions and culture; and in response to marketing heuristics or “lazy thinking” triggers.
These trends in how strategic planning and customer research are approached have led to the idea of strategic empathy—customer empathy-based learning and insight—which is shared across the organization and activated into marketing strategy and actions. Empathy is not a soft skill. To be strategic, empathy must result in shared learning and effective marketing action across all customer touchpoints. This is where cross-functional teamwork comes in. The strategic empathy process is a collaborative process that engages stakeholders across the organization (not just marketing) and may also bring in outside stakeholders such as agencies—and even customers themselves—to co-create marketing, product, or service innovation. The process has three phases:
1. Inspire: Cross-functional team-based strategic learning about how consumers feel and actually make decisions. This may involve ethnographic interviews (for example, to understand how culture and values drive differences between customer segments in terms of financial decision-making), the use of indirect and visual interview techniques (seeking to understand nonconscious emotional drivers and perceptions of your organization), or semiotic analysis (understanding the cultural meaning of your brand assets vs. competitors’).
2. Activate: Collaborative, team-based planning activities (such as facilitated workshops) designed to identify key insights from phase one and activate insights into marketing strategy and tactics.
3. Inspire: Communication of insights and strategy across the organization in a way that inspires empathy with customers and supports emergent strategy and implementation among other managers and employees. For example, you can produce video or other media and events which bring customer personas vividly to life.
This type of research and strategy process can be implemented by any type or size of financial organization, but it does require marketing and senior management commitment to deepening customer empathy and engaging cross-functional teams in strategic learning. Here are some tips for becoming an empathetic organization:
• View customer research not as measurement but as a process of deeper understanding.
• Ask these key questions:
- What are the deeper psychological and cultural needs which drive customer behavior and how can these be used to inform segmentation and targeting?
- What meaning do customers attach to your institution’s marketing claims, symbols and visual assets?
- How does your brand inspire me and speak to my values?
• Engage functions outside marketing in observing customer research and addressing strategic questions collaboratively, flexibly and fast.
• Invest in internal communications to nurture customer empathy across the organization.
Claire Brooks is the President of ModelPeople Inc, a global brand insights and strategy consultancy. She is the author of Marketing with Strategic Empathy®: Inspiring Strategy with Deeper Consumer Insight published by Kogan Page in New York and London. She can be reached on LinkedIn.