The CX Pod

You probably think this podcast is about you, don't you? Well, you’re right. This is a customer experience podcast hosted by Elizabeth Glagowski of the Customer Strategist Journal.

Tune in for regular discussions and interviews with the brightest and best in CX to get your competitive edge.

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Customer Trust Starts With Action

November 14, 2019

Everyone has that friend that clicks with them, someone who always knows what you need but still manages to surprise you in wonderful ways. According to author Jeff Fromm, those are the brands that are winning in today’s customer experience. His newest book, The Purpose Advantage, gets to the heart what is needed to meet what customers value most, connections.

We had an opportunity to call him and chat about what it takes to understand today’s consumer mindset.

Transcript: You're listening to the CX Pod by TTEC and the Customer Strategist Journal.

Dylan Haviland: Hey everybody, welcome to the CX pod. This is Dylan Haviland stepping in for Liz again. Now, today I'm interviewing Jeff Fromm, he's an author and a partner at Barkley and he's written some really cool stuff on customer experience and building that emotional connection with a customer, which is becoming ever more important in today's marketplace. Now his newest book, which came out this September, The Purpose Advantage, dives into just that and there's a lot of stuff I wanted to talk to him about and we had a really great discussion on it. So let's dive in.

So Jeff, can we have a snapshot of your responsibilities today as an expert consumer behavior and what led you to write your new book? The Purpose Advantage?

Jeff Fromm: Sure. In 2010 and 11, I led the first large scale study of consumers, uh, around millennial culture and this is before Pew had done a study on millennials in a partnership, um, with the Boston Consulting Group. That research led me to the first book I wrote called Marketing to Millennials. And this is just continued for me in terms of research, consulting, speaking, writing. And my new book The Purpose Advantage just comes out this week. I'm very excited.

DH: And when you wrote your new book, um, do you feel that that continued the work you started back then on millennials? Cause you know, as we get older, our expectations continue to change and evolve?

JF: Yeah, I mean a youth culture, not just millennials who are now not all terrible young, youth culture has been a focus for me. And honestly, youth culture is a major influence for brands because even if you're serving a customer who's 45 or 55 years old, there's a pretty good chance that they are the fast followers on trends. I'm not the first person to use mobile pay at a Starbucks, but I know how to do it as well. And I'm not the first person to use apps to run my life, but now I have a bunch of them that are my, you know, on my phone and et cetera, et cetera. So, uh, what we saw in the research on millennials and Gen Z was purpose kept becoming a bigger and bigger theme year over year. And that led me to interview more than a dozen CEOs of companies. And then based on the interviews with those CEOs and a variety of experts inside and outside our company and create the new book, which is part story and part how to workshop.

DH: That's awesome. And going off that, can you give us a quick overview of the book and why do you think it's relevant to know today's customer?

JF: Well, today's consumer and frankly, employees who work for companies expect uh, more purpose and more. Uh, so unless you compete on low price and hyper convenience, you're going to have to think about this. So there are some brands I'd argue that, that don't to think about it too much. I mean, you could be Amazon, Uber or Airbnb, you're very low price, you're hyper convenient. And so purpose is probably not the center of your brand bullseye. But for the vast majority of other brands, we compete for consumers and we compete for employees in a world where consumers have lots of choices and unemployment is remarkably low. So purposely purpose-driven brands have an edge. And so when I say purpose and let me illustrate, it's not purpose on an absolute basis, its purpose in combination with other factors. So I could be Chobani and be innovative and have a purpose and sustainability gene that makes my innovation more valuable to consumers. Or I could be Nike focused on consumer culture and talking about social issues and it could be purpose and those issues. And so different brands are going to play this out through different ways. And in the book we highlight the various mindsets that drive consumer preference.

DH: Great. Yeah. And for example, like you mentioned Mod Pizza at the beginning of your book, um, you just can't walk the walk. You have to show that you're putting your purpose into action.

JF: Yeah. And Mod Pizza is not the first, second, third, or fourth pizza chain to start in the U S in fact, there are dozens and dozens of pizza chains. Mod has a fast casual model like Chipotle and Panera. And frankly, it's a very, very competitive category. Their purpose is about second chances. They employ a lot of people who are down on their luck. Maybe they had a scrape with the law, maybe they had a a gap in their employment. And um, and so they give people second chances. They also give people a second chance on their ordering. The point of the matter is that second chance culture creates a purpose advantage in the sense that they're gonna have a much better, uh, retention rate in a category where the cost of acquiring and retaining labor is huge part of your financial statement and impacts guest satisfaction and loyalty on the other side. So it's a double whammy. It impacts the cost of doing business and it impacts my ability to deliver a high end guest experience. And so their purpose fuels their flywheel.

DH: Great. And for today's episode, I really wanted to focus on chapter four of your book, the Modern Consumer Mindset. As you said, quality and services are no longer differentiators in today's market. So why is understanding the mind of your consumer key towards securing a better future for your brand?

JF: So the mindset's important because when we did that work, we found roughly 75% of financial performance is related to price and distribution strategy for the average brand. And 25% is related to the mindsets and the aggregated. Now if you compete on low price, it's probably 85, 15 and if you compete on differentiation it might be 65, 35. Okay. So, so there are factors besides mindsets that matter, price distribution, you know, factors, uh, for any brand. Having said that, the mindsets were a way to look at research where we looked at what people do and what they say and let's face it, what people do and what they say diverges. So we looked at stated importance and we looked at behavioral economics, what they spend their time and money on. And those mindsets represent the thematic things we found in research that aligned to how people spend their time and money.

JF: Ultimately that was why that was so critical because companies often make decisions to invest on things where they're getting full credit. And then maybe ignore something where there is an important gap. Let me give you an example. Uh, Tom shoes is a really strong brand and gets credit for starting a buy one get one movement. Um, if you're getting full credit driving incremental, um, credit generates very small incremental EBITDA on sales growth. So for a brand like that, that's already getting full credit on this purpose to kind of a mindset which most brands don't. Most brands in their case they'd have to get credit on other factors as opposed to maybe a brand like Mod Pizza, which is a fabulous brand, but probably gets limited credit on something like purpose where they would probably get a lot of benefit from driving more credit for their core purpose. So those are two brands that compete on that same mindset who would have very different strategies based on my guess, about how much consumer credit they would get. One getting a lot, one not getting much.

DH: And like you said, having purpose alone doesn't cut it. You have to incorporate different mindsets into your customer experience and you actually outlined those six customer mindsets in your chapter. Um, I was hoping we can dive into them more now. The first one was having that social circle.

JF: Sure. Social circle is about cultural conversations, not social media per se. And so cultural conversation brands have an advantage. They get word of mouth and word of mouse[clicks].

So I use the topic of Nike and brand purpose. Well what is Nike's brand purpose? It fuels cultural conversations. What is Ben and Jerry's purpose? It fuels cultural conversation. So these are brands whose purpose start dialogue on topics that are within their brands, editorial authority and ultimately drive word of mouth and word of mouse for those brands, which is powerful.

DH: Yeah. Awesome. And after that, you know, you identified there's a need for self and innovation.

JF: Yeah. So self is the emotional connection consumers have to a brand and emotional connections are important in decision making. Today's consumer makes decisions quickly. They don't walk down a grocery store in the cereal aisle and say, here's the product price per ounce for every box. Here's a flavor score, a sustainability score, et cetera. Let me sort of create a quick algorithm, average that out and make a decision. They just say, you know what? I'm going to grab this one. And so brands that have stronger emotional connections, self oriented kind of brands have price elasticity and frequency use advantages. And when I say price of plasticity and frequency of use, that means that when somebody else isn't on deal, they're gonna probably win the day. Uh, and that's, you know, that's pretty significant.

JF: Okay. Yeah. So innovation is truly that. It's, you know, my definition of innovation is the useful new, it could be the product or service or it could be the experience you have before or after you buy that product or service. You might innovate on the content you get to inspire your use cases. Um, and so innovation in our research has been increasingly important to your over year. And, and in my example on purpose and, and for Chobani would be purpose and innovation. Chobani is very innovative. Uh, they, you know, create it. They're a little tiny yogurt company that became a big yogurt company by creating a category called Greek. And then they reinvented the category for afternoon snacking around palate states that require more sugar with a sidecar. So this is a company that understands how to innovate again and again. Yeah, it has a strong sustainability, purpose driven platform.

DH: And you know, the next one, trust. That's a really big one with millennials and Gen Z today, you know, speaking as a millennial myself. You know, we can be sometimes pretty cautious towards brands, you know, cause we're becoming more aware of what they may do behind the scenes or basically how they represent themselves to the public. So, um, you have to kind of earn it in my opinion. What do you think?

JF: Okay. So trust is tricky. Trust is very important, but it's earned by action. So we're brick where brands can get in trouble is they'll have a trust problem and try to get their way out of that problem through maybe traditional forms of advertising or something. And that usually is going to be a fail. What you have to do is take actions to earn trust. And um, usually that's a longer, more painful road for a brand and they often want, but that's, that's what's required. And, and the other thing that's interesting on trust, we found in the research, you either are getting it or you don't, that you don't usually get an incremental benefit from exceeding performance on trust. You're either meeting, meeting expectations or not. And if you're not, there's a penalty and if you're exceeding, there's no bonus. So you get penalized for it failing, but no extra credit generally for doing more than exceeding. But you gotta have it. You required, it's like, you know, it's non negotiable.

DH: Yeah. Interesting. And uh, the fifth mindset we had was accessibility, can you dive into that?

JF: Yeah. Accessibility is about hyper useful and hyper convenience. Uh, and I think it's important that people understand many of the successful, non purpose driven brands fall into the accessibility category. Amazon, Uber, Airbnb, they usually win on price and convenience and not just ordinary levels of convenience. Radically easy to use, radically convenient to the consumer and usually help the consumer save money.

DH: Yeah. Because I'm thinking of the influence of direct to consumer brands like Casper and Quip that are just dominant because you know, they're easy to use and integrate better into the future.

JF: Yup. I think those are good examples. All of them including Casper, uh, you know, whether they can sustain being convenient will be, you know, time will tell, uh, Amazon's probably done the best job of sustaining it because the definition of convenience is constantly changing as other competitors as other competitors get closer. Um, and so I think that's a great example. And I think that the challenge is if you compete on that basis, you have to be continually reinventing that definition.

DH: Exactly. And you know, I can imagine while they are accessible, they also have to rely on other mindsets as well because just like Casper, there's already seven other mattress companies that do exactly what they do.

JF: So, you know, that means, right. So then it's going to have to be convenience plus something could be content marketing, it could be some piece, you know, purpose-driven strategy could be low priced. I mean there are different ways to go, but you're going to have to continually innovate around what's going to drive value to that consumer.

DH: Great. So we've already talked a lot about your last mindset purpose, but one thing I want to touch on is do you think some brands might run the risk of alienating certain parts of the market when they align themselves for a certain set of beliefs? Or do you think that's inevitable in today's environment?

JF: Well, I think, I think for most brands it's going to be, you know, smart to have strong sense of purpose grounded in your history and the equity that's, you know, right. For your brand. You can't, you can't just make up a purpose and start communicating it instantly without having taken brand action and expect that to be a winning strategy. That'll be a disaster. But I think, you know, brands that have a history like Ben and Jerry's, you know, they're gonna take on social issues. And so while that may alienate a few people probably love Ben and Jerry's for two reasons. Their flavors and their purpose. And it's the combination, right? And again, people make emotional decisions. So I think that's, you know, part and parcel of what's going on there. Um, but you certainly run a risk. Nike ran a risk, um, with the decision to stand behind Colin Kaepernick, I think. I think it was a good business decision given their historic equity on the topics, uh, that he represents. And it was good decision with respect to how our research shows young consumers feel about those topics. So will they alienate anyone? Sure. Uh, is it bad? I don't think so. I think Nike will be successful because they have a clear view of their brand.

DH: Great. All right, thanks for elaborating on that. And out of the six factors we just discussed, do you think that's one that's getting left out more today?

JF: Um, I wouldn't say that. I would say it depends on your brand and your brand strategy. So, you know, for FedEx, trust is probably way more important than most brands in there. And they're gonna, you know, focus on something like that. And for Amazon accessibility is, but for Nike, I don't see, you know, that being the key. I see the social circle, cultural conversations. So you have to look at your brand and say, where am I today? What am I getting credit for? I think Chobani's a relatively younger brand that's done a great job of driving, driving, you know, real, um, combination of sort of innovation and purpose. And it's not, it's not just one or the other. And I think those brands that are successful at doing both, you know, boy, those are, those are going to be really tough brands to compete with.

DH: Great. Great. And Jeff, is there anything else you'd like to add?

JF: Uh, well, you know, the conversation is going to continue to evolve as the definition of, of expectations from consumers evolves. But, uh, the important thing to understand is doing good and being purposeful does not mean not making a profit. Most of the brands that are highly successful, purposeful brands also make a profit. They're inextricably linked and it's their ability to connect the flywheel of their business model, which we get into in the book together. You know, it's, it's, it's doing both and not one at the expense of others.

To learn more about bringing Humanity to business. Come see us at TTEC.com or subscribe to our journal at CustomerStrategistjournal.com. Thanks. See you next time.