St George Kills the Dragon, Edward Burne-Jones, 1866 (Courtesy: Art Gallery of New South Wales)
Ideas for Leaders #688

How to Make and Keep Customers Grateful

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Key Concept

Forget discounts. Customers perceiving a genuine effort by companies to invest in the customer relationship will feel grateful toward the company — an emotion that leads to overall (and longer lasting) customer satisfaction.

 

Idea Summary

Many companies develop their relationship marketing strategies based on the assumption that their customers are unerringly cold and calculating, and driven by one question: what kind of a financial deal can you give me? While discounts, for example, can be effective, this is a short-term and hard-to-sustain relationship marketing approach to customer relationship.

A team of researchers based in Australia explored the more emotion-driven side of relationship marketing, focusing on customer gratitude.

The research, based on surveys, showed that customer perception of how much time, effort and money a company is willing to invest in order to strengthen its relationship with its customers can lead to feelings of gratitude — and these feelings of gratitude ultimately lead to customer satisfaction. 

‘Perception’ is a key word. The research did not focus on the activities of the companies, but on how customers perceived those activities since not all customers react the same way to a company’s relationship marketing strategies. While some appreciative customers might welcome a car wash’s offer of paint protection advice, for example, other more cynical customers would see the effort as a cheap attempt to get repeat business. 

Recognizing the heterogeneity of customers, the researchers drilled down and focused on two of the antecedents of gratitude: reciprocity and cynicism.

Many customers believe that the law of reciprocity — if you do something for me, I should do something for you — applies to business. If they see a company making an effort to offer exceptional service, they will reward that company with their repeat patronage or through word-of-mouth recommendations.

On the other hand, some customers might be cynical about a company (or companies in general). For example, some people believe that all companies are untrustworthy and do not care about their customers. In some cases, disappointing experiences or unmet expectations has led to their cynicism. Whatever the reason, it can be assumed that such customers are less likely to be impressed by the relationship marketing efforts of companies.

To explore the connections among 1) perceived relationship marketing investments, 2) reciprocity, 3) cynicism, 4) gratitude and 5) customer satisfaction, the researchers surveyed 1100 students, asking them to recall a recent visit to a service company or organization. Among the service companies selected by the participants were car washes, hairdressers, hotels and dry cleaners. The participants were then given statements related to the five elements listed above, and responded on a seven-point scale from 1) strongly disagree to 7) strongly agree.

The results of the survey showed that perceived relationship marketing investment have a direct positive effect on gratitude, and gratitude has a direct positive effect on customer satisfaction. The results also showed that perceived relationship marketing investment can have an indirect impact on gratitude through reciprocity and cynicism. 

Specifically, perceived relationship marketing investment has a positive impact on reciprocity, which in turn has a positive impact on gratitude. 

For cynicism, the relationships are a bit more complicated. Customer cynicism has a negative impact on gratitude, as described above. However, because perceived relationship marketing investment has a negative impact on cynicism, the net result is a positive impact on gratitude (in other words, perceived relationship marketing reduces customer cynicism and thus increases gratitude).

Business Application

The results of this research on gratitude and customer satisfaction imply that relationship marketing initiatives that are self-serving (e.g., data collection) or are based on temporary financial incentives (e.g., discounts) are either ineffective or only temporarily effective. In the first case, customers have nothing to be grateful for; and in the second case, customers are grateful only temporarily. 

On the other hand, genuine relationship marketing investment — that is a genuine investment of resources, time and effort — yields directly or indirectly (by sparking reciprocity or reducing cynicism) the enduring gratitude that leads to customer satisfaction. 

For example, explaining to car wash customers how best to polish and maintain the shine on their cars is perceived as a genuine investment in time and effort to strengthen the relationship with customers. The fact that the car wash might lose business from customers who won’t need car washes as frequently further reinforces the integrity of this initiative.

Timing — immediate delivery at the time of the activity — is an issue. A brochure on car polish and wax that arrives in the mail two weeks later won’t have the same impact as an employee talking directly with the customer at the car wash.

This research linking gratitude to customer satisfaction also reinforces the effectiveness of customer service people who show initiative and a sincere desire to help. For example, an employee who provides a refund to a customer without a purchase receipt reflects a company that is willing to invest in its relationships with customers (first by training and empowering the employee to make the decision, second by agreeing to borne the cost of the refund).

Understanding why customers are grateful — or not grateful — is valuable for all companies seeking to improve and deepen their relationships with their customers.

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Authors

Institutions

Source

Idea conceived

  • January 2017

Idea posted

  • January 2018

DOI number

10.13007/688

Subject

Real Time Analytics