November 25, 2014

Marketing Research Chart: Clear communications and unconscious customer bias

SUMMARY: Your company creates value in many ways.

It accomplishes this through its products and services, but also in many less tangible ways that are not readily apparent — research and development, quality testing, customer service training,
sustainability, etc.

Unless you can communicate all these value-producing activities to your audience, that value is hidden. Even if you do communicate this effectively, your customers may not know they want it. To help you learn about value and customer perception, we look at research from the University of Illinois in this week's chart.
by Daniel Burstein, Director of Editorial Content

How well companies communicate corporate social responsibility (CSR) — the combination of environmental sustainability, community involvement and ethical marketing that help gain customers' trust — is a great proxy for how well companies communicate the intangible value they provide to potential customers.

How customers perceive CSR is also a proxy for how they perceive other types of intangible value.

This idea brings us to this week's research in the MarketingSherpa Chart of the Week. Dr. W. Brooke Elliott, Associate Professor, University of Illinois at Urbana-Champaign College of Business, wanted to determine how people consciously and subconsciously perceive and value CSR. Her results may surprise you.

First, let's look at the data. The chart below shows how much hypothetical investors would pay and what amount of a hypothetical inheritance they would invest in a company's common stock.

The respondents were broken into three groups:
  • When respondents were shown a company's CSR performance while valuing stock and there was a positive view (positive — no assessment)

  • When respondents were shown a company's CSR performance while valuing stock and there was a neutral view (neutral — no assessment)

  • When respondents were asked to explicitly assess a company's CSR performance before valuing the stock (positive — assessment)

You can see the chart below, followed by an explanation of the findings and tips for how marketers can use this discovery:

Q. Assume that you have received an inheritance of $10,000 in cash from a distant relative. Please indicate the maximum price per share at which you would be willing to invest the following amounts in XYZ stock.

View Chart Online

Click here to see a printable version of this chart

"Investors have an emotional (affective) reaction when they see CSR performance presented," Elliott said. "And this response carried over to affect their willingness to pay for stock: i.e., investors are willing to pay more for the firm with better CSR performance."

Here's where the research gets even more interesting. Respondent's behavior was affected by CSR performance regardless of whether or not they reported deliberately caring about CSR.

There is an unconscious, or subconscious, emotional impact. Participants did not realize they were placing greater value on companies with better CSR performance.

Elliott set up her experiment to try to uncover this behavior. Once study participants were specifically asked to evaluate CSR performance and then evaluate financial reports, instead of presenting the ratings of social responsibility and sustainability performance grouped in with financial reports, they indicated they would pay less for the stocks. By calling attention to the CSR evaluation, it was no longer part of their subconscious decision-making process.

Here are a few key takeaways from this research and how you can apply it to your own marketing campaigns.

Customers can't tell you what they value

Your customers don't always know or understand what to value, which makes it next to impossible for them to accurately tell you what they really think is important.

That being said, it doesn't hurt to ask customers what they want in surveys, focus groups and through customer service and sales reps.

Just remember not to stop there. Test it. Sometimes customers' behaviors are driven by subconscious and emotional reactions that they can't predict. They may not even know that these reactions exist.

Through behavioral testing of your marketing, you can see how customers actually behave when presented with certain offers and messaging.

Customers need to clearly understand the benefit of your company's work

This study showed that not only is value recognition subconscious, but also when that value is more clearly stated, customers actually reduce the importance of it — once the study participants were explicitly asked about CSR, they decided it wasn't important.

Quite a conundrum for the average marketer.

However, it's an important insight. This research is a proof point for how customers treat most marketing communications — they are unaware of its effects on their subconscious decision-making processes, and when these are brought to light, they seek to consciously discount these effects. To quote branding expert Josh McQueen, "On the one hand, many believe advertising is capable of hidden persuasion, but on the other hand, many also feel advertising 'doesn't influence me.'"

This can affect all of your marketing messaging, especially your content marketing. If you don't tell customers what's in it for them, why you are doing the things you write about in your content, they will not value them. You must present this value in a way that isn't manipulative, but rather, is informative. After customers have subconsciously made a decision, they want the facts to reassure them it was correct and to justify their decisions to others.

As bestselling author Chip Heath has said, "people often decide based on emotion and backfill with logic."

For CSR specifically, Elliott advised "marketers should try to link CSR performance and activities to concrete outcomes. If possible, linking to future financial performance or firm value — this is something few companies do today."

Using CSR as an example, you could explain its value with specificity instead of vague or hyped statements:
  • Financial metrics improved by CSR (for stakeholders, like employees and investors, etc.)

  • Product benefits for the customer (tastier or healthier food by using organic ingredients, lower product costs thanks to recycling or energy efficiency, etc.)

  • Community impact (lives saved or improved, less pollution generated, etc.)

It all begins with trust

Even the most compelling marketing messages are meaningless without trust. This is true for all marketing, especially marketing around corporate responsibility due to greenwashing and other ways companies try to convince customers of a value that may be considered overhyped.

"One valuable way to build trust is to be very transparent and to set specific goals for program impact," Elliott said. "The key here is to talk about when goals are met but to also admit when goals are not met (and explain why). Providing the latter information about when goals are not met adds credibility to what management says when goals are met. So, negative information gives credibility to the positive information."

According to Elliot, one example of a company that demonstrates this transparency is Starbucks, which admitted, "we have struggled to implement … " when discussing its recycling goals.

View the Creative Sample

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You are no longer control if the message gets out

You can only contribute to the message and help try to shape it. That's why transparency is so important to build trust.

From Snowden to Smuckers, nothing can be hidden for long in an era when everyone has the ability to publish information that can instantaneously be read around the world.

When I asked Elliott about this topic, she provided another experiment as an example. In the experiment, she tested different ways for a CEO to communicate a bad news event.

"What we find is that when the CEO accepts responsibility for the restatement and uses video to communicate the news (so you could think of this as the most transparent communication combination … transparency in cause of restatement and in video as a medium), investors still trust the CEO and actually recommend upping investment in the firm," Elliott said. "On the other hand, when the CEO denies responsibility, but still apologizes, and uses video to communicate the news, trust is eroded, and investors recommend decreasing investment in the firm."

"So transparency in communication does matter," she concluded, "especially as the medium becomes more transparent."

Related Resources

B2B Research Chart: How do prospects really feel about your marketing?

Email Marketing: The Kentucky Derby's customer-centric newsletter reduces out-out rate 64%

How Tennant Transformed its Marketing Culture Via a Customer-focused Strategy [Full video from Email Summit 2014]

Customer-centric Marketing: SAP drives $100 million in revenue influence with customer webcasts

Ecommerce Research Chart: How reputation affects success (and 5 ways to improve it)

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