From Captive to Captivated: Why the brands in the business of connection are getting it wrong
A look at the companies creating relevance through connection provides useful clues for the brands whose business model is predicated on it – but who fail to deliver it.
When we tick off the business categories whose primary purpose is to Connect people and things, we tend to think about digital communications – telecommunications, technology, and social media firms. But the companies that customers feel are most effective at fostering interaction do not deliver connection as a part of their core offer. Starbucks, pioneers of the “third place” in which people connect, is considered a restaurant. Air BnB, with its unique offering of peer-to-peer accommodations and interactions, is generally thought of as a hospitality company. We consider Peloton a manufacturer of fitness equipment, but it’s the interaction among cyclists and coaches that give the product its stickiness and appeal.
Which companies in the business of connection are doing well, and why? And what can these firms learn from businesses for whom interaction is a means to a different end?
We have mapped the underlying codes that drive relevance. Validated by six years of research with over 100,000 customers, companies that deliver against these relevance criteria achieve improved loyalty and growth.
How Human Connection Drives Relevance
To answer these questions, we have mapped the underlying codes that drive relevance. These codes contain traditional measures of product/service quality and customer experience measures that analyse the emotional rewards people gain from their relationship with a given company. Validated by six years of research with over 100,000 customers, companies that deliver against these relevance criteria achieve improved loyalty and growth.
In almost every arena, emotional rewards are more important than product quality and customer experience in driving up relevance scores. Traditional measures have become table stakes; metrics that reveal the nature of the company/customer relationship turn out to be the most significant. Companies that treat their customers like people, not transactions, that promote trust and reciprocity, nurture a sense of belonging, and make customers feel smart and proud – are the brands that perform most highly.
A Maturity Model for Relevance
Further analysis of the longitudinal data has enabled us to create a model for the maturity of a customer > company relationship, establishing four stages based on performance on these dimensions.
At the weakest, least customer-centric, end of the continuum are the companies whose customers are in a “captive” relationship, i.e. The company fills a basic need and customers use them out of necessity. These companies are better than nobody, but its customers would happily swap as soon as a better alternative comes along.
At the most mature, most customer-centric, end of the continuum are companies that have a “synergistic” relationship with their customers. These companies are symbiotic with the customer, understanding what needs to change over time. They fulfil a purpose, help customers express who they are, live their values, and be their best selves. And they also show a 2.5% increase in revenues as they advance from lower stages in our maturity model.
Synergistic companies fulfil a purpose, help customers express who they are, live their values, and be their best selves. They also show a 2.5% increase in revenues as they advance the maturity of their customer relationships.
Telco brands and Connect
Given that infrastructure is such a critical enabling ingredient for Connect brands (along with devices, interfaces, and content), it’s not surprising that there’s a relatively small number of core players in this arena, with those in telecom often having regional monopolies.
And precisely because there is so much demand and so little choice in telecom, the companies in this category are almost legendary in terms of the ire they arouse. People may love their phones, their channels, even their social media choices, but nobody loves their cable/internet provider. Their feelings generally mirror what the maturity model demonstrates: despite being in the business of connection, companies in this arena – particularly telecom companies – are disproportionately represented in the “captive” category. Companies ostensibly in the business of enabling interaction may be effective in doing so among their customers, but along the way, are creating consumers who avoid interacting with them.
What Drives Word of Mouth in the Connect Arena?
Seven relevance criteria emerge as the drivers of positive Word of Mouth in the Connect arena. Shown in descending order of frequency, they are:
- Personalizing my experience
- Providing a consistent experience
- This company meets my needs like no other can
- This company has better “customer intuition” than its competitors do
- Good use of my time
- I trust this company
- As this company’s customer, I don’t feel ripped off
- As this company’s customer I feel proud
- As this company’s customer, I feel smart
Some of these drivers — like trust and feeling smart, proud, and not ripped off – are pretty generic, as likely to influence retail, hospitality, food and beverage, or even financial services, as they are companies in the business of connection.
But notably, in this arena, it’s the drivers that assume some sort of personal knowledge of the consumer – even if it’s algorithmically based – that are dominant. “Personalizing my experience,” “Meets my needs like no other,” “Better intuition” — these all imply relationship as the foundation for that personalized experience.
So it’s not surprising that the companies in the Connect arena that score highest on these vital relationship dimensions – Atlantic Broadband, Slack, Google, Apple, Siemans, Sony, and Samsung — arena are also the synergistic ones. In contrast, “captive” companies like Twitter, Facebook, Comcast, AT&T, and DirectTV all have lower scores on these attributes.
Indeed, the companies that are in the business of enabling social interaction – telecommunications, technology, and in some respects, media – are the least represented among the top performers overall.
When we drill down into just the Connect industries, we see that in general, telecommunications companies score worse on every relevance metric than media and technology firms. That’s especially problematic given that our data show that relevance is more likely to drive NPS for brands in the Connect Arena than those outside of it.
In Connect, the drivers that assume some personal knowledge of the consumer – even if it’s algorithmically based – are dominant.
What are some Connect Arena companies doing right?
As the top performer in the telecommunications industry and one of the top performers in the Connect arena as a whole, Atlantic Broadband (now named Breezeline) is a notable outlier to the “consumers hate telecom companies” rule. And when we compare some of its scores to those of the bottom performer (Dish Networks), we can begin to see the instructive reasons why. (WOM drivers specifically for Telecom are asterisked in the chart below.)
So what can companies in the Connect arena learn from the top-performing industries and brands? What do grocery stores, automotive firms, finance and insurance companies, beauty firms, and specialty retailers have to teach their technology and telecom brethren?
Mutual trust and transparency are essential to relationships
In categories like Financial Services, consumers must trust the company they’re doing business with.
Policy Genius, one of the top performers, illustrates this principle. With a five-star Trust Pilot rating, this online insurance marketplace, illustrates the power of transparency in building trust. Unlike many other aggregators and marketplaces, Policy Genius shows information and comparisons of top policies without promoting any, and more crucially, without sending the user’s information to the insurance carriers. And if asked, the company will disclose the commission it receives from a given insurer on a given policy. That’s why it scores highly on relevance measures like “Authentic”.
But even more differentiating and valued is when consumers feel that a company trusts them, as demonstrated by Affirm. Another top performer, this company offers instalment payment plans to consumers in real time. Many retailers offer Affirm as a payment option, but even if they don’t, at checkout a purchaser can enrol, select the plan they prefer, complete their purchase, then pay off their Affirm loan over time. This is just one of several factors that make the company unique. It doesn’t levy fees of any sort, not even late fees, which is why it performs well on “This company trusts me” and on “This company is ‘in my corner’ – they have my back.”
Imagine if telecom companies adopted some of the same approaches, waiving enrolment and/or late fees and revealing the commissions they receive from the media companies they carry. Whatever revenue losses they might suffer would be more than compensated for by the gain in good will from their consumers. And as demonstrated by Apple, a perennial favourite, technology companies that acknowledge their security flaws and are at least transparent, maybe even restrained, in how they share consumer data, win a higher degree of trust than those that don’t. Facebook – with one of the lowest relevance scores – is learning that lesson the hard way.
No technology companies have high relevance scores, and only one telecom company (Atlantic Broadband) makes it into the top tier.
Identity isn’t just personal, it’s interpersonal
Specialty retailers like REI, distinctively branded grocery stores like H-E-B or Trader Joe’s, and specialty manufacturers like Caterpillar and Harley-Davidson, have long understood the value of building identity-based community with and among their consumers. These firms consistently perform well on almost all relevance dimensions.
Newer members on the top-performing roster, Tesla and Impossible Foods, powerfully illustrate why. Whether driven by the hunger for sustainability or prestige, people both acquire and express a public and communal identity through the mere act of owning an electric vehicle. Whether motivated by health or animal rights concerns, consumers of plant-based foods feel seen by manufacturers of those products. That’s why Tesla has a score of 8.48 on “As this company’s customer, I feel like I belong to a group of like-minded people.” Harley-Davidson, known for its community-building events, scores highly on this measure, as does Impossible Foods.
Some Connect arena companies like Apple have also long understood the importance of consumers’ social identity, as evidenced in its advertising, which sells tribe as much as product. Others, like Disney Plus, are enabling and reinforcing their fans’ collective identity and social interaction with its Group Watch Party feature. This technology streams the same program to multiple screens in synchronized fashion, enabling all who have been invited to the “party” to chat in real time while watching.
Fitness company Peloton, another leader in relevance, is similarly incorporating identity-building social interaction into its offering. “The magic doesn’t happen in the sheet metal … The magic happens on the screen,” observes Peloton CEO Barry McCarthy. “That’s where the user experience is, right? It’s the music. It’s the instructors. It’s all the social aspects that we have only just begun to develop – and that’s where we’re going to spend our money.” Not only does the company score highly on creating a sense of belonging, but in adopting this strategy, it is boosting its relevance in multiple arenas, addressing the need not just to physically thrive, but to socially connect.
DEI yields more than good will; it drives results
Feeling included and respected is closely tied to feeling a sense of belonging, and the companies that fare best on relevance metrics outperformed their rivals on our new Diversity, Equity, and Inclusion measures.
Cosmetics firm Fenty Beauty is a case in point. Distinctive for its broad inclusivity across skin tones and gender, the company’s original foundation launch in 2017 included 40 shades (and has since expanded to 50). That recognition and celebration of a fundamental form of diversity – skin colour and tone — is evident in the company’s high scores on “This company is an authentic diversity and inclusion ally” and “This company has a reputation for supporting diversity and inclusion”.
But as illustrated below, companies scoring high on DEI measures are not just those for whom skin colour is essential to the product experience. Those firms who performed best on the overall DEI battery also outperformed their rivals specifically on the DEI metrics, while those who did worst overall (notably, most of the firms in the Connect arena) also had the lowest scores on these specific measures.
Merely showing people of colour in advertising isn’t enough. Consumers need to feel included, known, respected, and trusted in their dealings with a company if their relationship with the brand is to move from merely captive to a higher developmental stage in our maturity model.
Similarly, merely enabling social interaction isn’t enough. While everyone enjoys a good party, nobody appreciates an indifferent or rude host. Companies for whom interpersonal connection is the product need to look inward at their own culture and processes. Are they empowering their employees to treat their customers like people, not transactions (one of the key drivers of positive WOM)? Are they acknowledging customers’ unique needs by doing everything they can to personalize their experiences (another key driver)?
Countless studies have shown that human interaction is essential to both our mental and physical health. And as Julianne Holt-Lunstad, a psychology and neuroscience professor at Brigham Young University and author of one such study has observed, “Technology can offer a very anemic connection. Technology can be the junk food of communication where we’re just exchanging tiny bits of information over text and we’re really missing out on accessing our full relationship capacity.”
The connections that help us flourish are those that harness our “full relationship capacity.” They’re the ones that let us derive as much or more positive human energy from an interaction as we give to it. Whether we are buying cosmetics or an insurance policy, cooking a veggie burger or applying for a loan, plugging in our cars or unplugging in front of a streaming movie, we need to feel that our humanity is being honored, not squelched. That’s what connects us to each other and will help us connect to brands in a more emotional and durable way.
Culture evolves, customer expectation shifts.
Someone is already rethinking your category.