Category: Habit

CRM in an Era of Habit Disruption

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Photo by Jess Bailey on Unsplash

The Covid-19 pandemic has disrupted people’s daily routines. Want to grab that favorite cup of coffee down the street? Sorry, the coffee shop is closed. Spaghetti and meatball night? Too bad, the local store ran out of ground beef. Client meeting at the office? Nope, Zoom meeting with surprise appearance of adorable kids or pets is the way to go now.

In these and many other areas of life, the well-rehearsed habits people had from the “old” days are suddenly thrust into the spotlight of their consciousness. As a result, old habits are breaking, and in their place new habits sprout. These transformations in habits have significant consequences for business. Some brands are being left behind from broken old habits, while others are discovering opportunities among the new habits. Overall, businesses that understand this habit transformation process about their customers will be better prepared to transition through the pandemic and beyond.

This article looks into psychology research to shed light on the habit transformation process and discusses how customer relationship management should respond to such disruptions.

Continue reading “CRM in an Era of Habit Disruption”

Turn Loyalty into Habit and Habit into Loyalty

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Recently I was interviewed by the creative minds at Venables Bell + Partners on the topic of customer habit and loyalty. One of the questions asked was how businesses can turn loyal customers into habitual customers and vice versa. That conversation inspired me to write this blog post, to share with you how a business can bring loyalty into habitual behavior and vice versa develop loyalty into automatic habits.

Why Do You Want To Turn the Customers?

Why would your business want to turn one type of customer into the other? Consider Jane, who loves your brand and is a loyal customer. She purchases your brand heavily and is in the top 20 percentile in terms of her spending. A paradoxical fact about loyal customers like Jane is that they are also often the most demanding customers. They negotiate the hardest and have the highest expectations because they have been so “loyal”. By encouraging Jane to become a habitual customer, you help make her brand choice process more automatic, reduce her overthinking, with the added bonus of having more regular, predictable behavior.

Now imagine the opposite case. Tom is also a frequent customer. He visits your store and buys your products habitually, but he does not have strong opinions about your store one way or another. I know what you are thinking. “Wait a minute! How is it possible for Tom to buy so much without liking you a lot in the first place?” You are certainly right that habit a lot of times evolves out of our passion for doing something. Over time, it becomes a habit. But for many products and services, consumers don’t necessarily care enough to want to choose the very best. Instead, they try the first thing that is available. It works reasonably well. They don’t care enough to go search for a better alternative. So they settle down right away and repeatedly buy that first product, eventually becoming a habitual buyer.

The above is just one example of how you can have a habitual customer who buys a lot but does not have strong feelings for you. Why do you want to turn someone like that into a loyal customer? The reasons are pretty straightforward. It could be a defensive move. If Tom loves you, he may not be so easily lured away by your competitors. He may also be more inclined to try other products from your brand. When unexpected things happen that disrupt his habit, you can hopefully have his loyalty to fall back on to keep him buying. Continue reading “Turn Loyalty into Habit and Habit into Loyalty”

How to Measure Habit Strength Using Customer Data

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Since my recent series on building customer habits through customer relationship management, I have received a few inquiries about how we can figure out customers’ habit strength based on their transactional data. I will offer a brief explanation in this article. The approach I am discussing here assumes that you have individual customers’ purchase or product usage data available. If that’s not the case, you can refer to the last section for alternative measures of habit strength using customer surveys.

Two Key Components of Habit

To properly measure habit, we need to first understand what it is. In psychology and marketing, a habit is most commonly thought of as an action that is frequently repeated under the same situations. If we break this down, there are basically two ingredients to habit:

  • Frequency: how frequently does someone take that action (e.g., watches TV, uses the mobile app, etc.)?
  • Stability: when the person engages in the action, is it often under the same circumstances (e.g., on the way home, on Sunday morning, etc.)?

So to measure how strong a customer’s habit is, you need to find out about these two ingredients. The higher the frequency and the higher the stability, the stronger the habit is.

habit formula

How to Measure Frequency

Measuring frequency is pretty straightforward. If you are dealing with purchase data, frequency means how many times on average someone buys your product in a given time window (e.g., per week, per month, per year, etc.). If you have usage data such as customer use of your mobile app, frequency means how many times someone uses the product in a given time length. Let’s say if someone buys your product 36 times a year, the average frequency per month would be 36/12 = 3 times. Continue reading “How to Measure Habit Strength Using Customer Data”