A friend of many years helps you to re-turf and landscape the backyard over the long weekend.  As a sign of your appreciation, you decide to give them $100 for the effort.  After all, he spent his time and incurred costs to help you. Smart move? Surely your friend would appreciate the cash. Even economists know you’re a dill.  You have just crossed an important line between social norms and market norms. Your friend is likely to feel cheapened by your offer. When you start with price, you end with the price.

Love and money don’t mix. Knowing the difference between social and market norms is important for managing the brand relationship in customer experience. Social norms are the rules we live by in our social lives. It is a system we use to judge our friends, family, loyalty and transgressions. Market norms work on getting what you paid for. There is still plenty of emotion in that.

Once it is gone, it’s . . . To test what happens when you cross the line and try and come back Gneezy and Rustichini (2000) tested the impact of price in a social relationship in a childcare centre. To compensate staff for parents being late to pick up children they introduced a fine. Late pick-ups increased as parents no longer felt guilty but instead did a quick cost-benefit calculation and saw it was cheap babysitting for that extra hour. When the centre dropped the fine, parents continued to be late. They got free babysitting! Customers like lovers don’t forget.

Love comes at a high price. Research that has investigated the impact of the different brand relationships shows people invest more effort into social relationships and forgive of minor slips. However, in market relationships we are more self-reliant; a big plus for reducing servicing costs. A client in publishing who had a social relationship with their customers suffered both from this high customer service costs and also found it difficult to get customers to give feedback that was not glowing. Customers often blamed themselves for service failures. However, when the company changed its reward system to one based how much customers recently spent and not on their long term relationship they felt ‘like a number’. Customers became ex-customers and got nasty. Social media is littered with vitriol on those companies that professed social good then delivered an accountants version of love.

The grass is greener. On the upside, the research we have done for community banks, some healthcare providers and education institutes that have these social relationships, the relationship was reflected in very low attrition rates, high cross-product ownership, and high repeat business.

If you choose to have a social relationship or are in one and afraid of a messy break-up, there are three things to keep in mind.

  1. Commit to a social relationship over the long term.
  2. Reflect the type of relationship in all your touchpoints.
  3. Be fair; play fair.

On the last action point, not all companies that have social relationships are social campaigners. Many are just great people to work with and work for. What these companies know is that to have brand advocates you first have to be an advocate for your customers and your community. Ironically, the banking and finance sector has some of the best examples of how to build brand relationships that are social relationships in an economic environment. Suncorp, Bendigo Bank, and Newcastle Permanent Building Society are good examples.

To test how strong your social relationship is with your customers, ask yourself whether your customers would take time out to do an interview an interview for free. I’ve even had customers travel to another city to help a client’s research.

 

To dig deeper . . .
  • Gneezy, Uri. and Rustichini, Aldo (2000) “A Fine is a Price.” The Journal of Legal Studies, 29, 1: 1-17
  • Aggarwal, Pankaj (2004) “The Effects of Brand Relationship Norms on Consumer Attitudes and Behavior.” Journal of Consumer Research, 31, 1: 87-101