Consumer Empathy for Brands - Part 2

Why Consumer Empathy Is Important

It is no secret that in the current climate (i.e., rising inflation, cost of living crisis, category congestion, and shifting consumer values - just to name a few), consumers are becoming more discerning about where they spend their money and how they invest in products, services, and brands.

Their relationship with brands transcends what we used to traditionally think of as consumer “loyalty” and into a more involved relationship called “Consumer Empathy.”

This four-part series will dive into what Consumer Empathy is, why it’s important, how consumers empathize with your brand, and what areas of business you should prioritize to drive Consumer Empathy.

Importance of Empathy

In Part 1 of our 4-part series, Consumer Empathy for Brands, we defined what Consumer Empathy is. Great – but I’m sure you’re now asking, “So why should I or my brand care about Consumer Empathy (it sounds like a lot of work!)?”

There are many reasons why fostering Consumer Empathy is important for your brand or business. At its highest level, it allows you to better understand the consumer you are serving and can help your organization drive deeper consumer-centricity, which can act as a strategic point of difference in the market. Consumer empathy also has the potential to drive positive return on investment (ROI) and is a mutually beneficial marketing tactic in that it turns consumers into marketing powerhouses by making them advocates for your brand. We dive into each one of these below.

Consumer Centricity & Strategy

Consumer empathy and driving consumer-centricity as a brand have a causal relationship. By being consumer-centric, you are leaning into consumer empathy as a super-power and strategic tool to drive business models, core business initiatives, and growth strategies in both the near and long-term.

Consumer-centricity is often described as “putting your consumers at the heart of everything the business does”. Many companies and businesses say they are consumer-centric, and it is a nice buzzword for marketing and shareholders, but many fail to deliver on the actions that would embody truly being consumer driven. True consumer-centricity is rare. It is a constant journey to remain close to your consumer and to use your knowledge and understanding about them as a lens for everything the business does. For instance, there is quite a difference in collecting your consumer data and drawing high level conclusions to check a box or validate a choice, versus using that data to understand your consumers to drive decision making and innovation.

The key to unlocking consumer centricity as a strategic tool is not ONLY thinking about, or knowing, but “understanding”.

To put consumers first, you need to understand them. By truly understanding your consumers, you can better close the needs-state gap between what your consumers want and what your brand or business delivers. You are not only able to understand their current desires, motivations, needs and behaviors, but also better able to anticipate future wants or actions.

The other benefit consumer-centricity provides, is to get companies outside of their deeply engrained rivers of thinking. Often, brands and businesses get caught up in doing things “how they have always been done” – seeking answers internally, as opposed to looking to the actual end-users of their product. At the end of the day, who knows what your consumers want, better than, you guessed it – your consumers? Businesses tend to default to internal and pre-existing norms as it is easier than challenging the status quo. And, let’s face it, consumers often times offer hard truths and contradictions that some may not want to hear as it differs from their own internal viewpoints. This isn’t saying that consumers have all the answers (they don’t), but by giving consumers a seat at the table, you are able to infuse objective external viewpoints to help guide decision making that can align with them long term.

As consumer centricity is a natural byproduct of consumer empathy, ongoing consumer-centricity as a business drives long term relationships with consumers. Consumer Empathy via consumer centricity is a strategic point of difference as it bridges who you are as a brand, with the consumers that you want to connect with through mutual understanding. We talk more about this concept in Part 3: How consumers empathize with your brand.

Consumer Retention & Return on Investment

Ironically, by treating consumers as more than “just a number,” we can see positive impact on your business figures. Consumer empathy has a proven positive impact on driving consumer retention and continued return on investment. In this section, the numbers speak for themselves.

It has long been proven that it costs less to keep existing consumers, than to attract new ones. Speaking from an investment perspective, it is seen through loyalty economics that the cost of reaching existing consumers that you have developed long term relationships with, are 1) more profitable and 2) cost less to maintain over time.

According to studies conducted over the last few decades by Harvard Business School, increasing customer retention by 5% can increase profits upwards of 25%. Moreover, the success rate of selling to a customer you already have has been proven to be between 60-70%, while the success rate of selling to a new customer is 5-20%. Acquiring new customers is costly and time consuming, as it can cost five times more than retaining an existing customer. Therefore many businesses have an increased focus on determining Customer Lifetime Value (CLV). By understanding the value of long-term consumer relationships, you can better plan investment strategies focused on consumer retention.

If you aren’t focusing on empathy building and consumer retention strategies, then your business is likely leaving money on the table. U.S. companies lose $136.8 billion per year due to avoidable consumer switching. It has also been reported that 27% of consumers switched brands for better values alignment. Remember back to Part 1, where we described empathetic consumer relationships as being built on deeper principles such as personal values?

While focusing on growth initiatives and reaching new consumers is likely a core strategic pillar for many brands and businesses, consumer retention should be considered just as important and lucrative. One of the best ways to retain consumers is by building empathetic relationships with them. Ironically, by treating consumers as more than “just a number,” we can see positive impact on your business figures. Consumer empathy has a proven positive impact on driving consumer retention and continued return on investment. In this section, the numbers speak for themselves.

Turning Consumers Into Advocates

The last reason Consumer Empathy should be a core focus for brands and businesses, is that it will ultimately drive consumer advocacy. By focusing on fostering empathy with consumers you have the potential to turn them into marketing powerhouses! Remember back to Part 1 of this series, when introducing the concept of Consumer Empathy, we talked about building relationships and connections with consumers. Sometimes business get so caught up in the numbers and delivering on the bottom line, that they forget that empathy drives connection, and connection drives trust, which has the power to turn consumers into advocates.

If consumers can empathize with your brand, on some level, they trust you. Now why is consumer trust so important? When consumers trust your brand or business, they will advocate for or recommend you to others. Let’s go back to the numbers again. According to a study commissioned by Adobe in the UK, 7 in 10 consumers will buy more from brands that they trust. In turn, trust in a brand will also lead consumers to recommend to friends (61%) and even post positive reviews or comments on social media (40%). Moreover, according to FreshDesk, 83% of consumers would recommend a brand that they trust to others.

Consumers will advocate for brands that they trust, and they develop trust through shared understanding via empathetic relationships. Advocacy that comes from consumers who have positive relationships with your brand also contribute to positive return on investment over time, as previously discussed – they are doing your marketing for you! Investing in developing empathy with consumers isn’t just about the end sale or the immediate conversion but is more dynamic. You are building longer lasting relationships with consumers that can help save you money and get you more bang for your buck in the future. In our next part, we dive into how to build empathic relationships with consumers.

To learn more, be on the lookout for Part 3 of our Consumer Empathy for Brands series, How Consumers Empathize with your Brand.

Eleni Bennett is Founder of Eleni Bennett Consulting, a Consumer Insights and Strategy consultancy.

For any inquiries on how Eleni Bennett Consulting can help get you closer to your consumers please reach out to: eleni_bennett@outlook.com