The Draining of Target’s Emotional Bank Account
Colin Shaw
LinkedIn 'Top Voice' & influencer Customer Experience & Marketing | Financial Times Award Leading Consultancy 4 Straight Years | Host of 'The Intuitive Customer' in Top 2% | Best-selling Author x 7 | Conference Speaker
Fourth quarter sales were down for Target following the data breach that compromised the personal information and credit card information of 110 million shoppers last December during the height of the holiday shopping season. Some might say the sales were down because of the data compromise, and I would say that they are almost right. The reason that Target suffered a disappointing 4th quarter is because when they disappointed their customers they had nothing in their emotional bank account…and they were overdrawn.
Emotional bank accounts are a concept that most organizations don’t really think about as much as they should. They are a concept derived from the works of the late, great Steven Covey, author of “The Seven Habits of Highly Effective People”, a book that helped build the foundation of my career. In his book, Covey describes the emotional bank account as the deposits that we all make into one another’s accounts, doing favors, helping out when it is needed, etc., and then the withdrawals we take when we need a favor or help in return.
Organizations have these accounts with their customers as well. These accounts are critical to customer retention. Good things and bad things are going to happen with your customers. When you have a lot of good things stored up in the emotional bank account when the bad things happen, your customers are more forgiving. But when you don’t, well … you have disappointing 4th Quarter earnings.
People say a customer experience is about only rational things. How wrong they are! This example from Target is a great example of how emotions affect the bottom line. Target still has the same store layout, the same pricing, and the same quality of products that it did before the data breach. These are all parts of the rational experience. But there isn’t the same is the feeling of security that it had before the breach. Emotionally and subconsciously, the shoppers were feeling that and shopping elsewhere.
Last month I wrote about Target and Snapchat’s data breaches over the holidays. In it I discuss how customers have to, at the very least, feel secure in their purchases with your organization. This is described in Maslow’s Hierarchy of Needs and demonstrated in his famous pyramid by having Safety listed right near the base of the famous pyramid. Customers need to trust you if you want to keep them.
Target’s customers would likely have trusted them more if they had more saved up in their emotional bank account with the giant retailer. But since the customer’s base of trust was rattled by the data breach and there wasn’t a big enough balance in the account, they didn’t shop there for the rest of the year. Add to the fact that January has been one of the worst in history for bad weather for much of the US, which has led to disappointing sales for retailers of all types so far in 2014 and you can see that the executives over at Target certainly have no shortage of woes right now.
Every organization has a level of emotional engagement with their customers, called an emotional signature. These signatures are tied directly to the emotional aspect of customers’ experience with the company. Defining this signature is critical to designing an effective customer experience (To read more about how to define your organization’s Emotional Signature click here).
Despite this fact, many organizations don’t know what their organization’s emotional signature is. They prefer to focus on things that they can make a correlation to their bottom line and for which they can easily calculate an ROI.
I would argue with these companies that there are ways to calculate your ROI on customer experience investments. Recently I worked with the Economist Intelligence Unit on a project that helped connect the ROI on Customer Service. While there is no “industry standard” on how this is done, any organization can connect their investments into improving their customer service with a measurable metric that will define the ROI. You simply need to choose one and monitor it, whether that’s a score on customer satisfaction surveys, or the spend amount for loyal customers, or even the percentage of churn you have with customers. Basically, pick what matters to you most and keep track of it.
Still, most companies do not define or even have a basic awareness of what their emotional signature is with their customers. They continue to do things the way they always have.
This works fine as long as everything is fine. It’s when everything isn’t fine that it really becomes apparent that the emotional signature might need some attention. Like when you have to announce disappointing earnings, refer to 2013 as a “challenging” year and figure out how you are going to get back the millions you just lost in revenue last year as a result of neglecting it--the three things Target just had to do. Customers may have had their personal account information compromised but Target was definitely the one who had their account drained.
What should Target do to help replenish their emotional bank account? Do you know what your organization’s emotional account balance is? I’d be interested in hearing your comments below.
Photo Credit: flickr.com/photos/pagedooley/
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If you enjoyed this post, you may be interested in the following blogs :
- Building an Emotional Bank Account to Improve Customer Retention
- Target and Snapchat: The Power of Customer Loyalty
Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world's first organizations devoted to customer experience. Colin is an international author of four best-selling books and an engaging key-note speaker. To read more from Colin on LinkedIn, connect with him by clicking the follow button above or below. If you would like to follow Beyond Philosophy click here
Follow Colin Shaw on Twitter @ColinShaw_CX
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I don't understand the point here. Using the concept of Emotional Bank Account here is meaningless if you are not going to explain your hypothesis that Target's EBA was already drained. You state it as a fact, but don't provide any supporting evidence. So yes, what you are saying is absolutely correct conceptually. Only, I don't get why it applies to Target. Guests not shopping for a while after a major incident like this means withdrawal from EBA, it doesn't necessarily mean it was already overdrawn.
President of The Way to Happiness Fnd Int
10 年Very very interesting post and interesting phrase "Emotional Bank Account". Here's a different take. How about promoting something that is at the bottom of the moral decline that targetted Target. By that I mean, "Do Not Steal". One of 21 chapters in a COMMON SENSE guide to better living, lists out the things we know but yet we see violated or perhaps violate ourselves and then wind up unhappy or wind up causing another's unhappiness. This book not only contains 21 common sense natural laws, but it contains the CONSEQUENCES of one's actions. "Think" the question Jay Leno asked that well known actor HG when HG had been caught with a prostitute. Jay's question? "What were you thinking?" If Target distributed this book to all of it's employees or mailed the book to the surrounding communities near all of their stores, along with a $25.00 gift card, I'm sure that 80 - 85% of those receiving this gift would respond positively. The book? It's called THE WAY TO HAPPINESS. It's in 111 languages and also on film. Go to the website and see the RESULTS of similar campaigns. Good Luck, Target. And thank you, Colin Shaw
E-Commerce & Digital Marketing
10 年As a former target supervisor, nothing pleases me more than to see Target "struggling." They abuse, overwork, and treat their employees like sheep. They have too many chiefs and not enough indians. They are the CHEAPEST company I have ever worked for. Miserable employees equate to miserable guests. So yes Target, Karma is coming for you!
Purchasing & Procurement
10 年And then they "brilliantly" chose Experian to monitor our credit for the next year? Uh, No thank you. https://krebsonsecurity.com/2013/10/experian-sold-consumer-data-to-id-theft-service/
Marketer, Communicator,Public Relations Professional,Independent Change Management Strategy Consultant ,Poet
10 年With all due respect, the case has nothing to do with the emotional bank account , it has to do with Business Performance Criteria Evaluation and Re-evaluation in ups and owns economic environment. From my view point here are the steps to be taken (Mona 05.03.2014_1): 1- How many Stores they have distributed on how many places? 2- How many competitior stores are there? 3- Do the competitor's stores offer the same offerings? 4- What price ranges they offer for each product category? 5- Which private labels they hold? 6- Do Customers feel any differentiation being here or there? 7- Do they have handy and easy reach to the consumer needs and wants? 8- Are they located where their emotional consumer located or may be a change in the inhabitants demography occured whereas they are still waiting for the same customer to come in? 9- How about totaly new offerings unexpected from the target consumers rather than the store customer? 10- Re-Branding is the turn key all the time even within the same criteria and offerings......