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How to get customers to talk about you

WOM is arguably the most influential means of persuasion and can be a critical driver of a company’s growth. For this reason, many companies offer consumers incentives to encourage them to generate WOM.

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Researchers from Arizona State University, New York University, and Northwestern University published a new paper in the Journal of Marketing that examines how marketers can fuel positive word of mouth (WOM) without using explicit incentives.

The study, appearing in the Journal of Marketing, is titled “How Marketing Perks Influence Word of Mouth” and is authored by Monika Lisjak, Andrea Bonezzi, and Derek Rucker.

WOM is arguably the most influential means of persuasion and can be a critical driver of a company’s growth. For this reason, many companies offer consumers incentives to encourage them to generate WOM.

Classic examples of WOM are referral and seeding programs, whereby a company literally “pays” current customers to generate positive WOM and attract new customers. Despite its intuitive appeal, however, this practice can backfire. Ironically, incentivizing WOM sometimes can hamper, rather than increase, consumers’ willingness to engage in WOM.

This research shows that commonly used marketing perks–e.g., gifts, benefits, and rewards–can effectively foster WOM without being used as explicit incentives. Their effectiveness at boosting WOM, however, depends on how they are framed and therefore perceived by consumers: Marketing perks are more effective at fostering WOM the less they are perceived to be given out of contractual obligation. The term “contractuality” refers to the degree to which a perk is perceived to be given to consumers in exchange for engaging in specific behaviors dictated by a company, such as filling out a survey or making a certain number of purchases.

Lisjak explains that “We demonstrate that marketers can influence the perceived contractuality of a perk with easily implementable pivots. Consumers can perceive the exact same perk, say a free coffee, as more or less contractual simply based on how it is framed.”

As one example, the perceived contractuality of a perk can be lowered by giving consumers a free item after a set number of purchases, but not making the number of purchases salient to the consumer. As another example, the same perk could be accompanied by a thank you note, as opposed to a note that highlights all the effort a customer had to put in to earn the perk. In both instances, companies do not have to change the offering, only how consumers perceive it.

Interestingly, however, perks lower in contractuality can sometimes backfire against companies. This is more likely to occur when a perk characterized by low contractuality comes from a disliked or distrusted company. Under such circumstances, consumers become wary of the company’s intentions and then interpret the perk as a manipulative act of persuasion driven by ulterior motives.

When this happens, perks lower in contractuality in fact hinder rather than fuel WOM. To illustrate, many consumers do not like utility providers or financial institutions. To the extent that such dislike prompts consumers to make hostile attributions of benevolent gestures, such companies might be better off using perks that are higher in contractuality.

Finally, contractuality can entail a trade-off. Despite being more effective at fostering WOM, low contractuality perks might be less effective than high contractuality perks at inducing compliance with a direct request. For example, if a company wants consumers to complete a customer satisfaction survey, offering a high contractuality perk can be more effective and efficient than offering a low contractuality perk.

Simply put, when brands have a specific action other than WOM that they would like consumers to take, perks higher in contractuality might serve as better incentives because they make behavior-reward contingencies clear and salient.

Bonezzi summarizes the study by saying “Our findings suggest that marketers could nudge consumers to generate positive WOM by providing them with perks that have fewer strings attached. Of note, this could be achieved at a similar cost to perks that come across as highly contractual.”

Strategies

4 Tips on doing business in a digital world

Doing business in a digital world requires end-to-end approach.

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By Lesley Salmon
Kellogg Company SVP, Global Chief Information Officer

It’s no secret that technological advances will continue to improve consumers’ experiences. While CIOs will always be responsible for keeping their organizations safe, secure, and sustained, successful businesses must harness the power of new digital solutions to drive better business decisions, and outcomes and ultimately grow the business.   

Depending on who you ask, doing business in a digital world can mean different things. To some, it means adopting consumer-facing digital offerings like e-commerce, mobile apps, and digital marketing; to others, it means digitizing operations and processes internally. To continuously evolve and adapt to forever-changing consumer expectations, CIOs must take an end-to-end approach to digital – focusing on four areas:  People, Process, Technology, and Data & Analytics. If you do this, you will realize the value it can add to your organization. 

1. Focus on your people.

For me, it’s all about people – having the right people delivering through great partnerships with the key stakeholders across the business, understanding their needs, pre-empting, and then responding to them. A recent Gartner poll stated that talent is a top challenge for CIOs in 2022. To attract and retain the right people, we need to satisfy their hunger to experiment, fail fast and learn.

When our Kellogg IT team told us they didn’t see enough growth opportunities, we knew we needed to take a new approach to learning and development. We built our Year of Development Always (YODA) initiative with a vision to cultivate our childhood curiosity and an eagerness to learn. We created several tracks in the program for technical training, career strategies, and shadow programs to help our colleagues learn and explore new facets of the overall IT function.  The program has seen great results, team engagement is at an all-time high.

2. Don’t frown on the word process; embrace it.

When we think of ‘process,’ many people immediately imagine a rigid and inflexible approach. I challenge this perspective – we sometimes have to slow down, to speed up. Processes can be flexible while still providing structure for business growth – they’re what drive progress every day!

Part of doing this is closely linked with People because Process can be about engaging business colleagues at the right time with the right solutions. Being a trusted partner means bringing the company along the digital journey with us, which is essential for our future success.

3. Integrate technologies that delight consumers and drive better business outcomes.

We know that building scale and leveraging our platforms will deliver value for the business, but what about delighting our consumers?

In 2020 a team member attended an event and learned that more than 2 million people in the UK live with sight loss and cannot simply read the information on packaging. It sparked an idea to add NaviLens technology to our packaging, allowing visually impaired people to access all of the information on our packaging via their smartphones – either by having it played aloud or by using accessibility tools.

We partnered with our Packaging and Design team and launched a successful pilot making Kellogg the first ‘food’ company in the world to include NaviLens technology on our packaging.

Our company’s purpose is for everyone to have a place at the table, and we want all consumers to be able to access important information about the foods we sell.

4. Making better business decisions with data and insights.

Data has always been available but never in the abundance that it is today. While CIOs may not manage every corporate data program, the IT function is critical in ensuring commercial and functional teams understand what data is available and use it to fuel insight-driven actions.  

At Kellogg, we’ve re-imagined our data & analytics approach and focus on data ownership, quality, ethics, and governance. This is the recipe for making better business decisions.  

The real magic happens when you join forces with other business areas, like Marketing, to combine our insights and analytics capabilities with innovation, e-commerce, and more. This has allowed us to create a rich omnichannel experience that ensures we have the right foods, attractive pricing, and tailoring the right message to our diverse consumers.  

Freeing data from silos is critical to meet consumer needs and preparing for the future consumer experience. We recently commissioned research that looks at what consumer shopping trends we can anticipate by 2035; we are making investments to prepare for those consumer expectations.

For example, in 2035 and beyond, the retail environment will fit the needs of each shopper. Shoppers will see the personalization of products and shopper journeys as a baseline expectation to fit their unique attitudes and needs. Traditional online and offline environments will become increasingly integrated, supplemented with AI and innovative technologies to offer data-driven capabilities. 

Final thought…

Digital is the driving force behind any business, and IT is in the driver’s seat. Commercial business leaders can and should partner with their IT teams to help prepare for digital shifts to create more personalized experiences that create brand affinity.

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Strategies

Tips on how to avoid a debt trap

Here are some practical tips to help better manage, stabilize, and avoid a debt trap.

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According to CNBC, an average American has over $90,000 in debt. Accumulating debt is not only a financial burden – it can be mentally and emotionally taxing as a borrower finds themselves trapped in debt because the high-interest charges keep piling on. 

Steve Sexton, financial consultant and CEO of Sexton Advisory Group, shares some practical tips to help better manage, stabilize, and avoid a debt trap.

  • An emergency fund is essential. “Aside from budgeting and living within your means, having an emergency fund for unexpected expenses is one of the best ways to avoid going into debt in the first place,” says Sexton. “Plan to have at least 6 months’ worth of expenses saved in this fund, which can help you financially weather a temporary crisis and keep things running until the situation stabilizes.”
  • Consolidate various loans under a single one. “Taking on multiple loans at different interest rates beyond one’s capacity to repay can be resolved by taking on a single loan,” adds Sexton. “By doing so, the borrower can simplify their finances and no longer need to worry about remembering multiple repayment dates. This step can help the borrower better emerge from a debt trap.”
  • Leverage cash flow to prepay high-cost debt. “An important factor to streamline your repayments and avoid debt traps is to use a temporary inflow of funds to prepay debt with high-interest rates,” says Sexton. “These include annual bonuses or capital gains on share sales which can be used to prepay personal, credit card, or auto loans. When loans with high-interest rates are repaid, you are effectively saving the extra amount that would otherwise have gone towards the higher interest charges.”

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Strategies

3 Tips to include in a business crisis plan

To better protect businesses and their people, emergency preparedness experts from Rentokil North America and their family brands, Steritech and Ambius, shared three elements to incorporate into a weather-related hazard mitigation plan.

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Across the world, natural disaster events are on the rise. Climbing temperatures pave the way for an increase in droughts, wildfires, floods and other weather emergencies. In 2021, United States natural disasters created more than $145 billion in economic damage, three times the amount originally estimated by the National Oceanic and Atmospheric Administration.

The Federal Emergency Management Association estimates that about 25 percent of businesses do not reopen after experiencing a weather-related disaster. Without a plan in place, one weather emergency leading to a power outage, flood or property damage may be all it takes to force a company or business to close its doors permanently.

To better protect businesses and their people, emergency preparedness experts from Rentokil North America and their family brands, Steritech and Ambius, shared three elements to incorporate into a weather-related hazard mitigation plan. Business owners and operators can use these tips to establish a plan and better protect their employees, customers and business.

Tip One: Prepare for Power Outages

Power outages can happen anytime, anywhere. A nearby accident can take out power lines resulting in a local outage. Heavy rain, high winds or extreme temperatures from severe storms can also lead to a regional or widespread outage. Business owners may not be able to prevent a power outage from happening, but planning ahead and incorporating step-by-step instructions for the business’s unique needs can help prevent the loss of temperature-controlled products.

Conduct an extensive walkthrough of the facility and make note of any temperature-controlled products or power-reliant vulnerabilities. Include clear instructions for handling these products in the case of a power outage and ensure resources are readily and easily available. 

Consider having a paper log on hand in order to manually monitor and document product and food temperatures as long as it is safe to remain in the building or if the power outage is confirmed to be brief. Avoid opening reach-in and walk-in cooler doors as much as possible to keep items cold. A freezer in good condition may maintain its temperature for up to 24 hours if unopened.

“When a power outage impacts temperature-controlled products, discard any foods that may have been in the cooling or warming process,” advised Paula Herald, Technical Consultant at Steritech. “Don’t take chances trying to cool down hot foods; discard in the interest of food safety.”

Tip Two: Address Air Quality Concerns

Flash floods and wildfires continue to sweep across the United States releasing toxins, bacteria, smoke and other harmful pathogens into the air. These contaminants infect the air and seep into floors, walls and furniture, linger long after the flood or fire subsides. Exposure to these pollutants can be highly dangerous to people and can lead to heart and lung problems, eye and skin irritation and a number of other health-related issues.

Do not enter a space that has been impacted by a flood or fire without first receiving approval from health and safety officials. Once the area is deemed safe to enter, assess all structural damage, look for signs of smoke damage or mold and dispose of anything that can not be washed, rinsed and disinfected such as furniture and carpet. Air decontamination units can be used to help remove any remaining airborne toxins, gases and pollutants.

“The increased frequency of natural disasters is having a significant impact on air quality,” said Matt Hayas, Director of Product and Innovation at Ambius. “Business owners can address indoor air quality concerns by investing in specialized air decontamination units designed to effectively remove 99.9999% of air pollutants before, during and after severe weather situations.”

Tip Three: Remove Destruction and Debris

Natural disasters can leave behind damaged roofs, broken windows, fallen trees and other destruction and debris. Structural damage and piled-up debris are not only safety hazards, they can also create the perfect harborage for rodents, insects, birds and other pests looking to build a new home.

Once the weather emergency has passed, it’s important to conduct an extensive walk-through of the property. Identify any open access points and move any fallen trees and debris as far away from the building as possible.

“A minimum distance of 25 feet is recommended to keep pests from entering the building,” said Nancy Troyano at Rentokil. “Rodents can fit through holes as small as one-fourth an inch so it’s critical to conduct a thorough inspection of the building, before and after a storm hits.”

Dealing with the aftermath of a weather-related disaster can be overwhelming and costly. A pre-established hazard mitigation plan can save businesses up to $13 dollars per $1 dollar invested (National Institute of Building Sciences). As climate change continues to advance, the threat of weather emergencies may soon be a reality for many across the country. Be proactive and establish a plan before a disaster strikes. Incorporate these tips into a crisis plan to better protect businesses, properties and the people they serve.

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