Abstract Contracts
One seemingly small change can upset an entire customer base! These pitfalls can be avoided easily! But first we have to analyze missed opportunities. Before Covid impacted the world, Westin had planned a trip to France. But it was almost immediately canceled. Turns out instead of going to France they had a baby instead! Dustin purposely missed the opportunity to go back to his crazy schedule post Covid and found that the craziness of the everyday grind isn’t as necessary as he first thought.
You have to be careful when seizing opportunities. Whether it is a packaging change or a new policy change, you must give the customer some thought. In 2009, Tropicana decided to change their logo and packaging. While doing this, they spent $35 million dollars in an advertising campaign to promote their new branding. Two months after their launch they saw sales drop by 20% and their then current clientele switched to competitor brands.They found that their lack of research done on their specific customer base resulted in a serious backlash that could have been avoided. When research is done, who do you focus this research on? Rachel thinks that the “maybe’s” customers are the most important, the in-betweeners that are not particularly dedicated to any one brand.
When a company breaches a psychological contract, the committed customer’s ratings for the competition go up. Their loyalty transfers to a rival company and negative attitudes towards the initial company increase drastically.
Contrary to what we assumed, research shows that in certain changes that you make, the most committed customers are the ones that give the biggest backlash to changes within the brand. Contrary to popular belief, the committed customers are both more resilient to change and more dependent on the consistency of the product. There’s a way that you can measure what changes you need to be very careful about and what changes require less decision making. It boils down to a psychological contract. When a company violates that psychological contract, the consumer gets very upset. Psychological contract breach in committed brand relationships affects the relationship between consumer and company. Consumers believe that the company has promised that the logo or brand will not change, so when these changes occur those people are disappointed. The contract inside the mind of the consumer is rendered void and sales are directly affected.
Through surveys, you can easily find the terms and conditions for your customers' psychological contracts. You can also find the degree that people think certain attributes of your company are inside the psychological contract or not. This can be price, logo, or container. When finding what is in the psychological contract you can be aware of what needs to be consistent. These factors are easy to test. The company just needs to work well internally to prepare to transfer a message out to the consumers, as any surprise from the company can be negative.
When a company breaches a psychological contract, the committed customer’s ratings for the competition go up. Their loyalty transfers to a rival company and negative attitudes towards the initial company increase drastically. When you don’t care about the consumer’s opinion, you are driving customers away and depleting sales. Customers really do care about different attributes of your brand. This is not a warning against change! But it is a reminder of the importance of being aware of the psychological contracts that exist with your customers as you move forward and make changes.