Customer Mindset

Understanding the Customer Mindset

John Kenneth GalbraithOpens in new window has said,

A man in imminent danger of being hanged is little worried about catching cold. There is no point in eliminating a minor source of uncertainty if a major one remains (Galbraith, 1967, p. 221).

When determining customer lifetime value (CLV)Opens in new window, the most important uncertainty to clarify is that of the mindset of the customer.

The better that a firm understands their customers, the more likely the firm will be able to surprise the customer with features that keep them satisfied relative to the competition.

The customer mindset determines customer behaviorOpens in new window. Customer behavior directly determines the length of a customer’s association with the firm. This association is known as the lifecycle of the customerOpens in new window.

Since the customer’s mindset determines customer behavior, it is of paramount importance for a customer-focused company to understand as many aspects of the customer’s mindset as are possible.

While marketing does help to shape the customers’ opinions about a given brand or company, firms must strive for finding the proper balance between marketing expenditure and firm profitability. If too many marketing dollars are spent on a per-customer basis, the profitability of the firm could erode.

Once again, it is clear that having good intelligence concerning the desires and expectations of the customers will improve the profitability and duration of the relationship between the firm and the client.

The mindset of the customer can best be described using the Five As as is itemized below:

1. awareness
2. association
3. attitude
4. attachment
5. advocacy

• Awareness is here defined as the ability of the customer to recall the brand, and to generally recognize the firm’s products and services.
• Association deals with the customer’s perceptions of the uniqueness, strengths, and benefits of a product or services. This influences the customer’s attitude concerning the product or service.
• A positive attitude is defined as having a positive opinion with regards to quality and satisfaction of a product or service.
• Attachment deals with the level of customer loyaltyOpens in new window. Do the other components of the customer’s mindset lead to a continued relationship or a defection?
• The components of the customer’s mindset also impact the level of advocacy, which is the extent of recommendation of the product or service to other potential customers.

Each of these components can be positive, negative, or neutral. The Kano modelOpens in new window, a common methodology that can be used to assess the desires and expectations of the customers, is discussed hereOpens in new window.

Since a key component of an enduring profitable relationship is trustOpens in new window, the challenge of all companies is to achieve the highest levels of performance possible in each of the five As for the firm’s targeted customer base.

Tools such as the Kano modelOpens in new window and other customer-inclusive panel discussions are key to being able to understand the mindset of the customer, which is a driving factor for predicting their future behavior, as well as the length and value of the relationshipOpens in new window.