Required Reading: Connecting with The Transformational Consumer
Many businesses struggle to segment customers and figure out on which groups to focus. In The Transformational Consumer, author Tara-Nicholle Nelson aims to simplify this process by arguing for a clear criterion: pay attention to those who are actively attempting to better their lives. Associate Editor Oren Smilansky caught up with Nelson to hear why this is the case and how this thinking can be applied across industries.
CRM: How do you define “transformational consumers”?
Tara-Nicholle Nelson: Transformational consumers are a massive and growing group of people who see all life as a series of projects to change their own behavior for the healthier, wealthier, and wiser. They are constantly on the lookout for products, services, and content they think might help. They are early adopters, and they tend to have great influence on the buying behavior of the people around them. I like to joke that if you have ever been vegan and paleo at different times in your life, you’re probably a transformational consumer. Most entrepreneurs are transformational consumers. The head of product for Airbnb once told me that they see both their hosts and their guests as transformational consumers.
What exactly makes this segment so influential?
More than 50 percent of the 2,000 U.S. adult customers we surveyed said they use digital or real-world products several times a week or more in an effort to reach their healthy, wealthy, and wise goals. They spend more than $4 trillion a year on such products and services. And when they believe your product actually works for this, they will use it over and over again, buy it over and over again, and tell everyone they know about it.
What can you tell companies whose products or services aren’t necessarily geared toward this segment and who can’t change direction overnight?
The transformational consumer framework—shifting to your customers’ worldview, seeing your world and lives the same way they do—actually applies to a surprisingly broad set of businesses, not just health and personal finance companies. They see “healthy” as including everything from pharmaceuticals to fitness to household cleaners and clothing and dog food. They see “wealthy” as ranging from personal finance to real estate to career development and even collaborative consumption platforms like Airbnb and Lyft. And “wiser” includes everything from meditation to faith, productivity, and higher education.
If your product is in no way transformational, the approach still works. Investing in engagement versus fixating only on growth is something every company could stand to do. Focusing on the real-world problems, lives, aspirations, and journeys of customers and systematically removing frictions and triggering progress along those journeys is something every business in every industry should be thinking about. Focus on your customers’ humanity. Understand them as people. Fixate on their problems and then solve them. Do that over and over again, and you’ll win.
What are the tangible benefits of applying this kind of thinking?
For most companies, it offers a lens through which to more powerfully understand the real-world journeys their customers are taking as they aspire to live better lives. And that, in turn, shows you how to increase customer engagement, brand love, loyalty, and repeat business, as well as reach new audiences. Most companies are spending all of their marketing dollars to convert new customers versus tapping into the potential long-term business lifeblood of customer loyalty.
Understanding the real-world customer journey surfaces limitless opportunities to innovate new products, features, services, and even marketing messages and content that win lifelong loyalty by removing resistance points and triggering progress along customers’ everyday life paths.
What companies have successfully shifted direction to untap the potential of this customer base? What might others learn from them?
Target called the big food companies to its headquarters and told them that one year out, there would be 40 percent less shelf space for unhealthy, packaged foods to make space for the healthier foods customers were demanding. It also took candy bars off the shelves near checkout in a bunch of stores and replaced them with healthier snacks like KIND bars. CVS took cigarettes out of all its stores, lost $2 billion in tobacco sales the first year, and more than made up for it with a variety of other lines of businesses that connected more deeply with healthcare providers and customers. The takeaway here is that these shifts involve some risk. But it’s a calculated risk, and one well worth taking once you understand the potential upside of winning the hearts and minds of transformational consumers.