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Here’s 5 Ways to Build Customer Loyalty, According to Science

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Regardless of whether you are an entrepreneur, investor, or a business professional, the concept of customer loyalty is a crucial one.

The fact is that 68% of customers leave because they feel brands do not care about them, and the cost of these lost customers can add up fast. It’s estimated that acquiring new customers is 500% more expensive than keeping old ones.

How can brands get customers to keep coming back, to avoid the problem of high churn?

The Science Behind Customer Loyalty

One way of looking at customer loyalty is to think about the underlying behavioral psychology.

Today’s infographic is from West, and it outlines some of psychological principles surrounding customer loyalty, and how they can be applied to help retain existing customers.

The Science of Customer Loyalty

Retaining customers is vital to success, but achieving a low churn rate is never an easy task. After all, customers can be fickle, and brands already invest millions each year to make sure they can handle extremely high volumes of customer interactions.

How can brands lower their churn, while making the most out of their customer interactions?

Five Ways to Build Customer Loyalty

Here are some tried and true methods that help build customer loyalty, and why:

1. Deliver unexpected rewards
Unexpected rewards produce a huge rush of dopamine to the brain. By rewarding customers when they least expect it, brands can really make an impression.

2. Start and end strong
People tend to have cognitive biases towards the first and last things they experience. By making sure the customer experience is strong at both of these touch points, odds can be improved that they will come back.

3. Create a social identity
Social identity theory shows that when people feel a part of an established in-group, they are more likely to stay loyal to that group. Brands can help by creating or nurturing these channels, allowing customers to develop bonds with each other, as well as the company.

4. Let customers share rewards
People are frequently motivated by helping others, so giving customers the opportunity to share benefits or rewards can create a new facet to the customer relationship.

5. Show customers you share their values
Studies show that customers rate shared values as a key reason behind their relationships with brands. Make sure you communicate brand values loud and clear.

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Misc

The Biggest Ammonium Nitrate Explosions since 2000

Ammonium nitrate is dangerous, and every few years, there’s a new explosion that causes widespread damage. These are some of the biggest ones.

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The Biggest Ammonium Nitrate Explosions since 2000

This week, a massive explosion involving ammonium nitrate rocked the city of Beirut, sending shock waves through the media.

This recent tragedy is devastating, and unfortunately, it’s not the first time this dangerous chemical compound has caused widespread damage.

Today’s graphic outlines the biggest ammonium nitrate explosions over the last 20 years.

A Brief Explanation of Ammonium Nitrate

Before getting into the details, first thing’s first—what is ammonium nitrate?

Ammonium nitrate is formed when ammonia gas is combined with liquid nitric acid. The chemical compound is widely used in agriculture as a fertilizer, but it’s also used in mining explosives. It’s highly combustible when combined with oils and other fuels, but not flammable on its own unless exposed to extremely high temperatures.

It’s actually relatively tough for a fire to cause an ammonium nitrate explosion—but that hasn’t stopped it from happening numerous times in the last few decades.

The Death Toll

Some explosions involving ammonium nitrate have been deadlier than others. Here’s a breakdown of the death toll from each blast:

YearLocationCountryDeaths
2015TianjinChina165
2004RyongchonNorth Korea160
2020BeirutLebanon157*
2007MonclovaMexico57
2001ToulouseFrance30
2003Saint-Romain-en-JarezFrance26
2004MihăileştiRomania18
2013WestUnited States15
2004BarracasSpain2
2014WyandraAustralia0

*Note: death count in Beirut as of Aug 6, 2020. Casualty count expected to increase as more information comes available.

One of the deadliest explosions happened in Tianjin, China in 2015. A factory was storing flammable chemicals with ammonium nitrate, and because they weren’t being stored properly, one of the chemicals got too dry and caught fire. The blast killed 165 people and caused $1.1 billion dollars in damage.

In 2001, 14 years before the explosion in Tianjin, a factory exploded in Toulouse, France. The accident killed 30 people and injured 2,500. The power of the blast was equivalent to 20 to 40 tons of TNT, meaning that 40 to 80 tons of ammonium nitrate would have ignited.

In addition to factory explosions, there have been several transportation accidents involving ammonium nitrate. In 2007, a truck in Mexico blew up and killed over 57 people. Filled with explosives, the truck crashed into a pickup, caught fire, and detonated. The blast left a 60-foot long crater in its wake.

The Aftermath

While there have been several ammonium nitrate accidents throughout history, the recent tragedy in Beirut is one of the largest accidental explosions ever recorded, with 157 deaths and 5,000 injuries and counting.

In terms of TNT equivalent, a measure used to gauge the impact of an explosion, it ranks in the top 10 of the largest accidental explosions in history:

Topping the list is yet another ammonium nitrate explosion, this time back in 1947.

Known to history as the Texas City Disaster, the port accident was one of the biggest non-nuclear explosions to occur in history. The explosion killed over 500 people and injured thousands. The impact from the blast was so intense, it created a 15-foot wave that crashed along the docks and caused flooding in the area.

A Resource With Trade-Offs

Despite being dangerous, ammonium nitrate is still a valuable resource. There’s been an increased demand for the chemical from North America’s agricultural sector, and because of this, ammonium nitrate’s market size is expected to see an increase of more than 3% by 2026.

Because of its increasing market size, it’s more important than ever for trade industries to enforce proper safety measures when storing and transporting ammonium nitrate. When safety regulations aren’t followed, accidents can happen—and as we saw this week, the aftermath can be devastating.

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Ranked: The Best and Worst Pension Plans, by Country

As the global population ages, pension reform is more important than ever. Here’s a breakdown of how key countries rank in terms of pension plans.

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Ranked: Countries with the Best and Worst Pension Plans

The global population is aging—by 2050, one in six people will be over the age of 65.

As our aging population nears retirement and gets closer to cashing in their pensions, countries need to ensure their pension systems can withstand the extra strain.

This graphic uses data from the Melbourne Mercer Global Pension Index (MMGPI) to showcase which countries are best equipped to support their older citizens, and which ones aren’t.

The Breakdown

Each country’s pension system has been shaped by its own economic and historical context. This makes it difficult to draw precise comparisons between countries—yet there are certain universal elements that typically lead to adequate and stable support for older citizens.

MMGPI organized these universal elements into three sub-indexes:

  • Adequacy: The base-level of income, as well as the design of a region’s private pension system.
  • Sustainability: The state pension age, the level of advanced funding from government, and the level of government debt.
  • Integrity: Regulations and governance put in place to protect plan members.

These three measures were used to rank the pension system of 37 different countries, representing over 63% of the world’s population.

Here’s how each country ranked:

CountryOverall ValueAdequacySustainabilityIntegrity
Argentina39.543.131.944.4
Australia75.370.373.585.7
Austria53.968.222.974.4
Brazil55.971.827.769.8
Canada69.27061.878.2
Chile68.759.471.779.2
China48.760.536.746.5
Colombia58.461.44670.8
Denmark80.377.58282.2
Finland73.673.260.792.3
France60.279.14156.8
Germany66.178.344.976.4
Hong Kong61.954.554.586.9
India45.839.944.956.3
Indonesia52.246.747.667.5
Ireland67.381.544.676.3
Italy52.267.41974.5
Japan48.354.632.260.8
Korea49.847.552.649.6
Malaysia60.650.560.576.9
Mexico45.337.557.141.3
Netherlands8178.578.388.9
New Zealand70.170.961.580.7
Norway71.271.656.890.6
Peru58.56052.464.7
Philippines43.73955.534.7
Poland57.462.545.366
Saudi Arabia57.159.650.562.2
Singapore70.873.859.781.4
South Africa52.642.34678.4
Spain54.77026.969.1
Sweden72.367.57280.2
Switzerland66.757.665.483
Thailand39.435.838.846.1
Turkey42.242.627.162.8
UK64.46055.384
U.S.60.658.862.960.4

The Importance of Sustainability

While all three sub-indexes are important to consider when ranking a country’s pension system, sustainability is particularly significant in the modern context. This is because our global population is increasingly skewing older, meaning an influx of people will soon be cashing in their retirement funds. As a consequence, countries need to ensure their pension systems are sustainable over the long-term.

There are several factors that affect a pension system’s sustainability, including a region’s private pension system, the state pension age, and the balance between workers and retirees.

The country with the most sustainable pension system is Denmark. Not only does the country have a strong basic pension plan—it also has a mandatory occupational scheme, which means employers are obligated by law to provide pension plans for their employees.

Adequacy versus Sustainability

Several countries scored high on adequacy but ranked low when it came to sustainability. Here’s a comparison of both measures, and how each country scored:

Ireland took first place for adequacy, but scored relatively low on the sustainability front at 27th place. This can be partly explained by Ireland’s low level of occupational coverage. The country also has a rapidly aging population, which skews the ratio of workers to retirees. By 2050, Ireland’s worker to retiree ratio is estimated to go from 5:1 to 2:1.

Similar to Ireland, Spain ranks high in adequacy but places extremely low in sustainability.

There are several possible explanations for this—while occupational pension schemes exist, they are optional and participation is low. Spain also has a low fertility rate, which means their worker-to-retiree ratio is expected to decrease.

Steps Towards a Better System

All countries have room for improvement—even the highest-ranking ones. Some general recommendations from MMGPI on how to build a better pension system include:

  • Increasing the age of retirement: Helps maintain a more balanced worker-to-retiree ratio.
  • Enforcing mandatory occupational schemes: Makes employers obligated to provide pension plans for their employees.
  • Limiting access to benefits: Prevents people from dipping into their savings preemptively, thus preserving funds until retirement.
  • Establishing strong pension assets to fund future liabilities: Ideally, these assets are more than 100% of a country’s GDP.
  • Pension systems across the globe are under an increasing amount of pressure. It’s time for countries to take a hard look at their pension systems to make sure they’re ready to support their aging population.

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