What is Emotional Loyalty and Why is it Important?
October 26, 2020
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Answering the question, “what is emotional loyalty and why is it important” is often a lightbulb moment for marketers, and a pivotal moment for businesses in general.
When considering customer retention and brand loyalty, it’s natural for marketers to think in terms of transactions. In reality, times have changed, and the key to offering customers a meaningful experience with your brand lies with all the other touchpoints: social media interactions, online shopping, push notifications and, of course, the in-store experience.
To define what emotional loyalty is and why it is important, let’s first start with what it isn’t.
For instance, flooding your customers’ email inboxes with daily promotions, is not emotional loyalty. Nor is a “Buy 9, Get Your 10th Free” offer, or a dramatic end-of-season sale.
While these approaches might inspire some level of customer retention, they are not fostering an emotional connection between the customer and the brand.
Customer loyalty can be divided into three categories: behavioural loyalty vs. rational loyalty vs. emotional loyalty
Behavioural loyalty is when a customer visits the same cafe on his or her way to work every morning, because this cafe happens to sit right in-between their house and their place of work.
This customer might find the coffee delicious, and thoroughly enjoy their daily conversations with the staff each morning.
But if the customer moves house or finds a new job and suddenly has to make an inconvenient detour to continue visiting this cafe, the relationship is over.
Rational loyalty occurs when a customer continuously shops with your brand because you offer the cheapest prices, or better quality products, or an attractive rewards program. Again, this brand-customer relationship relies solely on the business’s ability to “out-value its competitors”.
Clearly, not every business is capable of pulling this off, when you consider that 50% of US consumers have ditched a brand for one of its competitors that was better able to meet their needs (InMoment 2018 US Retail CX Trends Report).
This is where emotional loyalty stands out from rational or behavioural loyalty.
Customers develop emotional loyalty for a business when it earns their trust, delivers personalised service and ultimately provides a tailored shopping experience that is unique to that customer.
Not only does this keep customers coming back time and time again, but it also encourages them to spend more per transaction, and become ambassadors for your brand. More on that in a moment…The point is, while behavioural loyalty and rational loyalty are easy to attain, they are just as easily lost – thus, they don’t represent true brand loyalty. When it comes to customer retention, businesses can really only depend on their emotionally loyal customers. So, why is emotional loyalty important?
1. Emotionally loyal customers spend more
Good customer retention strategies will ensure that customers continue to make repeat transactions, but emotional loyalty is what motivates customers to spend more per transaction (67% more, according to Bain & Company).
The ultimate trifecta is:
FOV (frequency of visit)
ATV (average transaction value)
CLV (customer lifetime value)
Emotionally loyal customers promise an upwards tick in all three of these categories.
2. Emotionally loyal customers promote your brand for you
Think about your favourite brands to shop with, and why you love them.
Maybe it’s the staff at the local cafe or restaurant down the road, who know your preferred side off-by-heart and upgrade your drink size at no extra charge. Or perhaps it’s your shiny new smartphone, which recognises when you are driving home and tells you the quickest route without even needing to be prompted.
These are things that most of us can’t wait to tell our friends, family and colleagues about.From generous discounts and VIP perks, to experiential rewards and personalised service, people love to receive special treatment, and they will happily become ambassadors for your brand.
3. Emotionally loyal customers will stick by you through thick and thin
This point is more important now than ever before. In difficult or trying times, businesses can depend on their emotionally loyal customers to help them through – and vice-versa.
As the way in which customers interact with businesses has rapidly evolved and adapted in 2020, numerous studies indicate that the average consumer places far more importance on supporting local businesses.
In a broader sense, emotionally loyal customers are generally more willing to provide feedback on new products, promotions, marketing campaigns and other aspects of the business’s operations. By asking your most loyal customers for honest feedback, you can make well-informed adjustments to your business model for the better.
The key word is “motivation”
When looking for ways to activate emotional loyalty among your existing customer base, you first need to determine what your customers’ motivations are for shopping with your brand (and they aren’t all the same).
Some might appreciate your CSR initiatives, such as selling ethically-sourced products in sustainable packaging, giving back to the community, and so on. Others might enjoy the convenience of same-day shipping, or the incremental discounts.By determining these separate motivations and catering for them, you can tailor each customer’s experience in a way that exceeds their expectations.
A well-structured digital rewards platform will take care of this entire process for you, and communicate with your customers via an innovative digital loyalty app.
In addition to the standard “Buy X, Get Y” rewards structure, which might be the customer’s initial motivation for downloading the app and subscribing to your loyalty program, a digital loyalty app will:
Identify your customers’ individual needs and preferences
Send personalised communications that cater for these needs and preferences
Provide each customer with a unique, VIP experience that strengthens emotional loyalty
From surprise and delight mechanisms to experiential perks like skip-the-queue or free shipping, as well as Birthday Rewards and Scratch & Win gamification functions, a digital loyalty app equips your business with the tools to rapidly expand your emotionally loyal customer base.
The goal is not to keep your customers coming back again and again and again… it’s to strengthen their emotional connection to your brand.
Based on the findings of a 2019 Global Emotional Loyalty Study conducted by Aimia and Brand Keys, most loyalty programs are currently failing to emotionally connect with customers in a way that actually secures retention.
This is because, even with all the customer data and loyalty technology that a well-designed rewards program provides; most businesses are still focusing on repeat transactions, rather than the brand-customer relationship itself.
By building your loyalty marketing plan around your customers’ motivations, and pairing it with an innovative rewards platform, your business can efficiently achieve emotional loyalty.