Brand Loyalty and Big Data Seen in a New Light: The Science behind What Makes Customers Loyal

Mar 12, 2013

Ask David Andreadakis, VP of Loyalty Strategy for Kobie Marketing his thoughts on loyalty and he’ll tell you many in the loyalty marketing space – and elsewhere – have got it wrong. Loyalty isn’t some tit-for-tat reciprocity; it’s about something more exciting and profound. It’s something more genuine that inspires from the consumer lifelong dedication.

Of course, achieving that brand commitment is not easy. Essentially there are two avenues to achieve this: loyalty through economic triggers and loyalty channeled through emotional appeal. Part two of our two-part series examines how marketers are using both tactics skillfully, where improvements can be made and offers a helpful personal anecdote framing the true nature of loyalty that all marketers seek.

Do you agree with this idea that the loyalty space is moving beyond transactional rewards to those that build emotional engagement?
Absolutely. It used to be that loyalty was just points program-based.  Then we took that points-based model and applied it to different fields, tying in ancillary revenue services. But loyalty is more than points for rewards stereotypes. This is how I define loyalty: there’s emotional and behavioral loyalty. Emotional loyalty can only be engendered by three things:

  • Status
  • Reciprocity
  • Habit

This is a psychological condition. It’s the same type of loyalty between companies and one you’d have with a loved one. Brand Loyalty and Big Data, Why Customers show LoyaltyMost of what we see in loyalty is behavioral economics and not emotions. Often, the lowest price wins. So $5 pizza may sound great. But what happens when $4.99 pizza place opens across the street? That’s where price-conscious consumers will go. The smart companies are the ones doing both behavioral and emotional loyalty. Both are meant to keep the customer spending more and engaging with the brand-  to the point that they tell their friends about their positive experience. Sometimes you do that through emotional loyalty, eliciting emotions, and sometimes through economic triggers such as discounts or barriers to leaving a program. Some companies are getting very intelligent about the balance.

How can Big Data be used to drive both economic and emotional/behavioral loyalty initiatives?
We’ve gotten really good at economic drivers. Survey analysis, customer data tracking, etc., allows us to see transactional perspective. What will be the impact of a 5% price drop on sales? We can measure that with great accuracy. If you can identify what you’re doing to create status, reciprocity, habit and trust, Big Data comes into play with efficiencies on being able to do things on a larger scale. Here’s an example: Major League Baseball used to market to specific to localized geographies. Every team is different and every fan is different, or so the logic went. Now, MLB uses Big Data to find similar groupings of people to whom it can tailor marketing treatments. You have so many segments, so many personalities out there but Big Data, used properly, is helping show how to group people’s wants and needs in similar ways. In short: we may look different, but think the same. 

To what extent is loyalty promotion traditionally at the end of the marketing funnel? Is there any truth to that logic?
Not true at all. The things that make me bonded to you would be the same if it were 4,000 years ago. Here’s an example: I was 6 years old. My mother was giving birth to my younger brother and needed medicine around 1 a.m. My father called the local pharmacist who delivered the medication to my mother in the middle of the night, a profoundly loyalty-driving decision on his part. Fifteen years later as a young adult, I filled my first prescription, loyal to that same pharmacy and the pharmacist who helped my mother. It’s an example of true reciprocity.

Reciprocity in loyalty is more than giving like value in return for something else. Reciprocity is a moral obligation that tells a person, “I need to come back to you.” For returning customers we always look at transactions to figure that out. But it’s more than that. Marketing is advertising, it’s relationships, it’s customer experiences, it’s our brand promise. But in reality, how good are loyalty programs at extending brand value? I’d argue not very much. Too often loyalty programs don’t feel, act or smell like the brand at large. Loyalty must be throughout the consumer lifecycle – sometimes 15 years beforehand.

As seen above, the forefront of measuring loyalty isn’t so much economics-based, but emotion-based. So, how can Big Data better capture the emotional mindset of consumers – what’s known as social sentiment? In fact, I encourage you to read this Chicago Magazine article, which examines what people’s smartphone habits say about them and their emotions. Share your comments in the space below and don’t be afraid to spark a heated, emotionally charged debate! The conversation concerning the science behind measuring and acting on emotional loyalty triggers has just begun.