Moving From Transactional to Emotional Loyalty: How to Give Your Customers an Experience They’ll Love

Feb 14, 2013

A new Forrester Report and CMS Wire critique reiterates a point which Kobie has endorsed  for quite some time in our efforts to educate clients and the loyalty industry. There is compelling evidence suggesting that consumers increasingly expect an enhanced brand experience, one that takes loyalty beyond the points-for-rewards stereotype, delivering on emotional customer experiences as much as any tangible reward. Despite this, brands continue to play catch up.

They’re stuck in what we and Forrester call “loyalty 1.0.”

While generally an objective review of the data at hand and Forrester’s handing of it, the article raises two important questions – questions that require serious thought.

  1. Why isn’t a customer who uses a discount coupon engaged with the brand, since the purchase experience might result in a product or service so terrific that the customer is sold for life?
  2. How is emotional loyalty to a brand different from becoming a brand advocate — and, if it’s the same, why single out loyalty programs for that challenge when other marketing efforts might be needed, such as proactive customer service?

“Dis” loyalty Cards Versus the Need for Customer Experience

The fact that the first question needs to be raised underscores in part, why companies remain at loyalty 1.0. Consumers want to know whether or not they’re being offered “just another discount” (hence, the rewards stereotype) or if they are being provided relevant offers. Relevant and timely offers are the beginning of an emotional brand connection. That’s because there’s recognition on the part of the consumer that crafting that relevant offer required detailed customer knowledge – not something gleaned from email spam.

In other words, the challenge for marketers is answering the following questions:

  • How well do we know our customers?
  • Do we know what offers, customer experience and engagement techniques will drive customer lifetime value and incremental behaviors?
  • What strategy and loyalty tactics make the most sense and, just as important (as this loyalty phase graphic shows) how long will it take our brand to reach next-level loyalty engagement?
  • Finally, do we have the metrics in place to measure these outcomes?

Loyalty, Customer Experience, Emotional LoyaltyEmotional Loyalty Yielding Brand Advocacy

As for the second question above, there are obvious connections between emotional loyalty and becoming a brand advocate.  I would argue it’s best to describe one folding into the next. Emotional loyalty is about the brand connecting with the consumer, making the customer feel good about their purchase and customer experience, creating opportunities for the customer to return and experience “more and better” over time. Customer service is important too, as is social media. In today’s tech-centric world, consumers appreciate genuine engagement via conversation. For instance, soft-selling loyalty could be a hotel manager discovering that one of their frequent guest couples attends annual local wine festivals. Rather than bombarding this couple with two-dimensional email messaging, the hotel instead sends SMS messages, push notifications or Facebook posts related to the festival (and not the rewards) to inspire a stay.

In another concrete example, Burberry’s new London store features a 22ft digital screen, 500 speakers and RFID chips in certain clothes that, when worn in front of the screen, show wearers a virtual catwalk. While less conversation-specific, technology-driven loyalty is also at the heart of the new engagement.

Only after these connections have been established can marketers expect true brand ambassador engagement – a consumer willing to promote a given brand as much out of rewards expectation as they are motivated to support a brand they believe genuinely connects with them.

Regardless, achieving both kinds of loyalty, experience and rewards-driven (because loyalty 1.0 is still very important) requires engagement throughout the customer lifecycle and through all touch points – the central tenet of Kobie’s omnichannel loyalty focus. We defined it as is an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience. The result is personalized messaging that delivers more meaningful and relevant brand interactions and the right rewards for the “right” behaviors along the way. This results in a true impact on customer lifetime value (LTV) – the ultimate loyalty metric.

As has been rightly pointed out, emotionally-driven loyalty 2.0 remains a struggle. But perhaps answering the above questions will help illuminate steps brands can take to get the job done faster.

So tell us what you think. What additional steps can brands take to turn transactional loyalty into emotional loyalty and where else are they falling short?