When market dynamics shift, brands face a domino effect. Market changes force technology to adapt, and technology changes force loyalty strategies to adapt. At the receiving end of this chain is the customer, who may have lost, changed, or gained emotional loyalty along the way. That’s why in today’s evolving market, emotional loyalty matters now more than ever.
Before we dive into why emotional loyalty matters, meet Jonathan Haidt. Haidt is a psychologist who uses the analogy of an elephant and a rider to explain why companies and brands need to pay attention to the emotional side of their customers.
The rider is the rational side of our brains – collecting data, weighing the options, and making the decisions.
The elephant is the emotional side – reacting to instincts, purely subjective.
To many, it seems the rational side controls the emotional side, but that is not often the case, particularly when rational and emotional come into conflict with one another. You can extend this further into loyalty programs. When rational loyalty comes into conflict with emotional loyalty, emotional loyalty wins, which is precisely why marketers need to drive emotional loyalty with their customers.
We know that emotionally loyal customers are 3x more valuable* than customers who are just satisfied with your products and services. We know they tend to stick around 1.5x longer* on average. They are also “net promoters” of the companies they are emotionally loyal to, meaning they are likely to rank your company a 10 and fuel growth through word of mouth.
So why does this matter now more than ever?
From shifts in purchasing patterns due to financial stressors to shifts in brand interactions due to technology, consumer behavior has changed forever. Consumers have found new ways to buy and experience their favorite brands, and we’re seeing customers with high emotional loyalty to a brand value those new forms of engagement and crave high-touch experiences.
When Technology Enters the Equation
While we’ve become more comfortable with technology and interacting through our devices, brands have gained the ability to understand their customers better than before. Advances in technology provide brands with immense data, much like the rider side of the brain, giving them the ability to analyze and anticipate buyer activity based on digital interactions. These data captures can yield insights to better understand customers’ transactional, emotional and behavioral motivators, as we see with Kobie’s Triple Play Data approach. With an increase in digital brand engagement, we can gather and interpret the data that gives us a deeper understanding of the customers who are most emotionally loyal to your brand.
The Bank + the “elephant” + the “rider”
Brands are also now using an emotional value proposition (EVP) in their loyalty strategies and programs. The EVP looks at product and brand positioning in a way that strikes an emotional chord in members or customers. Having worked closely with financial services clients at Kobie, it is easy to say this vertical has mostly played into the rational value proposition (the rider) — yet they are quickly realizing the power of tapping into the emotional side, (i.e., your inner elephant.)
For instance, Bank of the West offers a checking account with a corresponding debit card that gives 1% back of its net revenue from transactions that account holders make to environmental causes. Then we see Bella, a FinTech company working to allow customers to pay it forward both socially and to the community. They issue money that can be used for good deeds, and they can track those transactions in an individual’s karma score and recognize those individuals for socially conscious, community-oriented behavior.
Now if banks can work on being more emotional, how can you?
Well, that comes down to understanding the components of emotional loyalty. Studies at Kobie show the three components of emotional loyalty are: habit, status, and reciprocity. Those driven by habit find comfort in the familiarity and convenience of knowing what to expect, while those driven by status want to feel more valued than other customers. Then we have the reciprocity–driven, who crave a relationship with the brand and feel grateful for the loyalty experiences they have.
To dig deeper into how emotional loyalty has changed over the last 2 years, Kobie analyzed 12 different studies from the last 3 years that surveyed over 22,000 loyalty program members and found some noticeable shifts, including:
- Brands working to be digital, deliver experiences, and offer more of an omnichannel experience are driving reciprocity.
- There has been an increase in loyalty members who have a combination of emotional loyalty drivers. Brands must work to understand the prevalence of these combinations so that they can deliver the most relevant value and optimal experience.
- Habit-driven customers crave predictability and tend to avoid choice. Hence with the rollout of new technology, recognize that these members may need a bit more help when embracing change and figuring out new ways to engage with your brand.
Given these shifts, Kobie’s Emotional Loyalty Scoring® helps brands identify what emotional driver combinations exist in their customer base and determines how to optimize loyalty programs to best fit the changing needs of those customers.
Because at the end of the day, if you are not aligning with loyal customers, then what are you aligning to?
Contact us to learn more!
Source: *Motista Nov. 2018 Research, Harvard Business Review