True Customer Loyalty is the Holy Grail for product and service providers. But as decades of research show, the issue is highly complex. At Veryday, we believe that what makes us loyal is deep emotional and human bondings. And for companies that seek true customer loyalty, understanding how to act like a service-minded human is a great place to start.
We are confident that for brands, the understanding of a customer’s complex emotions is a powerful differentiating factor that builds meaningful relationships. More than 40 years of scientifically mapping and understanding our customers’ future needs, dreams and aspirations (however complex) has made us wiser – and we know that personal relevance is the key to building emotional loyalty. Emotions that influence a customer’s acceptance, liking and attachment to brands, products and services.
A wide range of consumer behavior models has been presented in the customer loyalty area over the years. From today’s research standpoint, loyalty is a broad mix of the following three categories:
A customer’s tendency to repurchase. Easy to measure due to often excellent access to purchase information. However, behavioral loyalty is not necessarily an indicator of “true loyalty” and can be quite misleading. Repeated purchases may simply be the result of a lack of alternatives, time available or motivation to change.
Also sometimes referred to as functional loyalty, a customer’s tendency to weigh the value of a product or service experience to make a calculated, informed decision. This “What’s in it for me now?” attitude often shapes a customer’s rational relationship with a brand.
A psychological preference and affective attachment that is the strongest and at the same time the most difficult to achieve. Emotional loyalty is critical in shaping what we at Veryday call ”true loyalty.”
True loyalty is when a customer enjoys genuine value over time, built across a variety of positive brand experiences and touch points that trigger all three aspects at any given moment. An emotionally loyal customer is willing to stick with a brand even if other meaningful and available alternatives are presented. Focusing purely on rewards, a rational loyal customer only remains loyal as long as a brand provides the best value. As soon as a better deal is presented, they leave. It’s therefore surprising that most loyalty programs focus on various aspects of rational loyalty as opposed to putting their energy into developing emotional attachment. This is quite logic and relates to all kinds of human exchanges, both on a private and a professional level.
Emotional engagement is critical to build true loyalty. It has the largest influence on our purchase behavior and is the single most important thing that makes us customers stick to a brand.
Thomas Nilsson, Director Human Factors & Design Research
We cannot design true loyalty, but we can design personal relevance into our offerings. Personal relevance is key in building emotional loyalty – customer loyalty’s most defining aspect. Our heads tend to follow our hearts. People may change their behavior one time because of incentives, but they need to rationalize their decision in order to continue that changed behaviour. Thus, the role of loyalty’s emotional side is to provide a customer with the rationale as to why they have changed their behavior. And when a customer feels valued, understood and respected as an individual, they tend to remain loyal.
Most consumer loyalty programs focus strongly on the short-term gains of rational loyalty but are weak when it comes to building longer-term emotional attachment – even though emotional loyalty opens the door to rational loyalty. If a customer doesn’t like a brand, they probably won’t value its special offers.
Creating genuine value in people’s lives is key
A fair amount of customer loyalty programs are created in order to collect customer data. And once this data is avaliable, companies target customers with tactical communication. But at Veryday, we believe that collecting customer data is only the first step. It has far greater potential to improve services through tailor-made offerings rather than to merely target customers with communication.
Augmenting the communications approach with a service-oriented one means that a brand is equipped to seize opportunities to give back all the time. Generally, caring services based on a customer’s individual changing needs, what they really want and what’s relevant and meaningful to them builds emotional loyalty far more effectively than the cheap ”rational” gains of repetitive price discounts.
Companies that demonstrate a genuine interest and ability to listen to a customer’s changing needs will score more highly in true customer loyalty than those that may not.