Building emotional loyalty: why and how?
It is a given that companies seek to build loyalty with their customers at all costs. But why and how? Maintaining a high customer retention rate equates to recurring revenues and lower acquisition costs. But there’s more. Beyond more traditional approaches like reward programs, businesses can explore different facets of loyalty. One of those facets is emotional loyalty.
Emotional loyalty refers to an individual’s emotional commitment to a brand. This loyalty expresses the person’s trust and pleasure in doing business with the brand, but also their willingness to recommend it to friends and family. In short, it provides the basis of a strong relationship between individuals and brands.
Banking on the right emotions
Instead of being perceived as the opposite of transactional loyalty (rewarding purchases), emotional loyalty should be seen as complementary. By combining transactional rewards like points with experiential rewards, businesses actually develop a much stronger and more engaged relationship with their customers.
In fact, according to a report by Capgemini, 70% of emotionally engaged consumers spend up to twice or more on brands they trust.
According to the same study, emotions such as honesty, trust, belonging and joy have a significant impact on loyalty. Investing in these emotions is thus all the more important when the time comes to develop experiential rewards.
At this point it becomes important to understand which rewards are the most attractive to your customers. The experiential rewards you offer should reach your best customers as well as those with the greatest potential to become so.
Offering experiential rewards
Yes, customers want discounts and rebates, but they also want to feel valued by a brand and benefit from privileged treatments. Rewards like birthday gifts or VIP access to exclusive online and in-store events always hit the mark. This type of reward is closely linked to pleasure and contributes to the feeling of loyalty.
But beyond points and rewards, companies can go even further in their approach and offer experiences that are as distinctive as their brand:
- Exclusive content: promote your brand in a more personalized way by offering “Behind the scenes” content, training sessions on top products and services, as well as product launches and limited editions.
- Contribution to product development: test and collect customer feedback on products in development stages, ask customers for suggestions on services or products they would like to have, etc.
- Social engagement: invite customers to take part in the company’s social engagement (donations, charity events, volunteering, etc.). This fuels the feeling of belonging, which has a significant impact on retention.
- Priority service: offer a dedicated customer service line, private concierge service or value-added service free of charge. Think about what can make the customer’s life easier and their experience at all points of contact more fluid and pleasant.
- Discussion group and community: Connect with your customers to share knowledge and passion.
A successful example of community building is Sephora Beauty Insiders program. It provides an exclusive platform for members to get inspired, ask questions and benefit from unsponsored recommendations. This type of platform is a golden opportunity for the business to build connections and stimulate discussions between its customers, while providing a social experience that stands out from the crowd. It also helps to build trust in the brand, a feeling that significantly impacts loyalty.
Nurturing long-term loyalty
How can you broaden your transactional loyalty program in a bid to generate long-lasting customer loyalty? By focusing on the emotions that help build loyalty, such as honesty, trust, joy and belonging, and by providing experiential rewards that tap into said emotions.
Emitional loyalty improves brand awareness, reduces customer disengagement rate and grows its market share. Loyal customers are more likely to do business more often with a brand they trust, and therefore spend more and recommend the brand.
Interested in learning more about emotional loyalty? Contact us today! We offer strategic and operational support for companies wishing to set up or improve loyalty programs.