Emotional Customer Engagement Holds Strongest Impact on Customer Loyalty

At Loyalty360, we talk to brands often about the importance of emotional customer engagement and the crucial role that plays in earning long-term customer loyalty.

Emotional customer engagement is the ultimate payoff for loyalty marketers.

A new report from Capgemini’s Digital Transformation Institute titled, “Loyalty Deciphered−How Emotions Drive Genuine Engagement,” reveals that emotions have the strongest impact in driving customer loyalty.

What’s more, the report says that retailers that can foster customer loyalty through higher emotional engagement with consumers can increase annual revenue by five percent. But, contrasting statistics show that 80 percent of executives feel their brand understands the needs and desires of their consumers, while only 15 percent of consumers agree.

Specifically, the report says, honesty and trust have the greatest influence on customer loyalty. Consumers with high emotional engagement still believe rational factors and brand values are important when they decide on which companies they will bestow their loyalty.

Here are some interesting statistics from the report:

82 percent of consumers with high emotional engagement would always buy the brand they are loyal to when making purchasing decisions (compared to 38 percent of consumers with low emotional engagement).

81 percent of emotionally connected consumers will not only promote the brand among their family and friends, but they will also spend more too.

70 percent of consumers with a high emotional engagement spend up to twice as much with those brands.

Emotionally engaged consumers are loyal to the brands they love and willingly act as ambassadors to family and friends. They want brands to be engaged and reciprocate their loyalty in two-way interactions (86 percent), but they also enjoy giving back to a brand (81 percent). Consumers also want differentiated shopping experiences both online (75 percent) and in store (73 percent).

Retailers need to change the way they build relationships with consumers so they are focused on building engagement and mutual trust, rather than being transaction-focused, the report notes.

Here are four key components to drive “human loyalty” that retailers should follow to create strong positive emotions, and therefore deeper engagement and loyalty with their consumers:

Respect: Fulfill your commitment by promoting honesty, trust, and integrity.

Reciprocate: Build a two-way relationship with consumers.

Recognize: Make the effort to truly know your consumers and understand what they care about to create meaningful experiences.

Reward: Provide timely, meaningful rewards that promote long-term relationships in exchange for loyalty.

“Consumers are immune to transaction-based loyalty programs of the past, so a retailer’s engagement with consumers needs to shift from being transactional to more emotional and meaningful,” said Kees Jacobs, Consumer Goods & Retail Lead, Insights & Data Global Practice at Capgemini. “Decoding human emotions will ensure that brands have a better understanding of their consumers leading to building deep-seated engagement and long-term loyalty with them. With a potential revenue boost of five percent up for grabs, and weak emotional connections ready to be exploited by the competition, no retailer can afford to ignore this reality.”

The Capgemini Digital Transformation Institute surveyed 548 executives at director-level or above at large companies with 80 percent of the executives in companies with reported revenue of more than $1 billion in FY 2016. It also surveyed 9,213 consumers aged 18+. Both surveys took place from August to September 2017, and covered nine countries–Brazil, France, Germany, Italy, the Netherlands, Spain, Sweden, the United Kingdom, and the U. S.; and four industries–Financial Services, Retail, Telecom, and Automotive.

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