Customer Loyalty is apparently the buzzword that’s taking centre stage. According to the Financial Times Lexicon, “customer loyalty can be said to have occurred if people choose to use a particular shop or buy one particular product, rather than use other shops or buy products made by other companies. Customers exhibit customer loyalty when they consistently purchase a certain product or brand over an extended period of time.”
Loyal customers tend to be long term buyers who insulates the business from price competition. They cost lesser to serve as they usually are empowered to self-serve. They act as reliable brand advocates and provide honest feedback with a genuine interest in seeing the business of their brand grow. According to an infographic by Invesp, repeat buyers spend 33% more than new ones, and just 20% of existing customers account for 80% of a company’s future profits. It’s no wonder businesses are investing in research in what drives loyalty.
Customer Loyalty can be broadly divided into two – Transactional Loyalty and Emotional Loyalty.
Transactional Loyalty is loyalty that’s based on attributes like availability or affordability. However, if a retailer with consistently lower prices opens up closer to home, chances are loyalties will shift. This is in contrast to Emotional Loyalty which is a customer’s emotional response to an experience with a brand and has a very significant impact on their loyalty to it.An emotionally invested customer tends to be a die- hard brand zealot who can drive more business for the brand. Customers are all looking for more than the product attributes or functionality or even affordability, because they are fast ceasing to be product differentiators. These are basic qualifications for any purchase, and since these are being met by multiple brands, customers look to an emotional connect with the brand. The brand experience that makes them feel engaged and happy.
Even though emotional loyalty does have obvious advantages and is preferred, one cannot totally ignore the other, as most emotionally loyal customers usually start off as transactional loyals. Both types of loyalty requires exceptional customer experience that engages customers throughout the customer journey and across all channels.A customers needs at each stage of his journey would be different, this also differs from customer to customer. A superior customer engagement exercise requires a deep understanding into the customer psyche. Mining rich cross-channel data and gaining insights from this will help brands understand how best to connect with them in the long term.
Businesses who invest in understanding in-depth about their typical consumers stand to gain a lot, right from building a long term relationship to the growing emotional connect and thereby loyalty. Customers’ needs and desires are constantly changing, the pace at which they consume experience is also at break neck speeds. To create a bond that is tried and tested with a customer requires a lot of time, effort and money. The investment is well worth it, and businesses have opportunities that enable them to get to know their consumers through various touch points.
In conclusion, creating a lasting relationship with a consumer requires an intimate knowledge of the customer journey right from expression of interest to post purchase and beyond. Designing the right customer experience which would woo customers into becoming emotionally invested in the brand is the most important activity any business can engage in.