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The emotional side to customer loyalty

Following on from Starcounts look into ‘The changing landscape of customer loyalty’, we investigate the importance of retailers engaging emotionally with their customers — and how that engagement can change the way retailers develop customer loyalty.

In a recent study from the 2019 Retail TouchPoints Customer Acquisition and Retention Benchmark report, it was revealed that 52 per cent of retailers offer a loyalty scheme, with that figure set to rise by 12 per cent as more retailers look to develop a loyalty programme.

According to the report, a staggering 44 per cent of retailers claim that 40 per cent of their total revenue comes directly from loyalty scheme members. Meanwhile, 60 per cent of retailers that operate a loyalty scheme say that members, on average, spend two to three times more than non-members.

It is clear then, from these findings, that loyalty schemes provide a significant contribution for retailers, however, the average shopper participates in an average of 14.8 memberships and only regularly uses less than half of them.

So, how can businesses ensure their loyalty scheme strikes a real connection with their customers and offers more than just a collection of points?

The answer is to focus on creating an experience and human-to-human connections. This is essential for communicating with an audience and adding value to the shopper’s experience. Therefore it is even more vital that retailers understand their audiences in order to form these connections.

Starcount specialises in helping retailers understand their customers and helping retailers build human-to-human connections with their audiences. Read more about how Starcount can help you understand your customers here.

As a result of having a strong human-to-human connection audiences can be turned into brand advocates. These top customers allow retailers to expand their reach and provide greater insight as to how the brand can be developed and improved.

The Retail TouchPoints Survey identified the impact of engaging with brand advocates and prompting referrals. Customer retention increased by 70 per cent, as did sales and revenue rising by 48 per cent. They also noted a 30 per cent increase in loyalty programme membership.

This all stems from identifying your ideal audience and your business’ most important customer type. Once you know who is shopping at your brand you can focus on building that relationship.

Convenience 

Convenience is a significant factor in developing an emotional relationship and shopping experience. Today’s audience wants their experience with your brand to be as easy as possible no matter which outlet they are visiting, this means ensuring consistency across retail business models is paramount to developing customer loyalty.

Brand visibility 

Another issue that can prevent the building of a strong customer relationship is poor brand visibility. A retailer may have a very attractive loyalty strategy but if your audience is not aware of it or even your products then it serves no purpose to building that relationship. 

Consistency and transparency

Consistency and transparency also play a key role in a strong loyalty strategy, a simple decision to display a customer service contact at the top of a website can have a significant impact on your customer engagement. 

These factors are the cornerstones of a strong customer loyalty strategy, retailers will need to change their focus to developing human-to-human connections in order to deliver a unique and competitive customer experience for their audience.  

This comes back to the importance for retailers to not only know who their customers are but understand who their potential brand advocates are, what their customer’s passions are, what audiences retailers might be overlooking and refocusing their outlook in order to get their message across. 

Starcount has the tools and experience working with retailers to help them discover their audiences and their passions. The Starcount Observatory gives retailers the latest insights into your audience and uncovers why customers are engaging with your brand. The Observatory reveals the motivations behind customer spending patterns and the interests that lie outside of customer shopping habits. Using the vast amount of data at our disposal, Starcount will identify the customers retailers should be building closer relationships with and inform retailers how to use these insights to create customer experiences that will resonate with their audience. 

The retailer-customer loyalty relationship is a challenging one to develop, schemes and cards can do little to affect the relationship if the retailer is not providing the core products or high level of service that customers expect. 

Most importantly, it is the whole retail offer that creates loyalty, not a card or a scheme; getting the right products in the right stores, relevant offers for consumers and exciting new products that matter to your core customer base is essential Clive Humby OBE, Starcount’s Chief Data Scientist.

Loyalty cards and schemes do not create loyalty, they serve as a way to develop that loyalty retailers have built through their products. An emotional connection and deep understanding of your customers will help facilitate and nurture this relationship.

The results that retailers will see from discovering their brand advocates and how best to utilise customer insights will drive business decisions that in turn will see an increase in profits and expanding a retailers customer reach.

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