Today's Capgemini report suggests that less than half of Brits are loyal to brands -- and even in the category where we are most engaged with a service provider, in banking, we're still only just over the 50% mark. It's important because the point of the research is that when people are emotionally connected to brands they are more loyal. The researchers actually put a figure of a 5% uplift in revenue for brands that create an emotional bond.
This increase seems to be attributable to the fact that four in five people will bond emotionally with a brand they believe is honest and trustworthy -- and that can only be good for loyalty.
There is a gap between what brands feel they are doing and what they actually achieve. Four in five brand managers claim to be reaching out and creating emotional bonds with consumers, but only one in seven consumers agree.
The researchers point to the fact that half of loyalty cards remain inactive and a quarter are abandoned while they still have points on them. Clearly, traditional approaches to loyalty are not working, and so Capgemini is making some interesting suggestions about how emotional connections beat points on a card.
This requires retailers to follow the "Four Rs" -- don't you love how research always leads you to advice where all the letters are the same or spell out a word! These "Rs" are respecting customers by dealing with them with trust and integrity and building reciprocal relationships. Retailers also need to recognise what customers like and what makes delightful experiences for them, and then reward them with meaningful rewards.
Doesn't seem like too tall an order, does it? It's probably a good point to reference the A, B, C, D approach to loyalty I was writing about recently for Adobe, which essentially says that brands need to offer adaptive experiences that fit in with customer tastes and that they need to be wherever customers are -- offering choices that are personalised and that help differentiate their offering.
So essentially, none of this is rocket science -- but it does mean rejuvenating the lazy old rewards scheme where people collect points they don't understand things they are unlikely to actually want. Instead, tailored services that are available wherever they are, on whatever device are the way toward building the emotional connection that will engender loyalty that goes beyond a card sitting in a drawer, rather than their wallet.