True customer loyalty is built on emotional connections – the things that keep customers coming back despite price, competition or even convenience.
“There is a big difference between a repeat customer and a loyal customer,” says André Grandt, CX and digital transformation lead for Saudi Arabia and the Gulf, Roche.
“A loyal customer will have an emotional connection to the company or brand. There are many ways to form an emotional connection with customers. They might return for superior or individualized service, or the rapport they have with a particular employee. Then, for example, during times of hyperinflation, prices can adjust as the company needs and the customer will remain loyal because they have the emotional connection,” Grandt adds.
Our research report, The Global State of CX 2023 found that 35 percent of respondents agree that customers are more willing to switch brands if unsatisfied, while a further 30 percent strongly agreed. In 2024, the same survey found 56 percent of respondents strongly agreed that customers will switch brands when unsatisfied. Customer loyalty has always been fickle, but the data show this could be accelerating. In response, CX practitioners and leaders are trying to do more to ensure their customers are satisfied and want to return.
Sales, marketing and product can get you so far in this endeavour, but to form the emotional connection that underpins true loyalty, brands need to dig deep to learn what their customers care about and how they can authentically align with their principles.
CONTENTS:
- The state of customer loyalty
- Back social causes and charities
- Become an ally
- Take genuine action on the environment
- Create a community
- Conclusion: Deeper connections boost customer loyalty
The state of customer loyalty
To explain why it is necessary to form an emotional connection with customers, here are some key stats on loyalty from The Global State of CX 2023.
- 35 percent of respondents selected customer loyalty and retention as the number one investment priority for 2023.
- Stronger loyalty can reduce business overheads, as well as customer acquisition costs, for example by reducing complaints or contact queries.
- 35 percent of all respondents said they agree customers are more willing to switch brands if unsatisfied and a further 30 percent strongly agreed with this statement.
- Emotional connections will keep customers coming back, even during times of hyperinflation.
- Emotional connections are not just for real world services and physical products, they can even be formed by digital-only and digital-native brands.
Comparing these results to 2024 demonstrates how much harder it is to progress a buyer from repeat customer to retained customer and eventually, loyal advocate.
Our 2024 Global State of CX research found:
- Although the top CX trends were dominated by AI and technology, loyalty still made the top 10, and was one of only two trends on the list not directly related to technology.
- Among our 282 practitioner respondents, only 28 percent of respondents were using a points-based loyalty program to engage and retain customers.
- There is much commentary on how technology can build loyalty with customers. Among the 97 percent of Global State respondents who use data analytics tools, 78 percent said their application has enhanced loyalty. Fewer than 30 percent of respondents use metaverse technologies, but among them 10 percent have seen customer loyalty benefits as a result. Meanwhile, when it comes to generative AI, 57 percent currently use the technology and 28 percent have noted a positive impact on customer loyalty.
Back social causes and charities
As outlined above, brands need to dig deep to learn what their customers care about and how they can authentically align with their principles. Knowing how is where the challenges occur.
In Shep Hyken’s annual study Achieving Customer Amazement 2022, 45 percent of 1,000 consumer respondents said they believe it is important for a company to support a social cause that is also important to their customers.
A cause can resonate with customers in new ways – it could even inspire them to look beyond price, Hyken says.
“Customers who buy from brands that support causes – brands that are ‘ethical’ – these customers overlook the potential lapses in service because the company is trying to do good in a world where the customer has the same philosophy,” Hyken explains.
Charity in action: TOMS and Sephora
Shoe manufacturer TOMS is “in business to improve lives”. The brand invests one-third of its profits in grassroots organizations, whether that’s giving cash to the causes that need it or working in partnership with communities. Contributing to grassroots groups means the support can be tailored to specific needs.
As well as ongoing support for grassroots good, TOMS has been in partnership with the charity Save the Children since 2011. For every pair of TOMS sold, the company donates one pair of shoes to a child in need and supports employees to get involved in Save the Children events.
TOMS advertises six key commitments to helping the environment for example by working to increase the company’s B Corp score (measuring its social and environmental performance), making its packaging as sustainable as possible (it currently uses a minimum of 80 percent recycled materials), and sourcing 100 percent sustainable cotton by 2025.
Over at Sephora, Beauty Insider loyalty program members have the option to transform their points into donations to major charities and causes. Sephora’s Charity Rewards allows donations of 500-1,500 points – the equivalent of US$10-$30 – to its featured charity. Since the donation concept was introduced Sephora’s featured charities have included NAACP (the National Association for the Advancement of Colored People); The Trevor Project, which is the world’s largest suicide prevention and crisis intervention organization for LGBTQ youth; and Project Glimmer, which aims to “inspire every girl to envision and realize an empowered future”.
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Become an ally
As many as 20 million US adults identify as LGBTQ+ equivalent to eight percent of the US’ adult population and the stats show that LGBTQ+ allyship drives brand loyalty and sales across this massive group, but particularly among Gen Z.
Insight from the Branding Strategy Insider says 63 percent of those that qualify as Gen Z “care deeply” about LGBTQ+ issues.
David O’Laughlin, co-chair of OPEN Pride, says the 67 million Gen Zs recorded in the US census are “not as likely to reward companies for getting it right, but they are more likely to punish them for getting it wrong.”
A survey by DISQO and Do The WeRQ found that among the people identifying as LGBTQ+ more than a quarter believe brands have been “essential” to their progress in society, but LGBTQ+ issues are only one of many areas consumers are invested in.
DISQO and Do the WeRQ quizzed 9,000 people on this topic and found 72 percent of Gen Z respondents said they would also consider a brand’s political leanings before making a purchase, while 58 percent of the same age bracket said they have not bought from a company because they disagreed with their political stance.
This kind of obvious social awareness can translate into real earnings, as Michael Stausholm, founder of renewable pencil company Sprout, told CX Network: “Consumers want to purchase products from companies that make a difference.”
According to the researchers, 52 percent of people under the age of 44 believe brands should be involved in socio-political issues “without qualification”. To resonate, companies must reflect their customers’ priorities and 85 percent of the DISQO respondents said they considered a brand’s political activities when purchasing.
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Take genuine action on the environment
According to The Global State of CX 2023 customers are becoming more conscious of sustainability. When we asked our network members to name their top three most influencial customer behaviors at present, 50 percent of respondents said they had noted an increase in customer demand for sustainability and ethical working conditions.
“Covid-19 has produced irreparable losses, and emphasized the extent of our interdependence with the natural world,” says Marcelo Behar, the VP of sustainability and group affairs for Natura & Co.
“Consumers are becoming increasingly knowledgeable about nature preservation and sustainable production cycles, and this trend in the report shows no signs of slowing. The adoption of sustainable practices in business is not just about improving sustainability credentials, it makes business sense. Whilst there may be a cost to mitigating against these risks, this cost is far less than the cost of not acting,” Behar added.
A WeForum study published in early 2022 found that three quarters of Generation Z respondents prefer to base buying decisions on sustainability of the product, rather than prestige of the brand. Furthermore, Gen Z spending on sustainable brands and products has increased 24 percent since 2019 and their views are now influencing other generations, too.
“Sustainability is no longer just nice to have, but definitely a need to have,” says Michael Stausholm, the founder of Sprout, which developed the world’s first plantable pencil. “Consumers want to purchase products from companies that make a difference.”
Environmental heroes: Patagonia and Fairphone
Over at outdoor clothing brand Patagonia, founder and owner Yvon Chouinard signed over 98 percent of the company’s stock to a newly created charitable trust explicitly created to fight climate change (note – the remaining 2 percent is going to the Patagonia Purpose Trust).
Patagonia was founded in 1973 to sell outdoor clothing, and as far back as the 1980s was starting to explore sustainable materials and production methods – it now supports the upcycling of disused fishing nets into hat brims and clothing materials.
The brand famously took out an advert on Black Friday 2011 headed ‘don’t buy this jacket’ and urging consumers to speak out against overconsumption.
Transparency throughout its supply chains is another important objective, and Patagonia’s Supply Chain Environmental Responsibility Program measures and decreases the environmental impact of manufacturing the brand’s products.
Over in Holland, the world's first fair-trade smartphone continues to make waves. Launched in 2013, Fairphone avoids the conflict minerals typically used in smartphone manufacture and instead uses ethical methods to source materials like tin, tantalum, and tungsten.
Meanwhile, handmade cosmetics brand Lush has the Lush Ethical Charter which covers everything from fair employee wages to fair business dealings with suppliers. The Charter states that all Lush licensed territories should campaign at least once a year on one of the brand’s core values - animal rights, human rights and environmental protection. In the UK this has seen MPs lobbied on hunting laws and proceeds from certain products donated to anti-hunting organizations.
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Create a community
Communities are one of the strongest ways by which a brand can connect with its customers, but customers flock to communities because they want to connect with other customers.
There are many examples of this in action, but the principle is simple: the brand community brings a new dimension to the customer experience and is a key driver of loyalty. Based on dialogue, rather than broadcast, community members bond over a shared fandom for a product or service and the lifestyle it promotes. Add to this the word-of-mouth benefits of bringing a brand’s biggest evangelists together, and it is little wonder why community has become key to loyalty and experience.
Taking community to the next level: H.O.G. and Nike Run Club
Launched in 1983, the Harley Owners Group (or H.O.G. for short,) is largely credited with pulling American motorcycle manufacturer Harley Davidson back from the brink. Today, the Harley Owners Group has more than one million members and 1,400 chapters across the world.
In a 2007 interview, Geneva chapter director, Guy de Smet, said the appeal is rooted in “the legacy that comes with it; the tradition and the history since the company started in 1903.”
It is this passion for bike riding that draws members together and it is the organized events that keep H.O.G. members riding back.
Each chapter offers meet ups and socials, chances to bond over a shared love and ride across beautiful landscapes all for the equivalent of around £55 a year. The official H.O.G. site lists rallies across the globe, a chance to “easily choose an event that suits your schedule or your appetite for adventure.”
This social aspect of membership is a central benefit, but members also have access to merchandise and informational magazines.
Over at sports brand Nike, the Nike Run Club debuted as an app in 2010 to encourage people to start their independent running journeys. While the premium version of the app costs $14.95 a month, it is free for anyone else starting out.
Marathon pacer Pooja Shah, referenced the Nike Run Club app when discussing her own running journey. As she pointed out in an interview with Sportskeeda “sports brands are doing their bit to push the running culture.”
The most effective way the Run Club does this is by keeping track of each customer’s running stats on the app, marking their progress. Coaches and trainers are also offered as voice overs, reviews on the webpage highlight this aspect of the app. But the true highlight of the Nike Run Club is how it offers every member access to a community through its advanced social apparatus. The GetGymFit review of the Nike Run Club app highlighted this as a way “to set challenges and keep you accountable.”
Conclusion: Deeper connections boost customer loyalty
The approaches outlined in this guide can secure deeper connections with customers while supporting wider business targets around everything from ESG to sales. This technique is not exclusive to physical products or services – the same principles can even be applied to digital products and experiences.
Regardless of whether a product is digital or physical, most businesses have a digital presence and Ian Langridge, product and customer experience lead for Amazon Games, says the emotional connections that underpin loyalty can also be formed by disregarding the limitations of a physical product and instead focusing on the digital experience.
He says: “Digital is always there, always on, always accessible. You have to think about the product in that context – if it is always there, always on, always accessible, what does it mean to your customers? As a customer buys your product they are in a relationship with your company. You have to pay off on that relationship and online is a great way to do that. It is manageable and it is where your customers are.”
Heightened competition, new digital touchpoints, a wave of new loyalty programs and more demanding customers mean that in 2023, loyalty is harder to win than ever before - but it is far from impossible.
Quick links
- Everything you need to know about customer loyalty: A CX Network Guide
- Customer experience in the metaverse: A CX Network Guide
- What is customer journey mapping?