How To Optimise Your Loyalty Program To Win Both Rational And Emotional Loyalty
Discover the differences between rational and emotional loyalty and the ways in which you can succeed in optimising for both types.
What is Rational Loyalty?
Rational loyalty (alternatively: functional, transactional and cognitive) refers to how a customer makes a calculated decision about the value of a product. In this instance, loyalty occurs typically because of a non-emotional reason, for example, a customer is focused on the rewards a loyalty program will provide. A rationally loyal customer makes a calculated decision when starting to form a relationship with a brand. This is the type of loyalty used by a large majority of brands who see it as easier to quantify and reward.
What Is Emotional Loyalty?
In contrast to rational loyalty, emotional loyalty relies on feelings over facts. These feelings could in fact be called irrational. Irrational yes, but also crucial for understanding a customer's behaviour. An emotionally loyal customer will stay loyal to a brand even if there are meaningful alternatives presented to them.
Customers will spend 46% more money at companies that is has emotional bonds and ties to. Emotional loyalty relies on 'gut instinct' with no rational decision being able to convince a customer away from their chosen brand. It is risky to not be able to create an emotional connection with a customer. This is because they can be a lot more fickle when it comes to choosing a cheaper alternative.
What About Behavioural Loyalty?
Behavioural Loyalty is one of the three main types of loyalty. It tracks what customers actually do in terms of purchases but does not provide reasons why they make these decisions. Behavioural loyalty is the holy grail and is what all businesses want. However, it is hard to pin down what will actually make a customer buy something without a rationale behind their decisions.
Our focus is on the other two types of loyalty because they offer the ability to understand customers' rationale in a substantial way.
Why do you need both?
Rational loyalty in terms of sticking to a brand because of its perceived value is all well and good until something better comes along for the customer. Therefore, there is a prevalence in understanding how to create a strong bond with a customer.
If this is true, then why does emotional loyalty not work on its own?
This is because circumstances out of a customer's and company may occur that ensure that emotional loyalty is not enough when money is tight. The Covid-19 pandemic was a true example of where emotional loyalty took a backseat with convenience and affordability becoming much more prevalent.
Do you want to learn more about the convergence of perceived value and consumer values?
How to catch both types of loyalty
Now you know why you need to fight for both rational and emotional loyalty. Find out the ways in which you can utilise your loyalty program to catch both.
1) Reward Differently
You need to be able to reward customer for both transactional and non-transactional behaviours. This will satisfy both the rational and emotional consumer as you are provided a reward but are not just rewarding them for their purchases. This makes a customer feel valued and will strengthen the emotional bond.
2) Surprise and Delight
The ability to surprise and delight can really help to provide a lasting emotional connection with a customer. A personalised 'thank you' reward for your most loyal customers is an example of this. This is where segmentation is important in order to differentiate users. White Label Loyalty’s Audience Engine allows you to identify your best customers by segmenting your user-base in real time. Our Audience Engine, also provides you with the ability to personalise your offers based on the customers' data in order to establish relationships.
3) Personalised Communication
It is very important for you and your customer to have regular and personalised communications on multiple channels. One of the best ways to establish a relationship with a customer is communication. If the service is stellar, a rational customer will see the value.
There is a also the need to support referrals and word of mouth. Referrals can be great for emotional loyalty because a personal recommendation has added weight to a customer. Furthermore, the offering of a reward for the acceptance of a referral can be incredibly important for the rational consumer.
5) Celebrating A Customer
A great way for customers to feel valued is to celebrate them, one way to achieve this is by user-generated content such as a competition. As well as creating an emotional bond, a competition with a possibility of a reward will help inspire a rationally loyal customer.
Want to find out more about creating your own loyalty program?
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Jack was our Marketing Assistant. He helped with content creation including writing the blog posts you love to read!