The goal of most organisations has been to build their business by consistently exceeding their consumers’ expectations for the brand for decades, whether this was through product quality, service, communication, or other means, and the reason for this was threefold:
- Loyal customers tend to be more valuable – they tend to be your “best” customers
- Loyal customers tend to be brand advocates – they regularly will recommend your brand to others – helping to generate more business
- Loyal customers tend to be more resilient – they stick with your brand through thick and thin.
There isn’t much disagreement regarding these claims, the average “Loyal” customer was 360% more valuable than a customer who only had a “Transactional” relationship with the brand, 233% more valuable than a customer who had a “Functional” relationship with the brand, and 166% more valuable each year than a customer who had some “Emotional” (but not yet loyal) relationship with the brand.
Interesting, don’t you think?
But I’m sure you’re asking:
- What’s the difference between a transactional, functional, emotional and loyal relationship or connections?
- How do you identify these four different types of customers?
The answer to the question “what” is simple in concept:
Transactional Relationship – The customer doesn’t care who they’re doing business with, and your brand/organisation/company is essentially satisfying a quick need.
Functional Relationship — The customer is more concerned with their transaction; yet, their decisions are more clinical, and they place greater emphasis on elements that are normally considered “cost of entry” or “table stakes” in your category. They care about the need that your business is providing, but it isn’t necessarily the most important need to this customer.
Emotional Relationship — This consumer genuinely likes your company and will go out of their way to deal with you on a regular basis because they believe you excel at traits that are clear (non-table stakes) differentiators for your industry; and these things are important to them.
Loyal Relationship / Advocacy — This is the emotional relationship turned up to 11! This consumer not only likes you, but they also promote your company whenever they have the opportunity.
The “how” of identifying these client groups will differ depending on your industry sector and the type(s) of data you have about your consumers, and this can really help your business shape things.
This is usually accomplished by combining survey data with customer-level transactional data and having the analytics in place make informed data-driven decisions. The less transactional data you have at the customer level, the more you’ll have to rely on survey data – yet this by no means marginalises the usefulness of the results.
The Global Priorities Reset:
The bulk of the world was functioning in a somewhat “normal” or predictable manner at the start of 2020, I remember it well. Economic growth seemed solid, with strong demand for products and services, rising wages and production, and low inflation and unemployment. Then came March, when the economy unexpectedly slowed down as decisions were made all over the world in an attempt to halt the spread of the Coronavirus.
As a result of all of this, previously well-understood customer demand and choice frameworks vanished in the blink of an eye, leaving many pre-COVID-19 operational models obsolete. And the most customer-centric businesses began to respond in a spectacular way, adjusting their procedures and operating models on a daily basis in order to meet their customers’ (and employees’) new safety needs.
We have all witnessed a once-in-a-lifetime occurrence that is fundamentally altering societal, cultural, and consumer norms. While many of your organisation’s loyalty drivers are likely to have remained intact, I promise you’ll need to include new ones into your operational model, voice of the customer and loyalty programmes.
Always keep in mind that our businesses and brands exist because our customers value the products and services we deliver. Many of their definitions of value have shifted, and it is up to us to detect and adapt.
It is entirely up to each of us to determine how our customers perceive us today and in the future.
Let’s take advantage of this chance to become closer to our customers. Learn more about their wants and needs, as well as the role(s) our brands can play in their life. Let’s come up with fresh ways to innovate and exceed our clients’ expectations. Let’s start building the next wave of devoted customers and brand evangelists.
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