Driving Customer Loyalty: The Transactional vs. The Emotional
by Taryn Collins
In today’s world of retail, consumers demand a certain experience, and brands must deliver. However, those desired experiences can vary drastically from one consumer to the next. There are two buckets that retail customers generally fall into: those driven by the “deal” and those driven by the experience. Those always chasing the deal want the best price as quickly as possible, through whichever channel is most convenient. Those seeking the best experience aren’t necessarily price averse, but they crave a tailored experience.
Marketplaces like Amazon, Overstock, and Ebay are among the best at winning over shoppers who are transactional loyalists. These are shoppers who want access to a sale on their schedule, at the best price, with perks. Sites like these offer low pricing with free shipping, and often additional extras like free returns. The old adage “Content is King” doesn’t fit this consumer, because content hardly plays a part in their purchasing decisions. If there is a better price somewhere else, they’re gone.
However, according to the 2014 Gallup Report State of the American Consumer, customers only shop based on price when there is no emotional connection to a particular brand or retailer — when they are not engaged. They shop based on price when price is the only thing separating competing offerings.
Emotionally loyal shoppers are the ones that we would call “engaged,” and they are a different breed entirely. These shoppers want to feel catered to, and in return for this personalized service they become brand loyal. They get to know the brand, the brand gets to know them, and a sort of relationship is formed.
A brand that fosters emotional loyalty is likely to have a much more devoted customer base, with higher repeat sales and customer retention. While Amazon and Overstock may be popular sites, their customers will abandon those sites for a better deal. Let’s say, for instance, that one day Amazon decides to increase their margins, or drops their free shipping. One simple move like that eliminates their edge and those once loyal shoppers will be gone in an instant.
Enter retail and online giants like Target and Walmart. Their business models and store experiences are relatively similar, but they’ve developed two separate types of shopper loyalty. Target shoppers are emotionally loyal -- they know the Target mascot Bullseye, the brand name, and the brand story. Walmart shoppers are transactionally loyal, dedicated to the best price possible, and the convenience that Walmart stores provide. But the question remains -- what keeps a customer around for the long haul?
As the multi-channel retail world becomes increasingly competitive, brands will need to focus on building that customer connection. According to the Gallup State of the American Consumer report, fully engaged shoppers make 44 percent more visits per year to their preferred retailer than disengaged shoppers. The increase in visits pays off, says Gallup, as these loyal shoppers spend twice as much as other customers. Makes a pretty strong point for creating that brand-to-consumer connection, no?
Retailers that survive on price competitiveness alone will have to incorporate other ways to turn their transactional shoppers into brand advocates, or risk a lifetime of low margins and customer discounting. While a transactionally loyal shopper may never be as as devoted and long-term a customer as their emotionally loyal counterparts, they can be swayed to make a purchase, and if a brand can deliver on what sways them, then they’ll keep that customer coming back.
Showing the transactional loyalist some extra attention might also turn them into emotional loyalists by appealing to their desire for the deal. Maybe you give them a free shipping offer at a time in the sales cycle when that customer regularly abandons their cart, or offer them a limited time coupon code. Or maybe you deliver a product recommendation that fulfills their need at the exact time they need it, based upon what they’re been searching for. This shows the customer that you care enough to provide personalized service, and that you’re paying attention to why they’re visiting your site.
While price or a specific offer may bring them to visit your site initially, you can personalize the service you provide and build an emotional connection. And if you can build an emotional connection, you’ll win almost every time.