Exploring the Value of Emotion-Driven Engagement the Dynamics of Customer Loyalty May 2019 Contents

Exploring the value of emotion-driven engagement The dynamics of customer loyalty May 2019 Contents

Background & overview 03

KEY FINDING 1 Emotional connections drive brand loyalty. 04

KEY FINDING 2 The path to a meaningful, sustained connection is a two-way street. 06

KEY FINDING 3 Know the line between responsive and invasive. 08

KEY FINDING 4 A consistent, reliable voice matters. 10

Conclusion 12

Executive summary Leading the OpCX revolution. 14

Research background: Methodology 15

2 Background & overview

Consumers are complex, with strong posts and meta-analysis of results from deepen, and—in some cases—challenge emotions and expectations. That complexity 2,090 completed Voice of Customer surveys conventional wisdom about the role of is shaping relationships with brands and collected by Deloitte in service-focused emotions in the relationship between service providers like never before. It is industries. These cohorts are collectively brands and consumers. Four key themes broadly believed that emotions are the basis referred to as “consumers” or, simply, emerged across the research data: for 80 percent of the decisions a person as “people” in this report. Except where makes in a day;1 yet—beyond marketing— otherwise noted, all statistics mentioned 1. Emotional factors inspire brand very few organizations sufficiently and in this white paper derive from the results loyalty, while rational influences play intentionally act upon how and when of this Deloitte study. The research was a key role at the beginning and end of emotions impact customers’ connection and designed to test the following hypothesis: relationships. loyalty to a brand. The ability to leverage 2. Emotional connection requires emotionally intelligent platforms to Beyond marketing, emotional developing two-way relationships recognize and use emotional data between brands and customers that at scale is one of the biggest, most and contextual data can foster mirror human relationships. important opportunities for companies deeper emotional connections 3. Knowing what data is OK to use going forward. across all key moments with (and when) is vital to building and maintaining trust with customers. To illuminate the scope of that opportunity, customers to increase their 4. Customers expect a consistent, Deloitte conducted a research study that lifetime value while also contextually appropriate experience examined the role that emotions play in decreasing their likelihood of of brands across all interactions. consumer engagement. The 2019 study integrated data from a survey of 800 switching brands. In this white paper we explore the data that consumers and an online panel of 112 supports these findings, and consider their participants, plus analysis of 91 million social The research yielded insights that expand, implications across the enterprise.

3 4 KEY FINDING 1 Emotional connections drive brand loyalty.

As with any relationship, the connection rudely spoken to by an employee or unfairly are important, they are more of a base between a consumer and a brand treated in a dispute, for leaving a brand. need that’s satiated at the outset of the evolves over time based on a mix of brand relationship. Certainly purpose- factors. Emotional responses, rational 60% of long-term customers driven values are helpful for marketing considerations, and shared values all come use emotional language to and developing brand awareness and into play at some point in the evolution of positioning; but shared values, on their that relationship, often overlapping and describe their connection to own, are typically not what create loyal intermingling. (Figure 1) While individual favored brands. customers or brand promoters. Only 3 consumers (and brands) vary in infinite ways, percent of people would recommend a the overarching cycle of how a consumer Factors that drive emotional responses, product or brand to others based on the chooses to enter a relationship with a brand however, are key to almost everything company’s values or corporate responsibility and how that relationship deepens (or how that lies between the beginning and end principles—whereas 44 percent would make it ends) is remarkably consistent across of a consumer’s relationship with a brand. a recommendation based on emotional industries and consumer types. Emotions inspire and frame the depth of criteria. brand loyalty as well as advocacy. As the When consumers first engage with duration of a consumer’s relationship and Clearly, there is real business value in brands, it is rational considerations exposure to a brand increases, emotional establishing emotional connections that dominate—think price, promotions, attachment takes over and rational needs with customers. Doing so at scale, or loyalty programs. These influences can become less pertinent. Sixty percent of however, presents complex challenges and also trigger the end of a brand relationship, brand-loyal consumers use the same type numerous pitfalls. Success largely depends if a brand fails to deliver on the emotional of emotional language they’d use for family, on your ability to gather, understand, and connection and promise it has built. Nearly friends, and pets when speaking of their use emotional data—at the right time, 70 percent of people who leave while using favorite brands—words like love, happy, and in the right ways—to create contextually or receiving service on a product leave for adore. appropriate interactions. rational reasons such as high prices, faulty products or wrong orders. Only 18 percent While shared values like being cited emotional reasons, such as feeling environmentally friendly or socially focused

Figure 1: The elements of connection between consumers and brands

Emotional responses Rational considerations Shared values

• Anger • Age / heritage • Animal welfare • Belonging • Customer service • Charitable mindset • Compassion • Loyalty reward points • Environmentally friendly • Disillusion • Price competitiveness • Ethical • Gratitude • Product quality • Fair business practices • Happiness • Promotions / offers • Gender & LGBTQ • Honesty • Recommendations by trusted equality • Integrity source • Political alignment • Joy • Same-day delivery • Religious affiliation • Sadness • Simple, clean, easy-to-use • Socially responsible • Security interface in mobile • Surprise app / website • Trust

5 KEY FINDING 2 The path to a meaningful, sustained connection is a two-way street.

We live in the age of the empowered Customers want to know not only that purchase history, while 57 percent expect consumer. Customers can learn anything brands are listening to them, but also brands to know their service history—and they want about a company’s products that brands are adapting offerings and to be able to call upon that knowledge to and services, as well as their competitors. communications based on what the contextualize and personalize interactions. Social platforms afford everyone the ability customer is saying. Nearly half of consumers to participate in—and even drive—public say they love it when companies bring By mirroring the qualities of positive discourse around products, brands, people, up their last interaction, while two out of human relationships, brands can and politics. Across digital and in-person three expect companies to integrate their cultivate the kinds of connections that interactions with brands—in store, on the feedback into future product and service will convert customers into loyalists. phone, via email and beyond—consumers design, and to provide special offers based Achieving that at scale will likely require expect unprecedented levels of care, on loyalty. a new approach to data, technologies, responsiveness, contextual awareness, processes, and governance—an approach personalization, and helpfulness. Like friendships, customer relationships that infuses empathy, responsiveness, often take time to develop. Among people and context into every interaction. It also They expect, in short, to be treated by who consider themselves brand-loyal, 76 means knowing what’s appropriate to collect brands like they are treated by friends. percent say they’ve used the brand for more and act upon, and at what moments. It than four years. means building an emotionally intelligent In this paradigm, brands must learn to enterprise. listen and engage appropriately with both In order to accelerate the conversion potential and existing customers. Seventy of newer consumers into emotionally percent of consumers say that a brand connected loyalists, brands must increase relationship includes providing feedback— the quality of each experience by making and most expect that feedback to drive it feel more human. Doing so will require brands to responsive action. not only understanding customer data and applying the right technologies to 62% of consumers feel drive deeper connection, but also breaking down silos that fragment the customer they have a relationship experience. Seventy-five percent of with a brand. customers expect brands to know their

6 7 8 KEY FINDING 3 Know the line between responsive and invasive.

At the same time that consumers expect Where they draw the line is with what three out of four expect to be contacted brands to listen and respond to their needs, they consider “sneaky” surveillance and within five days after completing a survey they also have strong feelings about the monitoring. (Figure 2) For example, 35 with a complaint. types of information brands should know percent do not want their favorite brand about them and how that information to know their browsing history for similar All of this goes to show that consumers should be used. Trust is the most identified products or services, in order to serve know that brands know. What’s emotional metric that consumers say relevant ads or to provide chatbot help. important is that brands are thoughtful influences their connection to a favorite Consumers also are sensitive about the and respectful about how they use the brand. Unfortunately, trust can be broken ways that brands respond to what they knowledge they’ve collected. In that more easily than it can be established. say online. While 59 percent don’t want sense, it is too narrow to think of data risks the company to respond when they post through legal, ethical, and reputational It’s not that consumers are naïve about the positively about a brand on social media, 54 silos alone. The ways companies use data information that brands collect about them. percent do expect a response within three should also be considered through the lens To the contrary, they recognize and expect days or less following a negative post. of customer trust. Again, by proactively that brands amass a great deal of data using technology and data in the right way about their preferences and history. When it comes to direct engagement at the right time, a brand can build intuitive with brands, consumers are considerably and empathetic “human” experiences Trustworthiness (83%), more permissive regarding the data that is that deepen customer relationships and collected and used. For example, 75 percent strengthen loyalty. integrity (79%), and honesty expect their favorite brand to know why (77%) are the emotional they purchased the product, and 52 percent factors that consumers feel expect the brand to know how satisfied they are with the product. A majority expect most align with their favorite brands to respond within 24 hours when brands. contacted through a “contact us” page, and

Customers understand that brands collect a wide array of data about them. Where they draw the line is generally with the collection of data that isn’t intentionally shared with the brand.

Customers are generally comfortable But they don’t like it when with companies tracking: companies collect:

Why they purchased How satisﬁed they The customer’s browsing the product are with the product history for similar products 75% expect 52% expect 35% don’t want brands to know brands to know brands to know

Their customer service How long they’ve Preferences unique to the history been a customer individual customer 57% expect 49% expect 30% don’t want brands to know brands to know brands to know

9 KEY FINDING 4 A consistent, reliable voice matters.

Trust in friendships is built, in large part, Brand experiences that don’t deliver out of three people believe that if companies on knowing what to expect from a person. consistency erode the emotional connection knew how satisfied or unsatisfied they are, The same is true when people connect with that lies at the heart of loyalty. Of people it would improve the customer service they brands. Customers expect a consistent, who abandoned a brand 43 percent did so receive; and 75 percent of women think predictable, memorable experience in while using the brand, and 20 percent did so customer service would improve if the every moment, from online engagements while trying to receive services for what they company knew what the consumer said to in-store conversations with sales reps; had purchased. about them online. from email newsletters to packaging. No matter the touch point, brands must speak When emotional bonds are broken, rational As our study shows, emotional connection in a singular voice in order to connect thinking often takes over. Three-quarters is vital to customer loyalty and lifetime consistently with customers. of people who leave a brand while using value. In brand relationships as in or receiving service on a product, leave for personal relationships, the foundation Almost 70 percent of consumers say reasons such as high prices or wrong orders. of emotional connection is trust; and “reliable, great customer service” is what Fortunately, most customers recognize that the foundation of trust is consistency. makes a brand their favorite to shop online. missteps happen, and are willing to remain Achieve that and brands stand to deepen For a majority of people that means being loyal to a brand so long as they receive a their connections, gain forgiveness accessible through multiple points of straightforward, honest, and empathetic when they do make a mistake, and build contact and reaching out to the customer response to concerns. When they feel that stronger loyalty, customer by customer. when needed. And when looking to resolve their issue has been addressed, 77 percent Capturing, understanding, and appropriately issues, 72 percent of consumers prefer a of people will stick with a brand. responding to the consumer’s emotional solution from a customer service agent or state and context allows companies to store associate over automated service The consistency that consumers expect is deliver the predictable experience that options. implicitly difficult to deliver when a brand’s today’s consumer expects. operations are siloed. Understanding a 39% of people customer’s emotional and contextual state depends, in large part, on having immediate switched brands and comprehensive visibility into the after a bad experience. customer’s history across touch points. Two

10 11 Conclusion

Emotional data is the key to building cue in appropriate ways is enormous and at scale—that will distinguish tomorrow’s reliable, meaningful, loyal relationships growing. But it’s clear that customers don’t most beloved brands. with customers that stand the test of care whether it’s difficult or expensive to time. However, in order to sustain those humanize relationships at scale. Companies Where to start? The answer is going to be relationships, the data should be handled that aren’t focused on building emotional very different for each stakeholder in an carefully. Customer engagement needs to bonds risk losing customers to competitors organization, and obviously the needs of be contextually appropriate, consistent, that are figuring it out—and it’s hard to win each organization vary. empathetic, and responsive. (Figure 3) back old friends once you’ve lost them. The key is, simply, to start. Given the sheer quantity of touch points Most organizations already have a wealth of between customers and brands—online data about customers that can help jump and offline—the challenge of collecting, start this process. It’s gathering and using reading, and reacting to every emotional that data—at the right time, in the right way,

Figure 3: 3

Rationality kicks in with incidents that erode customer trust

1 4 Shared values and Empathetic, contextualized rational thinking bring response strengthens customers to the door emotional bond

2 Emotionally resonant key moments lie at the heart of human experience. Emotions build to inspire Brands must tap into the right factors loyalty, advocacy, and at the right moments in order to build preference and maintain customer loyalty.

12 13 EXECUTIVE SUMMARY Leading the OpCX revolution.

Deloitte’s research uncovered the balance This transformation can’t only be a function well aware that their data is being collected between three defining factors that drive of marketing—and it likely can’t be achieved by brands—but when collection starts to consumer behavior: emotional connections, through incremental change to existing feel like unwelcome surveillance, trust is rational connections, and value-based CX capabilities. Elevating CX into a true quickly broken. To avoid breaching trust, risk connections. The research showed operational discipline—OpCX—allows assessment should be woven into the very that each factor is significant at distinct companies to infuse customer expectations fabric of the HX ecosystem. moments. To build strong connections with into a disciplined and cohesive technology customers and inspire long-term loyalty, ecosystem capable of translating human Functional silos — As discussed in finding brands must tap into the right factors at the insights into actions. 4, it is impossible to create the kind of right moments by putting human needs at cohesive, informed, contextually appropriate the center. Priority considerations include: connections that consumers expect if CX has evolved as siloed capabilities. When Understanding customers’ emotions and Technology — Legacy, siloed CX systems companies fail to create a seamless “wow” responding contextually and automatically that have sufficed in the past won’t be up to experience in every interaction with requires an emotionally intelligent the task; nor can human customer service customers, they risk breaking the trust technology ecosystem that adapts to the agents keep pace with the widening array on which emotional connection is built. moment at hand. It means looking beyond of customer inputs and rising expectations. The OpCX revolution is about building customer experience, or CX, to the broader, The goal is a cohesive, emotionally intelligent engagements and capabilities according to deeper connections that make up human technology ecosystem that leverages both the needs of the customer rather than to experience or HX. operational and contextual data to adapt to the structure of a company’s operations. the moment at hand, moving away from a What is OpCX? linear touch point management approach to a more dynamic, responsive, contextually OpCX is the discipline of driven paradigm for customer connection embedding emotionally and human experience. intelligent HX capabilities into Data and governance — Beyond legal, every fiber of a company’s ethical, and reputational risks, companies operations to deliver human must vigilantly watch for HX risks within the experience at scale. data they collect. Today’s consumers are

14 RESEARCH BACKGROUND Methodology

Deloitte employed an innovative multimethod research approach to understand how emotions impact consumers. The methodology integrated traditional primary research including consumer surveys and online panel sessions with social listening and meta- analysis of Deloitte Voice of Customer data.

Primary data sources General consumer survey — 800 completes; 28 questions Online panel session — 112 participants; 42 questions Value: Insights into why people love brands and the Value: Testing of different hypotheses in real time with organization’s role in that affinity pointed questions about brand experience

SEX RACE SEX RACE SEX RACE Caucasian 79% (632 People) Caucasian 83% (93 People) CaucasianAsian 79% (632 People) 6% (46 People) Asian 5% (6 People) AsianBlack 6% (46 People) 7% (59 People) Black 6% (7 People) HispanicBlack 67% (5059 People) Female Male Female Male Hispanic 4% (4 People) HispanicOther 26% (1350 People) Female Male % Native American 2% (2 People) 51% 49% Other 2% (13 People) 62.5% 37.5 51% 49% INCOME LEVELS AGE INCOME LEVELS AGE INCOME LEVELS AGE 41% < $49,999 6% 18-24 2% 18-24 4041% $50,000< $49,999 - $99,999 236% 2518-3424 39% < $49,999 23% 19% 1240% $50,000$100,000 - -$99,999$149,999 29% 3525-4934 42% $50,000 - $99,999 25-34 126% $100,000 - $149,999 3329% 5035-6549 34% 35-49 $150,000 - $249,999 11% $100,000 - $149,999 16% $150,000> $250,000 - $249,999 339% 66+50-65 36% 50-65 6% $150,000 - $249,999 1% 9% 66+ > $250,000 9% 66+ 2% > $250,000

Secondary data sources Social media listening and analysis — 91 million posts across Meta-analysis of Deloitte Voice of Customer data — 2,090 30 brands in 11 industries completed surveys from two service-driven industries Value: Real consumer mentions of emotional keywords, Value: Real-world data to correlate actual with descriptions of their brand experiences, loyalties, or customer experiences affinities—providing greater context to the development of the survey and panel guide

Endnotes: 1 https://amdgtl.com/blog/emotional-marketing-multifamily-marketers

15 Get in touch

Tim Greulich Angel Vaccaro Jennifer Buchanan Sarah Logman Operational Customer HUX Practice Leader Customer Experience Data Science Leader Experience Practice Leader [email protected] Insights Leader [email protected] [email protected] [email protected]

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