In this article, we discuss the different types of loyalty. Each type offers valuable insights into how customers engage with a brand, revealing the intricate dynamics of customer loyalty.
We'll be taking a look at - Emotional Loyalty, rooted in personal connection, Advocacy Loyalty, marked by enthusiastic endorsement, Transactional Loyalty, based on repeated purchases, Social Loyalty, influenced by social circles, Engagement Loyalty, driven by active involvement, and Behavioural Loyalty, reflected in consistent actions.
What are the Different Types of Loyalty?
What are the Different Types of Customer Loyalty?
1) Emotional Loyalty
This type of loyalty relies on building a deep, personal connection with the customer. When a customer's feelings of recognition and importance are consistently reinforced through their interactions with a brand, an emotional bond is formed.
Transactional rewards form the backbone of many loyalty programmes. This is a great strategy for retaining customers, but to solidify the relationship, you need to connect with them on an emotional level. The act of being loyal is more an expression of emotion than a simple transaction or a series of repeat purchases. Emotionally loyal customers are less likely to be influenced by competitor products, even if they offer cheaper prices.
"Emotionally loyal customers will continue to patronise a brand even when presented with viable alternatives, and studies have shown that customers who have formed strong emotional connections are 32% more likely to make repeat purchases and spend 46% more often"
The end goal of fostering emotional loyalty is to win their trust. Customers are much more likely to trust a business when they perceive they are being treated with dignity. They will also have more faith in a business if they see consistent authenticity across all channels and interactions.
How can you put this into action? Simply focus on what makes your brand unique (its values), providing exceptional customer service, offering something of value, and engaging meaningfully with your target demographic.
It’s also important your loyalty programme strikes a balance between transactional and emotional incentives. By doing so, you establish a lasting emotional relationship with customers.
What types of loyalty programme drives emotional loyalty?
Now that technology has improved, shoppers always expect to be able to get what they need right away. Providing this instant gratification is a surefire way to strengthen emotional bonds. Always-on reward programmes not tied to spend can make that happen.
In traditional loyalty programmes, customers would have to make repeated purchases to earn rewards. However, they don’t need to gather coupons or points with always-on incentives and rewards.
Instant, personalised rewards back up the excellent service and high-quality products that the customers pay for. This leaves the customer feeling a lasting emotional connection to the business and promotes a feeling of community.
2) Advocacy Loyalty
This type of loyalty involves advocates referring customers to a brand. Advocacy is the best possible endorsement of your products or services. Customers often tell their families and friends about their great experiences interacting with a brand.
What makes this great is the advocate recommends products or services to people they think will enjoy what you offer. Making these people highly qualified leads. Additionally, recommendations from a family member or friend is the highest trusted form of advertisement and it's completely free!
A repeat customer, often called a "brand champion," is more than happy to advocate for your brand. Without shelling out massive sums on marketing, your brand gains a new customer who already trusts your offerings.
Nevertheless, many businesses, both B2B and B2C, don’t use advocacy to its full potential. In part, this is due to the widespread misconception that advocacy should be left to the customers. However, advocacy is something that businesses themselves must plan for. This is yet another excellent reason to launch a loyalty programme.
"Set up a loyalty programme to reward advocates. Brands at the very least should offer bonus points. After all, word-of-mouth is quite the customer acquisition machine. Over 84% of customers trust referrals from friends and family over traditional ads."
What type of loyalty programme drives advocacy loyalty?
Creating a referral programme is a great way to gain loyal customers who will spread the word about your business.
When you offer customers valuable rewards, they will feel more inclined to tell others about their experiences. Incentives can range from price reductions to early access to new offerings. Just giving them the incentive to advocate for your business also significantly reduces customer acquisition costs.
3) Transactional Loyalty
This is the most straightforward form of loyalty. It involves providing discounts and special offers. Discounts are typically offered as part of a customer loyalty programme to drive repeat business.
If implemented properly, transactional loyalty has the potential to yield impressive results and is for that reason essential to successful loyalty programmes.
However, businesses shouldn't rely on transactional loyalty alone. Especially when customers are looking for more innovative ways and incentives for businesses to foster deeper relationships with them via highly personalised offers.
Customers might continue to make transactions simply because of convenience without getting any tangible value. The result is that they might leave abruptly for a better deal if the situation changes.
If you put in the time and effort to cultivate the relationship, however, it can pave the way for deep emotional loyalty when used together. Transactional loyalty gets customers interested in your brand, whilst emotional loyalty incentives them to stay loyal for longer.
What type of loyalty programme drives transactional loyalty?
It’s common practice to use an earn-and-burn programme to foster transactional loyalty. With their point system, customers are rewarded for their loyalty and use accumulated points to redeem rewards and prizes in the future.
When a customer reaches a certain point total, they are eligible to receive discounts, freebies, and other rewards. It’s important to note that customers are more likely to continue making purchases when they are offered rewards of increasing value.
4) Social Loyalty
When it comes to social loyalty, customers are rewarded for promoting the brand on social media by earning points in a loyalty programme. Sharing on social media may take the form of reposting brand messages or tagging friends and family members on Twitter or Facebook to help spread the word.
Offering incentives, such as discounts or freebies, for writing reviews and rating your product strengthens the bond between your brand and customers.
In addition, it creates a buzz around your offerings as more people view, comment, and share. The main benefit is that it gives businesses yet another tool to maintain their customers' interest.
What type of loyalty programme drives social loyalty?
When looking for a way to increase social loyalty, a referral programme is hard to beat. Offer VIP tokens, exclusive discounts, and freebies to your customers as rewards for spreading the word about your business on social media.
As part of this system, businesses often negotiate compensation with social media influencers in exchange for increased exposure in huge online followings.
5) Engagement Loyalty
This form of loyalty refers to your customers’ engagement with your brand beyond their everyday transactions.
Customers show engagement loyalty by subscribing to your newsletter, viewing your YouTube videos, and keeping tabs on your brand. As an added incentive, offer incentives to customers who actively engage with your business outside and between purchases. In this case, they usually earn points as part of an engagement rewards programme.
To maintain engagement loyalty, you need to keep tabs on how customers are engaging with your brand, what engagement techniques are successful, and which ones need to be shelved. Customer loyalty software can be invaluable for monitoring this kind of engagement and ensuring that it's producing results.
This ensures that your marketing content is relevant to your audience and thus increases the effectiveness of your marketing campaigns.
What the ideal loyalty programme will help you achieve with engagement loyalty is helping your customers climb up the loyalty ladder. It helps you identify the type of consumer who is likely to be loyal to your brand and target them specifically. It explores the market for the most effective means of interacting with these customers (i.e., gamifying your programme).
It also offers the right mix of advertising and promotions to pique the interest of these potential customers. It heightens their engagement because they know their brand loyalty will be rewarded.
What type of loyalty programme drives engagement loyalty?
Driving engagement can be tricky, which is why businesses use creative and stimulating techniques like gamification to keep customers riveted.
Gamified loyalty programmes allow brands to add an interactive and fun element to their relationship with customers. Brands boost customer engagement with the help of leaderboards, badges, prize draws, and treasure hunts. Participation is simple, and customers will enjoy the friendly rivalry it inspires.
In addition to being essential for customer retention, the heightened sense of community that results from this is another excellent benefit.
6) Behavioural Loyalty
This occurs when a customer repeatedly purchases or makes use of a given brand's goods or services. Although behavioural loyalty is easier to quantify, its underlying causes are not always clear.
Though it's still an important variable to study, the customer's actions don’t always reflect their beliefs. Behavioural loyalty is not sufficient on its own to determine how committed a customer is to a particular brand.
It could simply be certain habits that cause them to return to the same brand. Their reasons could vary from anything in the list below:
Positive brand preference (a brand meets important practical and/or emotional needs) also known as attitudinal loyalty or active loyalty.
Habitual or apathetic loyalty (to be uninterested in changing brands or retailers because "it's too much trouble" or feeling like they're all similar.
Captive loyalty (an unwillingness to switch brands despite receiving little value, usually brought on by cost and availability).
Successful loyalty reward programmes often use behavioural loyalty as a key tool. Algorithms based on data science and machine learning allow us to gain better insight into why repeat customers make purchases. Analysing this information allows you to tailor your marketing efforts to influence their actions.
What type of loyalty programme drives behavioural loyalty?
Finding the right loyalty programme to drive behavioural loyalty is a difficult task, since the motivations behind customer behaviour (choice) are often elusive. The best approach is monitoring a combination of several loyalty metrics and analysing customer data gathered in the platform or CRM.
Launching an always-on loyalty programme and getting customers to take part in gamified surveys, gathers crucial customer data and simultaneously fosters emotional and engagement loyalty. The better insight you get into factors driving customer behaviour, the better your chances are of influencing that behaviour to secure their loyalty.
Leverage the Power of Loyal Customers
Beyond the value and quality of your product or brand, cultivating these various forms of customer loyalty will help you forge lasting relationships with your customers. Your customers are the lifeblood of your company. In the modern saturated market, where a customer has so many options, even the smallest details make or break their loyalty.
Adding that much-needed personal touch to your business is as simple as implementing a loyalty programme. Spend time learning about, connecting with, and empathising with your customers, and you will take your business to new heights.