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How Emotional Loyalty Is Key for Digital Tech Companies' Success?by@kategrizik
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How Emotional Loyalty Is Key for Digital Tech Companies' Success?

by Kate GrizikJuly 9th, 2024
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Increase customer emotional loyalty for product-led digital tech companies by implementing effective strategies, improving products, and leveraging loyal customers for mutual growth. Enhance retention, acquisition, and profitability through personalized engagement and feedback-driven innovation.

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Introduction

I have been working in the product-led digital tech industry for more than 10 years and have developed several loyalty programs for customers, including a referral program (Peer Program) and a Trader Program. Personally, I built emotional loyalty with users from the very beginning.


Many marketers and product specialists confuse retention with loyalty. The difference is that retention is an action aimed at creating conditions under which customers will continue to use the product or the service, whereas customer loyalty is the formation of an emotional attachment to the product or service. Loyalty is a result of customer retention, advocacy, and acquisition strategies.


Achieving customer loyalty is much more difficult than retention since loyalty forces people not only to use often a product, but also stimulates them to take action, for example, leaving feedback, bringing new customers (their referrals), and becoming public brand advocates.


According to the 2024 Statista report on the top loyalty drivers, having a user-friendly interface of a platform or offering low prices is not as important as providing good products or services (1st place, 61% of respondents) and offering good customer support (2nd place, 47% of respondents).


Top Loyalty Drivers, Statista Report, 2024


The Importance of Developing Emotional Connections With Customers in the Digital Tech Business

If a company strives to grow and reduce the churn rate, as well as increase retention, then it must rely on the development of loyal customers who are emotionally involved in the product. How do you gain loyalty among customers?


A successfully tiered loyalty program with simple mechanics and rules is not sufficient to develop a loyal customer base. Loyalty, unlike loyalty programs, is fueled by emotions and should be deserved. Loyalty increases the chances of customers sticking with the brand in the long term if relationships with customers are properly built and based on recognition, satisfaction, and anticipation of the customers' needs.


When customers feel an immediate, direct connection to a brand, that they are heard and valued, and that the product is tailored to their needs, they are more likely to become the brand’s loyal customers, even if other competitors offer slightly better terms or fewer fees.


Emotional loyalty develops when customers trust the brand, value ​​the reputation and honesty of the company, and understand that the product meets their expectations.


Why is it necessary to constantly increase customers’ emotional loyalty to brands? Since there are a lot of product-led digital companies, and the market is very active, it is necessary to stand out from the crowd and have a unique competitive advantage that will attract new customers, as well as retain existing customers: Emotional loyalty can be such a competitive advantage.


Emotional loyalty increases the retention rate and allows the company to increase profitability and customer lifetime value (LTV), as loyal customers will strive to use the product more and try new features. Loyal customers are also more likely to recommend their favorite product to friends, thus causing their friends to become loyal users of the product.


Finally, emotionally attached users help the brand constantly develop and innovate in the market since the company develops new features and makes the product better based on the product feedback from its loyal customers. Therefore, it is very important to develop users’ emotional loyalty to the brand when building long-term relationships with users


A strong emotional bond with customers can reduce the churn rate, even when competitors offer slightly better fees or more favorable conditions. Therefore, customer loyalty is less about “points”, “stars”, and spending, and more about human interactions with the brand, based on experience. These experiences allow companies to build strong emotional connections with their customers. Among them:

  • Data-driven personalized features and product offers and recommendations;
  • Grant access to the premium community or the VIP club;
  • Invitations to AMA (ask-me-anything) sessions with company executives or other exclusive events;
  • Celebrating customers’ anniversaries, birthdays, or other significant milestones;
  • Opportunity to visit the company’s office, etc.

"The State of Customer Loyalty and Retention" report, Yotpo, 2023

One of the bubble charts in the Yotpo e-commerce platform report was dedicated to users’ information expectations from brands to which they are loyal. The results showed that 54.6% of respondents expect the company to know their birthdays (1st place), their names (2nd place), and their product preferences (3rd place). These results prove the importance of tailored treatment and personalized brand interactions with their customers.

Strategies for Building Emotional Connections With Customers

In my career, I’ve successfully utilized these strategies to establish emotional loyalty among customers to the brands, which has helped digital tech companies increase profits and streamline customer acquisition pipelines:


  1. Utilize data analysis to segment customers and gain insights into their interests and preferences. Moreover, data analysis should be used in creating tailored recommendations for customers based on their historical interactions.


  2. Provide effective customer support. Use chatbots wisely and provide clear instructions on how customers can switch to a real support agent. Be proactive in solving customer issues. Support should be friendly and committed to finding solutions for customers. Notably, during technical or security issues, loyal and emotionally engaged customers are more likely to support the brand and remain patient until technical issues are resolved.


  3. Implement tiered personalized loyalty programs or other customer reward systems. Do not hesitate to create VIP programs for your most high-value customers: they value both exclusive benefits and perks and long-term, emotionally, and mutually involved relationships.


  4. Create customer communities on social media platforms or messengers. They truly appreciate this direct line with the management of the brand and their favorite product. Reward the most loyal and contributing members of the communities for their suggestions, and active engagement.


  5. Be transparent with customers. Any changes in terms & conditions, user agreements, fees, or policies - inform them openly. Sometimes, it is better to take several days to explain changes in fees to customers than to tackle later an increase in churn rate and a decreased turnover.


  6. Boost customer engagement: Customers who are emotionally connected to a brand interact extensively with the product and its features and understand different aspects of its use. Therefore, they are more likely to provide valuable feedback on new features and services, and report bugs.


    To be competitive in the market, all digital tech product-led companies need to improve their products or services, and this priceless direct connection with loyal customers helps companies to build products and services that properly serve customer needs, positioning the company as highly customer-centric (“customer is a center of the company’s universe”).


    According to a Gartner study, 82% of respondents tend to stay with a brand when the brand enhances its value by improving the product, adding new features and functionalities, enhancing customer service, or improving brand perception.


How to Improve Customer Loyalty and Retention, Gartner study

  1. Create opportunities for customers to explore new features, products, or services. Reward them for their comprehensive feedback.


  2. Motivate customers to create their own content about the brand (e.g. product and feature reviews, and how-tos) on their blogs, social media platforms, and personal websites. Don’t forget to monitor mentions of your company on the internet and social networks using social media listening tools to analyze customer sentiment and proactively identify customers leaving reviews or discussing the company’s new features, products, and services.


  3. Introduce the one of us” principle in training other customers. Ask the most loyal and active customers if they would be interested in leading a training session for other users to showcase use cases of specific products or features (“How to” masterclasses). You will be surprised by the level of interest among them and the level of attendance of regular customers!


  4. Develop products with the help of customers by organizing online meetups with the most loyal and active customers to gather reliable and direct product feedback or conducting regular product surveys to pinpoint their concerns, pain points, and challenges.


  5. Be accountable to customers: Successful product-led companies should have a principle of accountability to their customers to nurture their trust. “You asked - we delivered”, “you reported - we fixed” should be essential mottos in your company.


  6. Support customers’ willingness to promote the brand by introducing a referral program they can use or creating temporary referral marketing campaigns.

Conclusion

If the brand implements these strategies listed above to develop customers’ emotional loyalty, it can not only satisfy customers but also constantly improve the product and its features, leveraging the company’s best asset — loyal customers.


Thanks to the mutually beneficial collaboration between loyal customers and the brand, users receive a continuously evolving product tailored to their needs and requirements, along with fast support and the opportunities to earn through referral programs or content creation on social networks, and in return, the brand gets the opportunity to be instantly competitive in the market by introducing those features that users need, thereby increasing retention and acquisition rates and boosting the profitability and revenue in general.