Understanding the emotions that lead consumers to make certain purchase decisions can help unlock insights to increase customer loyalty and sales.
Article Highlights
- Consumers spend up to twice as much with brands they feel emotionally connected to.
- Consumers are often unaware of psychological triggers that drive their emotional loyalty to certain brands.
- Retailers can apply the psychology of customer loyalty to increase participation in their customer loyalty programs.
- Leveraging customer data with the psychological triggers that impact customer loyalty can boost emotional connections, long-term loyalty and revenue.
You may think you know your customers because you collect data and create consumer profiles. But how well do you understand the psychology of customer loyalty and its impact on emotional connections to your brand? Studies have shown that a person’s positive emotions toward a brand have greater influence on consumer loyalty than trust and other judgments based on a brand’s attributes.1 In addition, 83% of consumers are more likely to purchase from a brand they feel an emotional connection to.2
Emotionally connected customers:3
- Rate brands higher than merely satisfied customers at 71% versus 45%
- Have 306% higher lifetime value (LTV)
- Spend up to twice as much with their preferred retailers
Understanding the psychology surrounding consumer buying decisions — that is, the factors that relate to why, where, when and how much they spend — can help your organization increase those emotional connections and learn how to inspire loyalty and grow sales.
Why are people loyal?
To understand the psychology of loyalty, it’s essential to look at the psychological factors that influence how consumers make purchase decisions. “Loyalty is an emotional concept with strong unconscious components,” explained psychologist Joel Weinberger in a DestinationCRM.com article. He went on to say that you can’t ask people, “Why are you loyal to this store?” and expect an honest answer. “Consumers are largely unaware of the associations that drive loyalty,” he added.4
So, what are some psychological factors that compel consumers to purchase, and more importantly, how can retailers tap into these factors to create more loyal customers and boost revenue? This list helps answer that question, highlighting some common psychological triggers, the emotions they produce, and the retail marketing opportunities they provide.
Trigger: First impression.
People tend to filter information they receive based on first impressions, meaning if customers find one quality of their initial first experience with your brand appealing, they tend to extend that opinion to other brand qualities.
Takeaway: To take advantage of this loyalty psychology concept, focus on providing new customers with the best possible shopping experience during their first encounter with your brand, whether it’s in-store or online.
Trigger: Mutual benefit.
Relationships are more likely to thrive when both parties — retailer and customer — feel like they receive value.
Takeaway: Leverage your data to get to know customers better on an individual level so you can give them what they’re looking for. Use information from surveys and registration forms to create relevant product suggestions, offers and more personalized, value-added content. You’ll reap a payoff through sales and loyalty.
Trigger: Reciprocity.
A strong component of the psychology of brand loyalty is the idea that receiving something unexpected with no strings attached makes others feel special — and more often than not, likely to reciprocate.
Takeaway: To encourage new customers to engage or existing customers to change a behavior, consider surprise-and-delight ideas like offering free samples, premium content, an unexpected gift with purchase, personalized product recommendations and so on. This tactic can encourage customers to reciprocate by signing up for special offers, making a purchase or spending more than they originally planned.
Trigger: Authority.
Humans are conditioned to respond to authority or to those who they perceive to be experts.
Takeaway: If customers feel like they can count on your brand for knowledgeable insights, they’re more likely to seek out your brand, remain loyal, and recommend your brand to others. To leverage this loyalty psychology tactic, your retail marketing team can share trends, industry insights or products curated by an expert.
Trigger: Social proof and conformity.
People tend to like things that are popular and liked by others, and nowhere is this more evident than on social media channels.
Takeaway: Use every opportunity to share positive news about your brand and products, including press, testimonials, customer feedback and success stories. Another marketing tactic that taps into this trigger is grouping products and services in store or on your website by “top sellers” or “most popular items.”
Trigger: Scarcity.
Promoting exclusive or limited availability can create a sense of urgency and fear of missing out (FOMO).
Takeaway: If a customer is considering a purchase and they see messaging such as “Today Only,” or “Only 2 Left,” they may be more compelled to take action.
Trigger: Novelty.
New ideas, from products to campaigns, pique interest and curiosity.
Takeaway: Stand out by offering something novel compared to your competitors; or consider fresh ways to promote an existing product or service to increase consumer engagement.
Trigger: Commitment consistency.
People tend to be internally motivated to make sure their future actions are consistent with previous ones.5
Takeaway: Ask customers for a piece of personal information and explain how you’ll use it. For example, request an email address so you can send customers a company newsletter, new product alerts or sale notifications. They’ll be more likely to provide additional information the next time you ask, like their birthdate in exchange for a special birthday offer.
Speaking of consistency, another tenet of the psychology of loyalty is that consumers are likely to interact more with specific brands when they’re top of mind. Keep your brand visible and focus on delivering consistent customer experiences. You can do this by maintaining ongoing, relevant communication, like personalized emails and texts, and being present and active on the channels where your customers are.
Our fifth annual Retail Customer Brand Loyalty Study reveals how consumer shopping behaviors and preferences changed in 2022. Understanding the factors that are important to customers with different shopping personalities can help retailers determine how to prioritize resources and budget.
The Psychology of Customer Loyalty Programs
While the behaviors and triggers above can be used to encourage customer loyalty and spend, retailers can take advantage of additional psychological triggers to increase loyalty program engagement, participation and retention. Consider how you might apply the theories below to the psychology of customer loyalty to motivate your members to engage more, spend more and commit to your brand for the long-term.
Positive reinforcement.
Also known as classic conditioning, the theory works like this: Behaviors that are followed by a reward are more likely to occur again and again. This is a fundamental concept in the psychology of customer loyalty programs.
Takeaway: For retailers, this can lead to modified customer spending behavior — for instance, increased frequency of visits and incremental sales. Reward loyalty program members with points or special perks whenever they take an action that encourages engagement with your brand and loyalty program. They’ll equate earning and redeeming with a successful customer experience — and they’ll want to repeat that action again and again.
The prospect theory.
Developed by Daniel Kahneman and Amos Tversky, this behavioral theory is based on the idea that people view incremental gains more positively than a single, larger gain.5
Takeaway: Retailers with customer loyalty programs can tap into this trigger by providing members with multiple opportunities to earn points, like sharing preferences or referring a friend, and then delivering points or rewards earned in real time. This approach may be more effective than one that requires customers to build up a large points balance to reap a single larger reward.
Motivation to complete an activity.
Customers will engage in behaviors if they perceive the rewards to be both desirable and achievable.
Takeaway: To take advantage of this psychology of customer loyalty theory, be sure to demonstrate your program’s value upfront in a clear and transparent way. Promote your loyalty program routinely in all customer communications, on your website and through your brand’s social media channels to encourage enrollment and ongoing participation. Make it easy, straightforward and fun to join, earn and redeem rewards.
How to choose the right loyalty program benefits.
The right benefits and rewards are essential to any loyalty program success. CCG’s Statistical Loyalty Program Optimization™ uses multivariate tools to help define the optimal mix of benefits for key audiences, with an eye on ROI and efficiency.
Endowed progress effect.
Research shows that people who perceive that they have a head start on a goal are more motivated to take actions to reach it.6
Takeaway: When members perceive that they’re making progress toward earning a reward, they’ll increase their efforts to attain it. Give loyalty program members a head start toward their reward by offering bonus points for enrollment, completing a survey and so on.
Anticipation.
Before deciding to pursue any type of goal, people will anticipate the likely outcome.
Takeaway: As loyalty program members get closer to reaching a reward, or a higher tier with greater benefits, they’re more likely to increase engagement and spending. You can tap into this emotion by keeping a member’s reward progress front and center — making it visible in all communications and any time they log in to their account. Additionally, create trigger campaigns that regularly show program members their status and progress.
Enhanced affinity.
As an outcome of the positive reinforcement theory, enhanced affinity happens when successful actions become habit. This is another fundamental concept in the psychology of customer loyalty programs.
Takeaway: For retailers, this means members are engaging with your program, have a points balance that impacts future spend and are more likely to choose your brand over others. Encourage ongoing engagement and participation with your program by consistently and clearly communicating the value of your program and by offering a selection of relevant rewards.
The Link Between Customer Purchase Psychology and Retail Brand Loyalty
Clearly, there are psychological triggers that drive emotional connections and impact customer loyalty and spending, whether subconsciously or not. Understanding these behavioral insights and layering them with your customer data can guide your retail marketing campaigns and loyalty program strategies. By putting those insights into action, you can deliver stronger emotional connections and customer experiences, drive more profitable behaviors and increase brand loyalty and sales.
Helping our clients build and grow customer loyalty and revenue is our singular focus at CCG. Our experienced retail marketing consultants have developed and enhanced customer loyalty programs for retailers across North America. Learn more about the retail marketing services and solutions we offer and contact us online or at 303.986.3000 for a free, no-strings consultation.
Sources
1 “How Emotions Influence What We Buy,” by Peter Noel Murray, Ph.D., Psychology Today, posted Feb. 26, 2013, https://www.psychologytoday.com/us/blog/inside-the-consumer-mind/201302/how-emotions-influence-what-we-buy, accessed Oct. 5, 2022
2 “2020 E-Commerce Holiday Shopping Trends,” Iterable, posted Sept. 29, 2020, https://iterable.com/blog/2020-e-commerce-holiday-shopping-trends/, accessed Oct. 7, 2022
3 “New Retail Study Shows Marketers Under-Leverage Emotional Connection,” PRNewswire, posted Sept. 27, 2018, https://www.prnewswire.com/news-releases/new-retail-study-shows-marketers-under-leverage-emotional-connection-300720049.html, accessed Oct. 7, 2022
4 “The Psychology of Loyalty,” by Adam Hanft, Destination CRM, posted Dec. 26, 2014, https://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=100641, accessed Oct. 12, 2022
5 “Hacking Human Psychology to Create True Customer Loyalty,” Kearney, posted June 14, 2022, https://www.kearney.com/consumer-retail/article/-/insights/hacking-human-psychology-to-create-true-customer-loyalty, accessed Oct. 10, 2022
6 “The Endowed Progress Effect: How to Motivate Your Customers with a Head Start,” by Genevieve Colman, Zapier, posted Jan. 14, 2016, https://zapier.com/blog/endowed-progress-effect/, accessed Oct. 10, 2022
