Since studies have shown it costs 6 to 7 times more to acquire a new customer than keep an old one, developing a loyal following amongst patrons has never been more important. Brand loyalty can be somewhat of a tricky business and is based on a creating an emotional connection to your brand or service which is far more powerful than any sort of behavioural loyalty. But what is the difference between the two?
Behavioural loyalty is something that most companies believe is the right way of engaging with its audience; offers like BOGOF’s or special offers which may convince a customer to come back once to make use of the deal but emotional loyalty means the customer is actively engaged with the brand and will return again and again regardless of offers or deals.
What is important to customers has changed over the years and loyalty programs are no longer as effective in fact, a study by Deloitte showed that loyalty programs ranked 19th out of 23 attributes in terms of what is important to restaurant customers and ranked 24th out of 28 factors that drive repeat patronage
I can testify personally that I have discarded my multiple stamped coffee shop loyalty cards in favour of a place that simply remembers who I am and can ring up my favourite drink before I’ve even reached the counter. For me personally feeling valued as a customer outweighs a one-off deal by far and this is where small business needs to focus, on the values and identities of their customers.
The way that small business owners can beat larger brands isn’t to compete with them on the things they are good at (e.g., low prices, logistics, etc.); it’s far more important to beat the competition by providing a level of service and something that speaks to the individual who comes to you.
Customers no longer care about how often you reach out to them, for a long time “engagement” seems to have been marked as the key to success when in fact that couldn’t be more wrong and while marketers have been raving about how important it is to regularly engage with customers, this couldn’t be further from the truth. Most consumers do not care about how much you engage with them and in fact are more likely to have their head turned by shared values.
CeB a brand insight and technology company studied customer loyalty for over a year and found that consumers were loyal to not companies but beliefs.
“We saw that emotional attachments to brands certainly do exist, but that connection typically starts with a ‘shared value’ that consumers believe they hold in common with the brand.”
Aaron Lottonn, CEB
Seth Godin’s definition of a brand is:
“The set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”
So where does this tie into social identity? The brands that people choose to dedicate loyalty to in recent times has become integrated with that individual’s social identity, what you stand for doesn’t have to be global, you just have to show you have interests outside of simply making money but in an ever increasingly tribal society you must plant your flag somewhere. It could be ethically sourcing your supplies or your support for smaller local individual companies and working with them to create your finished product but it has to matter and has to in some way, speak to the social identity of the consumer. Companies like Brewdog have a strong brand identity that is also very much tied into the social identity of its patrons, connoisseurs of craft beers, tattooed and bearded trendy young things who loathed the ‘stuffy ales’ that dominated the market.
Social identity theory suggests that people identify with groups in such a way as to maximize positive distinctiveness. Groups offer both identity (they tell us who we are) and self-esteem (they make us feel good about ourselves).
Are you a Mac or a PC?
Apple has one of the biggest loyal followings in the world because it has established an identity and has pretty much indoctrinated consumers into its cult; it’s no longer simply a product but a statement about an individual’s identity. Build an identity and you’ll gain a tribe. Examples of this on a smaller scale can include pubs that sell craft ales and beers, restaurants that are quirky or offer nutritionally valuable food only or locally made produce, when you think of these places you immediately see the tribal persona that matches these brand identities.
As Seth Godin says in Tribe Management,
“What people really want is the ability to connect to each other, not to companies. People form tribes with or without us. The challenge is to work for the tribe and make it something even better.”
As Roger Dooley points out, building a social identity is about making your customers feel different than the people who use a competing brand, and he points out that Apple’s use of pre-existing stereotypes of Mac and PC users was brilliant:
“Even though these stereotypes may not have been accurate, their existence made Apple’s job easier.”
Creating an identity for your brand that speaks to a particular group of course may alienate consumers who may have popped in for a one off or as a reply to a coupon they received but on the other hand it will also create a growing and loyal following that will generate much more valuable repeat business for many years to come which will safely get you through any kind of economic rough patch.
It is no longer about moving products but rather, moving people. With mobile access and endless new restaurants and pop ups opening everywhere, the consumers choice is endless and the competition is merely a click away so in the end vouchers, special offers, deals and marketing may get your name out there, but will people stick around? Will passer-by customers turn into loyal, long term advocates? Probably not, those who invest in you and recognise your brand as a part of their identity most definitely will.
Think about specific hospitality brands and the tribes associated with them take Starbucks for example picture that patron in your head then ask someone to do the same no doubt you will find both your answers strikingly similar because that brands identity is tied to that particular social identity. Try it with other brands, it just goes to prove the theory what we consume is a fully integral part of our identity and this also creates brand advocacy. Customers don’t just want to belong to a certain social group they also want to be seen publicly as a part of it and will immediately share their activities on social media to engineer the way they are perceived outwardly.
With the unceasing juggernaut that is the popularity of social media, outward identity has never been so important to individuals and they are more than willing to use a brand to underline this.
Creating that emotional link to your business as tricky as it may be is inevitably worth it in the long term. Yes, it may be nuanced and fraught with dangers but as a means to an end it’s an incredibly powerful marketing tool that gives long term benefits and works as its own platform to garner interest from like-minded individuals who will inevitably want to buy into it themselves to cement their identities among their number.
Using it as a tool when creating a following in the hospitality industry can not only increase consumer loyalty but ensure the business has steady growth as well as a strong brand identity, something that no amount of loyalty cards or coupons can provide.