Retailers see 5% boost to annual revenues by driving emotional engagement with consumers: Capgemini

Capgemini’s Digital Transformation Institute has recently released a new report titled “Loyalty Deciphered— How Emotions Drive Genuine Engagement,” which seeks to understand the main drivers behind brand loyalty. The report, which surveyed more than 9,000 consumers and 500 executives, found that emotions have the strongest impact in driving consumer loyalty. For retailers who are able to foster loyalty through higher emotional engagement with consumers, there is a great potential business benefit of possibly increasing annual revenues by 5%.  The new report also identified a stark disconnect between executives and consumers on how well organizations are making emotional connections; where 80% of executives feel their brand understands the needs and desires of their consumers, only 15% of consumers agree. 

Kees Jacobs, Consumer Goods & Retail Lead, Insights & Data Global Practice at Capgemini said, “Consumers are immune to transaction based loyalty programs of the past, so a retailer’s engagement with consumers needs to shift from being transactional to more emotional and meaningful. Decoding human emotions will ensure that brands have a better understanding of their consumers leading to building deep-seeded engagement and long-term loyalty with them. With a potential revenue boost of 5% up for grabs, and weak emotional connections ready to be exploited by the competition, no retailer can afford to ignore this reality.”

The report found that 82% of consumers with high emotional engagement would always buy the brand they are loyal to when making purchasing decisions (compared to 38% of consumers with low emotional engagement). In addition, 81% of emotionally connected consumers will not only promote the brand among their family and friends, but they will also spend more too. The report found that 70% of consumers with a high emotional engagement spend up to twice as much with those brands.

Emotionally engaged consumers are loyal to the brands they love and willingly act as ambassadors to family and friends. They want brands to be engaged and reciprocate their loyalty in two-way interactions (86%), but they also enjoy giving back to a brand (81%).  Consumers also want differentiated shopping experiences both online (75%) and in store (73%)

According to the report retailers need to change the way they build relationships with consumers so they are focused on building engagement and mutual trust, rather than being transaction focused. The report sets out four key components to driving ‘human loyalty’ that retailers should follow to create strong positive emotions, and therefore deeper engagement and loyalty with their consumers which includes, Respect, Reciprocate, Recognize and Reward.