Using Emotional Intelligence to Improve Customer Service and Loyalty

Modern marketing is not just about advertising the superiority of products. While the features of a product are undoubtedly important, delivering quality products and services is just the starting point for any business. However, this foundation needs a crowning glory, which is proper customer relationship management and the cultivation of emotional loyalty. After all, customers aren't just buying products and services; they're investing in the promise of a better life. What does that mean, and how can emotional intelligence be used to achieve it?

What is emotional intelligence?

Emotional intelligence is the ability to recognize, understand, manage, and utilize emotions. This concept involves a set of emotional and social skills that, that enable to navigate through complex social situations and make informed decisions.

From a brand perspective, the key components of emotional intelligence include:

• Self-awareness: The ability to understand one's own emotions and their impact on others, as well as an awareness of strengths, weaknesses, values, and goals.
• Self-regulation: The ability to control emotions in challenging situations, allowing brands to respond professionally to unexpected events.
• Motivation: The ability to consistently deliver value and stay focused on goals.
• Empathy: The ability to recognize and understand the emotions of others, making them feel heard and understood.
• Effective communication and interpersonal skills: Skills that help maintain positive relationships.

Emotional intelligence is essential not only for businesses, but also for individuals. It emphasizes the ability to understand and manage emotions, which is key to success in both professional and personal life.

From a brand perspective, strong emotional intelligence, is what helps to create a deep connection with customers and differentiate from the competition.

The role of emotions in boosting Customer Lifetime Value

Each of us is a customer. Depending on our needs, we return to certain brands more or less frequently. This is influenced by many factors, such as our lifestyle, hobbies or values. Therefore, it is clear that not every customer is inclined to build a deep relationship.

However, those who do want to engage can be easily encouraged to do so. One of the key benefits of emotional intelligence in business is the creation of an emotional connection which triggers up to 95% of transactions. This emotional connection can be related to a product, a company, or a lifestyle associated with a particular purchase. It is crucial to create such an emotional connection with the brand so that the customer wants to make regular purchases.

In fact, according to Deloitte's Customer Drivers report, 62% of customers say they feel an "emotional connection" to the brands they buy from most often. What's more, as Alexis and Dune de Prévoisin point out, when used correctly, emotion can be very effective in increasing customer lifetime value.

They also refer to a study by the Center for Retail Management at Northwestern University, which shows that 15% of the most loyal customers account for 60% of a company's total sales. This means that a customer who buys products frequently, but with a smaller basket, will ultimately prove to be much more profitable than a customer who buys large amounts less frequently once in a blue moon.

Overview of the emotional intelligence concept in loyalty programs

In the context of loyalty programs, emotional intelligence refers to a company's ability to understand, manage, and leverage emotions in the process of creating the marketing messages and narratives. The goal of these efforts is to create a lasting, positive connection with customers and address their unspoken needs.

As Ben Lipsey, Senior Vice President, Customer Loyalty at Air France, explains: “The emotional impact is the source of memorization and membership. It is the emotion that allows us to choose and act.”

Communication based on positive emotions should aim to foster a friendly relationship between the brand and the customer. The salesperson should strive to position himself or herself as a friend who accompanies the customer in the most important moments of his or her life. “Because behind our services, there is always a memorable journey”, Lipsey adds. Loyalty programs with high emotional intelligence go beyond transactional interactions and aim to build deeper, more meaningful relationships. How can this be achieved?

Strategies for building emotional connections with customers

Building an emotional connection with customers is a long and complicated process that requires a significant amount of effort. It is crucial to incorporate both a technological approach, such as automated communication, high levels of customer service and overall product quality, as well as a more creative approach based on developing interesting narratives and engaging storytelling.

As Patrice Laubignat, president of the Club du Marketing Émotionnel, explains: "We need to reverse the paradigm: so far, it has been up to the client to prove that they have been loyal to a brand. From now on, it is the brand’s responsibility to prove that it is faithful to its customers." The most important step is to understand your customers; collect data on your customers' preferences, behaviors, and needs. Use surveys, feedback forms, and analytics to understand their expectations. Once you have an appropriate strategy, you can move on to the next steps.

Customer Loyalty Programs

These programs are designed to reward customers for their loyalty to the brand. In general, they allow to accumulate the points that can be exchanged for transactions. However, there are different types of loyalty programs, including points-based loyalty programs, punch card programs, cash back loyalty programs, tiered loyalty programs, and many others.

Empathy

Customers often turn to a company in urgent situations that require immediate action. They demand an appropriate, empathetic response from the company, whether it's a call center agent, customer service representative, a chat representative, or an AI chatbot. The outcome of these interactions determines whether the customer will have a positive memory of your brand. Up to 86% of customers say that positive interactions with agents make them more likely to return to certain locations.

Major corporations recognize the importance of emotional intelligence in their customer service teams. In fact, 75% of Fortune 500 companies use emotional intelligence training tools to train their employees.

Understanding Customer Emotions

Emotional intelligence requires an understanding of customer emotions. Why does the customer want to buy a particular product? What attributes do they associate with the product? How does the specific product or the entire brand align with their lifestyle? To gain critical insights, companies should utilize the services of data analysts and customer feedback analysis tools. Based on this information, a strategy should be developed to create marketing messages and other actions that are aligned with the true core of the brand.

Sense of empowerment

Customers are more engaged with a brand when they can have an impact on it. A sense of agency can be achieved through surveys and reviews provided to customers after purchases or other interactions with the brand. It's important for customers to feel that their feedback is valuable and will be considered. Another way to create a sense of agency is to allow customers to choose their reward from several options offered by the brand.

Build community

Customer loyalty also comes from a sense of belonging to the group. Even if the brand's target audience identifies as individualists, it's still valuable to create a community with which they can identify. Every individual wants to belong to a group. Actions such as storytelling and sharing customer experiences drive interactions and allow for the creation of shared experiences.

In essence, loyalty programs based on emotional intelligence should take a multichannel and omnichannel approach, combining both online and offline channels of engagement. By recognizing customers' emotions, a company can determine its course of action and provide solutions to their problems. This results in deepening customer loyalty and fostering long-term relationships built on trust, understanding, and positive emotional connections.

Identifying and targeting high-value customer segments

Businesses deal with different types of customers. According to Dr. Fader, there are three basic types of customer segmentation:

• MEH customers, representing 70% of your customer base, show little attachment to your products and tend to shop around for better prices or offers from competitors, resulting in a significantly low lifetime value.
• GOOD customers, which make up 20% of your customer base, show enough interest in your products to maintain a relationship with your company for an extended period of time. This results in a higher lifetime value, and with proper care, they have the potential to evolve into GREAT customers.
• GREAT customers, who represent 10% of your customer base and are often referred to as Loyal Customers, demonstrate long-term commitment and can stay with your brand indefinitely. They act as enthusiastic advocates with a remarkably high lifetime value. This segment should be the primary focus of your targeting efforts.

How do you identify the ones that bring the most profit to the company? Identifying customers in the "GREAT" category requires understanding their behaviors, preferences, and other actions. Here are a few steps that can help identify this group:

• Analyze purchase history: Reviewing purchase history data helps identify customers who have made multiple transactions and are regular users of the company's products or services.
• Tracking interactions: Monitoring customer interactions with the brand, such as loyalty program participation, newsletter subscriptions, and attendance at company events, can provide clues to their engagement.
• Review opinions and reviews: Customers in the "GREAT" category often share positive opinions and reviews. Search online reviews, industry forums, and social media to identify those who are actively promoting the brand.
• Surveys and research: Gathering direct opinions from customers through surveys and research can provide valuable information about their preferences and satisfaction.

The combination of these strategies allows the company to identify customers in the "GREAT" category and focus efforts on maintaining their loyalty and further building positive relationships with the brand.

Exploring technology's role in enhancing emotional connections

It may seem that building emotion relies primarily on narrative, storytelling, and constructing a narrative that the customer can relate to. This is a good approach, but as in any area of life, if we want to outperform others, we need to equip ourselves with the latest technologies that help us make accurate, data-driven decisions.

Although it sounds paradoxical, emotions are in a sense measurable, and the effects of their impact can not only be predicted, but even attempted to influence. While it's impossible to pinpoint someone's feelings on a scale of 0 to 100 with an accuracy of 1 point, such as sympathy, sentiment, excitement, or nostalgia, you can study customer behaviors that leave a real, measurable trail. How do you ensure the best possible customer service? Emotional Intelligence is the answer!

Data Analysis

Advanced data analytics provides an in-depth understanding of customer preferences and enables precise personalization of content delivery. It also makes it easier to identify the moments in the transaction that pose the greatest challenges for customers.

AI chatbots and voice assistants

AI tools enable continuous communication with customers. These algorithms can be trained with appropriate data to ensure that their responses are not only helpful, but also empathetic. Voice assistants can take such interactions to a higher level, providing an even better and more human level of customer engagement with the brand.

CRM systems

Customer relationship management (CRM) systems allow precise management of various key stages of customer interaction with the brand. They are also excellent tools for creating personalized messages tailored to each customer. Applying the principles of emotional intelligence to relationship management allows for the integration of all tools to achieve an even better result.

Mobile apps and push notifications

Mobile apps allow businesses to stay in constant contact with their customers. Companies with their own apps have an advantage over those that require customers to visit their website. This is because apps allow for better optimization for users' devices, ensuring a better experience. Mobile apps also make it easier to send push notifications to customers, making them an excellent tool for staying in touch.

Augmented Reality

Augmented reality tools help provide customers with an even better shopping experience. They allow customers to virtually try on a particular garment or accessory, or visualize the interior of a particular piece of furniture, all without leaving their home.

Organic social media reach

Social media platforms are tools that enable direct contact between companies and their audiences. They make it possible to achieve organic reach and build relationships based on direct communication, maintaining a constant presence in the lives of customers according to their preferences.

Gamification

Gamification enables the creation of more engaging and emotionally rewarding customer experiences. It helps customers track their progress in a measurable way through loyalty points, increasing their engagement and making them more likely to return to loyalty programs.

Interested in emotional loyalty? Check out our e-book!

Investing in emotional intelligence is a critical element of a company's marketing efforts. To learn more, check out our e-book "Emoloyalty From Emotional Connection to Brand Success: The Path of Loyalty".

Read the e-book to find out interesting strategies, understand the importance of emotional intelligence, explore real-life cases and read inspiring interviews with industry experts.

Click here to download the E-Book.