Hands up, if you think relationships are essential in business? A forest of hands go up in the air every time this question is asked. But exactly how important are relationships when you compare them to product quality, price, ease of use, customer service, digital self-service capabilities, and so on?
I conducted a several-month-long research project with data collected from some 18,537 customers of 24 large organizations from 9 different industry sectors. The data was analyzed using structural equation modeling on 59 customer groups. In the process, B2B and B2C customers from the US, Canada, UK, Europe, the Middle East, and East Asia answered 1m+ survey questions. The research culminated in my book “The Big Miss: How Organizations Overlook The Value of Emotions” (Business Expert Press, 2022).
In the research, I tried to compare how much value does the feeling of a relationship drive for organizations compared to the typical customer lifecycle journey touchpoints (i.e., things like brand and advertising, learning about the product / service, the buying experience, the joining experience, the product price, quality, ease of use, the quality of customer service, communications, the self-service and account management options, etc.).
With this goal in mind, I created a touchpoint called “Feeling of a relationship.” However, as I proceeded with the analysis, I saw that it goes beyond the feeling of a relationship. It’s more about “Emotional attachment,” as some of the most prominent aspects of it were things like “Cares for me as a person,” “Values me as a customer,” “Feeling appreciated,” and so on.
And isn’t this what our personal relationships are – an emotional attachment. Think about your loved ones, partner, parents, kids – what makes them stand out from the rest of your acquaintances is your emotional attachment to them.
I found that “Emotional attachment” was the biggest driver of value in 59% of the customer groups we analyzed and overall was responsible for 43% of business value – far more than 2nd ranked “Product and use” with 20% and 3rd ranked “Brand and advertising” with 18%.
When I say “drive value for organizations,” what I mean is customers being more likely to recommend the organization, buy from them again or renew their subscription, contract or insurance policy, seeing the organization as easy to work with (which research suggests is a predictor for future financial performance) and seeing the organization as distinctively better than competitors.
The findings are consistent with the research of some companies that have been working on customer experience for many years. For example:
- a US-based global logistics company found that emotions measured at distinctive points in the customer journey were contributing to 46% of the brand attachment and share of wallet, while cognitive loyalty (satisfaction) was contributing to 39% of Brand Attachment.
- a US-based global B2B hardware & software company found that customers who describe the organization as a “trusted advisor” allocate 32% of their budget with them vs. 26% of those describing them as a “partner” and 22% as a “vendor.”
Research from other organizations also confirms the importance of emotional attachment. For example, Motista collected data from 2016 – 2018 from more than 100,000 customers of more than 100 retailers across multiple sectors. They found that customers who feel an emotional connection to a brand are far more valuable to retailers, in some cases spending twice as much, than customers who rate themselves as satisfied with the brand (CSAT). Additionally, these emotionally connected customers have a 306% higher lifetime value (LTV), stay with a brand for an average of 5.1 years vs. 3.4 years, and will recommend brands at a much higher rate (71% vs. 45%).
Another organization, MBLM, which uses a distinctive index to measure the customer’s intimacy with an organization, also found that brands that nurture emotional bonds with their customers tend to outperform top companies listed on the S&P 500 and Fortune 500 in both revenue and profit. Not only that, they can also build higher levels of trust, which in turn breeds a more loyal consumer base over time.
Behavioral science comes to the forefront in explaining why the feeling of relationship and emotional attachment are so important. Professor Daniel Kahneman, the Nobel laureate for economics, says “There is confusion between experience and memories. We actually don’t choose between experiences; we choose between memories of experiences.” And what creates memories? Considerable research shows that the greater an emotion is felt, the more vivid the recollection of that experience. We may forget the transactional side of the experience, but it is the emotional peak and ending points that stick with us.
So, if what drives the most value for organizations is the “emotional attachment,” what can organizations do?
- Focus on the emotional connection and the feeling of a relationship.
At the moment, when organizations use Journey Mapping, they focus on the customer actions and the rational side of the experience. They try to smooth the journey and find opportunities for digital automation.
Interestingly, even removing friction from the customer journey and making it easy to do business with is about perception, which is driven again by emotions. According to Gartner, how customers feel drives 59% of the Customer Effort Score (CES). However, when it comes to taking action, 73% of Customer Experience (CX) teams are more inclined to focus on the objective factors that drive customer effort, rather than on addressing how customers feel.
Customers have the inner desire to feel a sense of belonging, that they are valued and appreciated as customers, that the organization they buy from cares for them as individuals and is trustworthy and reliable.
Organizations should rethink their journey maps and moments of truth to not only look at what customers are trying to do but how they are using the various interaction touchpoints as opportunities to create an emotional connection and a feeling of a relationship.
With digital transformation, organizations should think:
- which interactions to automate and digitize
- where to keep or redeploy the human element to drive more emotional attachment
- how to also evoke key value driving emotions in the digital customer journeys
- Do not (solely) take customers on their words.
Unequivocally, what customers tell you and what they do can be very different. In our research, we found that customers don’t know what they really want. When the company, Beyond Philosophy performs its Emotional Signature research, they use maximum difference scaling (which looks at Most Important vs. Least Important) to find what customers want most and predictive analytics to find the key drivers of business value (customer attitudes). They found that in 74% of the customer groups we analyzed, customers state Product as the most important for them, but in reality, the predictive analytics structural equation model showed that the Product only accounts for 12% of the largest drivers of value. On the other hand, only in 2% of customer groups analyzed did customers state “Emotional attachment” as the most important aspect, when in fact, “Emotional attachment” was shown to account for 59% of the of actual value.
Hence, as you can see, the true drivers of value are often hidden, and this is predominantly the case with “Emotional attachment”. Harvard Business School professor Gerald Zaltman says that 95 percent of our purchase decision-making takes place in the subconscious mind. The subconscious is the process and thought of which we are not aware, the “human operating system.” We are not mindful of it running, but the subconscious has a surprising effect on what we do. To gain customer-driven growth, organizations need to adjust their research methodologies to look at the hidden, often subconscious drivers of customers’ attitudes and behavior.
- Include emotions in your research.
Emotions heavily influence customers and play a big part in the experience. Colin Shaw in conjunction with London Business School first pointed this out in 2005 (see “The DNA of customer experience: How emotions Drive value”, Palgrave MacMillan, 2007). Subsequent studies have found each and every time that emotions play a significant role. I discovered in my own research that emotions positively or negatively affect at least 48% of business value. (48% in B2B and 49% in B2C). Consequently, if you are doing research without emotions, then you may be missing a crucial part of the real world. This oversight could cause you to miss the biggest opportunities to gain customer-driven growth.
Of course, these are just the tip of the iceberg. As Colin Shaw of Beyond Philosophy, says, “If it was easy, everyone would be doing it!”. If you want to know more read the book “The Big Miss: How Organizations Overlook The Value of Emotions” (Business Expert Press, 2022).