What’s the difference between emotional and behavioral loyalty?
Let’s face it – customers are expensive to obtain. Enterprise accounts are even more expensive to win, and you’re almost always facing a competitive situation. What is a SaaS company to do when the competition is so fierce?
The goal for Customer Success organizations is to develop emotional loyalty in your customers as opposed to behavioral loyalty. What exactly is the difference between the two, you may ask?
Behavioral loyalty is simply when customers are loyal because they have to be.
Emotional or attitudinal loyalty occurs when customers are loyal because they love your product, service, or experience. As a company in a competitive marketplace, you can see that the latter is much more desirable.
Do better than ‘try not to annoy’
To help illustrate the difference between behavioral and emotional loyalty, I’ll share a quick example. When I worked in downtown Cincinnati for a large multinational company, I drove the same route to work every morning. Once a week or so, I would stop to fill up my gas tank at a particular gas station on that route.
This particular gas station always seemed to have higher prices than many of the other nearby gas stations, and many times had trash overflowing from their garbage cans located near their pumping stations. But I still stopped at that gas station. I did so because it was convenient. I did not want to fight the additional traffic for the small discount from a neighboring competitor.
However, if another gas station would have opened on my route, one that had higher sanitation standards and competitive prices, my loyalty and my patronage would have easily switched to them. I demonstrated only behavioral loyalty to the convenient gas station. I did not love their brand or their service. I will, however, crawl over broken glass for my Apple iPhone or Chick-fil-A, because of my emotional loyalty to both their products, but also their service that helps to elevate and expand my experience.
I once worked for a startup as employee number seven, leading the Customer Success department. In the early stages of companies like that startup, the most salient thing that matters is your product. You must have an attractive product in order to build engagement and entice your customer to buy.
As a company grows, you must start expanding your focus and build a positive, enjoyable experience for your customers. The importance of having someone within your organization who looks at the experience journey with your product, and how your customers do or do not follow that journey cannot be overstated. I knew in those startup days that if we did not have a viable product, that we couldn’t even play the game.
However, if we didn’t have a well-articulated and executed customer experience, we would likely still not be able to win enterprise clients. So, my focus turned to helping my clients understand what their experience would be like from the get-go; what deliverables they would receive and what interactions they would have, and we saw the difference that made.
MVP to mature
As I mentioned before, creating emotional loyalty is quite an expensive endeavor. Building products that customers love, instead of products they simply use, is no easy feat. The same goes for creating an experience that delights instead of one that simply does not annoy.
Story time again. I used to work for Apple, to support customers that needed help with iOS and MacOS software. iPhones are pretty complicated if you’re not tech savvy, and Steve Jobs knew that the experience of using an iPhone was just as important as the design and features of the phone itself.
Apple does indeed have Customer Success Managers, although they call them by a different name. They call them Geniuses, and they are staffed at the Genius Bars in Apples retail stores. It is not cheap to hire fifty Geniuses to work at each store, but this was a strategic investment that Apple made into their customer experience model, and clearly it has paid off, as Apple is the most profitable company in the world.
Imagine if customers were given an iPhone and Apple’s standard for their customer experience was as low as ‘try not to annoy’. Talk about a nightmare! From this example, we see that building an experience that empowers and delights your customers will require both investment and clarity on the part of leadership.
Building emotional loyalty doesn’t happen in silos
It’s trite by now, but big companies are heavily siloed. A couple times a year they may have a big three consultant come into their company and tell them you need a “cultural change”. This is true. And with regard to Customer Success, they need to be in small agile working groups with product, IT, and CX teams. It takes all of these groups to fully form and implement the product/service combination required to build emotional loyalty.
I once interviewed for a job at a Insurtech company that was a creation of the largest reinsurance company in the world. In the interview I asked why they were not a part of the parent company. My interviewer told me, “…it is because they do not have the culture that would allow us to move as quickly and efficiently as we need to.” Good on them for understanding that instead of trying to bring this Insurtech under their corporate umbrella, that the parent company simply gave financial backing to them and proverbially said, “Go forth and conquer, my son”.
The market will continue to reward those SaaS companies that are working toward building emotional loyalty while the rest worry about keeping the lights on. Big companies have legacy products that keep them occupied most of the time. However, they can make space for small working groups in new SaaS initiatives and give them the resources to create something that delights.
The future belongs to those companies that prioritize, not just the product, but the service and experience of those products. Behavioral loyalty might have been acceptable in the past, but now, building an experience that delights each customer will be the work of the future.