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#490: Leaders in Customer Loyalty Industry Voices: Driving Emotional Connections That Survive Competitive Pressures

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How do your customers honestly feel about your brand? Are they just interested in discounts, or do they really believe your brand cares about what they think, buy, and experience when they shop with you? Are there strategic moves your company can make to create a stronger, more lasting relationship with both customer loyalty program members and non-members alike? 

Mark Johnson, CEO of Loyalty360, spoke with Denise Holt, SVP and Head of Strategy, Experience & Research at Phaedon on ways to cultivate an emotional brand connection with today’s value-conscious consumers.  

SPEAKER_00:

Good afternoon and good morning. This is Mark Johnson from Loyalty360. Hope everyone's happy, safe, and well. It's a Tuesday, so that means another edition of our Leaders in Customer Loyalty series, the Industry Voices podcast. In these episodes, we speak with leading agencies, technology partners, and consultants in customer, channel, and brand loyalty about the technology trends and best practices that impact a brand's ability to drive unique experiences, enhance engagement, but most importantly, impact customer loyalty. Today we're excited to be joined by Denise Holt, who's a senior vice president and head of strategy, experience, research, and insight at Fade In. Denise recently joined us for an encycle webinar on the power of emotional loyalty. We explored how brands can move beyond transactional tactics such as points and discounts to build deeper, more authentic customer relationships. The discussion focused on strategies for strengthening emotional connections with qualitative insights from Loyalty 360's executive perspective reports. This included excerpts from brand interviews that reveal the challenges of creating and sustaining emotional loyalty in today's competitive landscape. Welcome back to the podcast, Denise. I'm glad you can join us. How are you?

SPEAKER_01:

Excellent. Thanks, Mark.

SPEAKER_00:

To start off, for anyone who hasn't seen the webinar and may not be familiar with what Faden offers, can you give us a brief overview of how Faden helps brands strengthen customer loyalty? And you know what differentiates your offering and your approach from others?

SPEAKER_01:

Sure. Faden really does have a rich history as a loyalty and customer experience consultancy. And we've evolved significantly over the years, as you know and your audience knows, just to meet the changing needs of today's brands and customer demands. Our core expertise really spans a full spectrum of loyalty strategy and execution. We help brands design and optimize loyalty programs from the ground up. We might develop sophisticated CRM strategies. We execute against those strategies to really drive more meaningful customer engagement. And I would say what truly differentiates us is our proprietary technology alongside of our consulting practice. So it's really about taking a best-in-class loyalty technology solution to power flexible modern programs. We infuse a product we have called Clary, where we provide AI-driven insights from the data that really helps brands understand and act on customer behavior in real time. And then you take all of that and it's driven by strategy to make sure that the business objectives that our clients are trying to accomplish are really met with the combination of all three of those.

SPEAKER_00:

When you look at customer loyalty and its true potential, a good deal of that is driven by the hope of emotional engagement. I think you described it as that next level connection in the webinar, something that's beyond transactional engagement. Can you explain to us a little more about what that means?

SPEAKER_01:

Yeah, we've really invested heavily in understanding what creates these truly resilient customer relationships through our humanizing loyalty research. And what we found is that while transactional loyalty, think like earn points, get rewards, it has a place, but it's simply not enough to create that kind of lasting bond that will withstand competitive pressures. So emotional loyalty is really what separates customers who stick with you from those who chase that next best offer, for example. It's about, you know, customers really feeling genuinely connected to your brand, not just because of what you sell, but because of how you make them feel and what you represent in their lives. So as I referenced briefly in our recent webinar, our Risha research identified six key drivers of emotional loyalty for those who didn't see it: trust, appreciation, reliability, investment, empathy, and shared values. And these drivers really work together to create relationships that go far beyond transactions. They're deeper, they're more resilient. And I think about like when brands activate these drivers effectively, they see measurable impact. So think about higher customer lifetime value, better retention rates, increased share of wallet, and customers who begin become genuine advocates for the brand. Our strategy and analytics services are really designed specifically to help brands assess where they stand on these emotional loyalty drivers. And then they can develop targeted initiatives to strengthen those connections. So whether that's through loyalty program design, CRM strategy, it might be customer experience optimization to make sure that experiences in your digital channels are coming to life seamlessly in in-person interactions. So the beauty of emotional loyalty is really that it's both aspirational and measurable. So we help brands just define what it means for their specific customer base, and then you can track against those emotional drivers and then continuously optimize to deepen the relationships over time.

SPEAKER_00:

Can you walk us through some examples of how one or two of these emotional loyalty drivers show up most strongly in customer brand interactions?

SPEAKER_01:

Sure. We see them show up in tangible ways every day in daily interactions. Top of mind are a few examples from our research. We collected open-ended responses from consumers about a time when a brand went above and beyond for them, really strengthening their emotional connection to that brand. And there's a few examples from each of the drivers. So when I think about the trust and reliability drivers, there was an example from someone who was talking about red robin, the restaurant. And they said, I have celiac disease and cannot eat gluten. This restaurant has strict practices when it comes to allergies and intolerances, and employees are trained in these practices. And this was from uh uh Gen X. And this was just truly helped to build their confidence. It helped them to feel um feel like they had a great option for a fun night out and to be able to eat out while making sure that they were being cared for. So that's a trust and reliability example of that coming to life. Again, that's not connected to loyalty, a loyalty program. This is really loyalty as an outcome and building those emotional connections. Um, another example would be if I think about appreciation investment, those two drivers. Um, someone talked about American Eagle and they said um the brand that I'm very loyal to is American Eagle because they deliver excellent customer service at every shopping experience. I get personalized offers through email, updates on when sales promotions are taking place, an effortless checkout when I'm done shopping. And I love the styles, colors, fits of their jeans. And that was for millennial. Um a couple of things coming through there too is that it's the seamless, effortless experience. That is really critical these days. And so I think there's a ton more focus on um UX and UI and how that's factoring into the experience. And then if I were to think about um the empathy and shared values drivers, we had an example that someone shared about Hampton Inn. And they talked about how this was from a baby boomer. They said they helped me when I forgot to bring my phone charger on my trip. It was snowing and I couldn't drive. So they hooked me up with someone who could drive me so that I could get what I needed, and I won't ever forget it. So, even in those moments of, you know, those smaller moments where someone is struggling and needs something, you can show up your staff, you can train and empower your staff to show up in really meaningful ways. And that might not have been a huge deal for someone at the hotel to be able to tackle that for them, but it meant so much to this person that they're literally writing about it still today, and they're talking about how they won't ever forget it. So those are just a few um a few examples. And I think what's particularly telling in these examples is that the functional product or offering was really secondary in their comments. So these customers weren't focusing on price points or a deep dive into features. They were really talking about how the brand made them feel, and that's really emotional loyalty in action. So these insights really inform what we do at FAID. And so it's about helping brands assess the emotional loyalty health of their customer relationships and then design whether it's experiences, programs, communications that really consistently activate and operationalize those drivers at every touch point.

SPEAKER_00:

For marketers listening today, you know, what's one actionable step they can take right now to begin strengthening emotional connections with their customers?

SPEAKER_01:

Great question. And people are looking for um, you know, how to jump in and roll up their sleeves. Um, there's actually a tremendous opportunity right in front of us, and that would be Black Friday and Cyber Monday. I think this can be an example to share with the audience. And this feels like the most transactional moment of the year, but it's really your best chance to start building emotional loyalty. So here's some things you could do. Um, like create a clear value hierarchy that makes your members feel genuinely special. Like that can be the one thing you try to accomplish in this Black Friday Cyber Monday moment. Um, doing things like giving your members early access, 48 to 72 hours before the public, elevated points, reserved inventory. But the key is to really go beyond discounts. Think about offering extended return windows during the super stressful holiday season, like make life easier. Um, maybe it's virtual styling sessions or members-only experiences that they can share with family and friends. The holiday season is about finding those special moments with those that you care about. So the more that brands can help enable those interactions, the better. Um, and that's where the you know more memory making takes place. Um, when I think about, you know, then using your data to personalize the experience. So really, you know, segment your deal seekers from your relationship builders, understand who those are within your audiences. And then when you think of deal seekers, deal seekers need to get a post-purchase communication that's really celebrating their wins for deal seekers. They're like, that is a game to them. They want to save money, they feel pride when they're able to do that. So make sure you're supporting that and helping them celebrate, celebrate their wins and set them up for um what's next. And then with you, if you think about your relationship builders audience, they should get content that really deepens connections. So maybe think about providing style guides or product education or some sort of community access to really help build on the connection piece of it. And I think the magic really happens when you carry this into first quarter next year. So use this moment, you know, launch an onboarding series for new members, showing them the benefits that are to come for the year. Or take um those who are non-members, maybe offer retroactive benefits to non-members for the holiday extras that they missed, as long as they join the program. And what this does is you're really transforming a one-time holiday shopper into an engaged long-term member. And that's the real win.

SPEAKER_00:

You know, as we look forward, look ahead into 2026, how do you see emotional loyalty continue to play a role as a strategic differentiator? You know, separating brands that maintain or try to cultivate deep emotional connections from those who revert to maybe just transactional tactics.

SPEAKER_01:

Yeah, thinking about it differently as not just a one-off, but how your entire marketing strategy ladders up to connecting those dots and building those relationships. I think as we look toward 2026, um, the market uncertainty that we've been navigating through, it's not going away. So if anything, brands are continuing to face pressure to do more with less. Marketing budgets are going to remain tight and consumers are increasingly selective about where they want to spend their constricted discretionary income. So in this environment, emotional loyalty isn't just a nice to have, but it really is that strategic imperative that you were referencing. As brands compete for share of wallet, and that wallet size is shrinking, the relationships that will survive and thrive are the ones that are built on that genuine emotional connection and not just transactional incentives that can easily be outbid by a competitor. So I think that the brands that will separate themselves as leaders are those that invest in understanding and activating the emotional loyalty drivers we discussed: trust, reliability, appreciation, investment, empathy, shared values. These really create those durable bonds that will withstand the economic pressures and the competitive threats. Um, you know, really retaining your best customers in 2026 is simply your best customers have to be there for you. It is, you can't lose them. It's not optional, it's critical to maintain them. So customer acquisition costs, as you know, continue to rise and budgets contract. So retention built solely on discounts is fragile, but retention built on emotional loyalty is resilient. So we really need to get the true picture of where brands stand on emotional loyalty. Um, you know, at Frayden, we ground that in data and insights that are actionable and not abstract. I think that's what that's what companies are needing these days is figuring out what that strategy should be. I think about you know, foundational knowledge being essential for delivering those experiences and creating programs that drive meaningful engagement. Because I think a lot of the audience probably it's like emotional loyalty can sound so intangible, uh, but it is absolutely definable and measurable. So we need to track the metrics that matter for each brand, you know, whether that's customer lifetime value, retention rates, churn, repeat purchases, average order value, if it's loyalty program participation and revenue retention, there's KPIs that are critical to a business. The goal is to really connect that to emotional loyalty to understand how they impact business outcomes. So if you think about measurement and optimization capabilities, they're really critical for demonstrating ROI. So when brands can see that direct impact of emotional loyalty investments on their strategic KPIs, it really becomes much easier to justify continued focus and resources, even in constrained environments. But those business cases are really critical. So when we talk about the differentiator in 2026, it won't be who has the best discount or the flashiest promotion. Um, it'll really be who has built relationships strong enough that customers choose to stay, advocate, and they spend, even when a cheaper alternative exists. So brands really need to maintain that customer-centric focus during uncertain times, embed empathy into every experience and really leverage data to personalize at scale.

SPEAKER_00:

When you step back and look at the challenges that brands have, is there kind of a fundamental challenge brands are having with regard to understanding emotional loyalty? Is it important to do the initial research, kind of that foundational piece to understand the drivers that are pertinent to that, you know, that respective brand?

SPEAKER_01:

Yeah, that's a great question. And I think one of the big mistakes is thinking that there is one solve for building emotional relationships with customers. And I think a lot of companies might gravitate towards um just empathy. We need to figure out how to show empathy when all of those drivers that I mentioned are really critical and they have to work together in order to form that whole relationship. If you throw everything into just one specific area of execution, um, it's not enough and you're going to miss something. So I think that's that's probably one um one area that I've seen um missteps in is thinking that one driver alone can be the focus. So as you mentioned, getting that foundational pulse check, like how emotionally strong are your existing customer relationships and in what areas, in what of those drivers, which ones are the weakest right now? And where are you strong? And that will help you to roadmap out what areas of focus should be throughout your next year as your strategic planning. It doesn't mean you need to execute everything all at once. It means that you just need to set a strategic plan and have an understanding of where your baseline is in that emotionally, emotional strength of your relationship. And then how you're going to action, whether it's on different cohorts, specific customer groups, and what that means for operationalizing some of these insights through the engagements that your customers have with you, because it's that it's your communications, it's your um the interactions that your employees have with a customer that make and break some of this. So you need to make sure that you're not just understanding what drivers you're strong in, where you need improvement, but then how do you operationalize that within your business? And so that's where it's important to really have a strategic roadmap for how to develop these relationships over time. So I think clients get a little bit can get a little bit overwhelmed by where to start, but that pulse check and finding out the foundation of where you exist today and then roadmapping out the ways to operationalize that is really important.

SPEAKER_00:

Well, I want to give a big thank you to Denise Holt Faden for joining us on the latest edition of our Leaders and Customer Loyalty Podcast, Industry Voices. If you want to go deeper, please watch the full executive perspectives webinar, The Power of Emotional Loyalty, How Brands Build Lasting Connections. It's available now on loyalty360.org in the webinar section, and there is also a link below to the actual webinar. For more expert insights on customer experience, customer loyalty, and brand engagement, subscribe to the Leaders in Customer Loyalty Podcast series wherever you listen. Follow loyalty360.org on our website and social channels for upcoming webinars, research reports, and executive perspective papers like the one we discovered. Until then, have a wonderful day.