Out of the Head, Into the Heart: How Authenticity Drives Customer Loyalty

imageby Tommy Lynn

Every marketer on the planet can agree that customer loyalty is Job #1. Without loyal customers, your sales cycles are longer and more complicated, and your overall profitability begins to slow.

According to B2B International, “Customer loyalty research has shown that most companies lose 45% to 50% of their customers every five years, and winning new customers can be up to 20 times more expensive than retaining existing customers. Moreover, just a 5% reduction in the customer defection rate can increase profits by 25% to 85%, depending on the industry.”

So what is the future of driving customer loyalty? Believe it or not, it has less to do with spreadsheets and algorithms and more about tapping into your heart. While that may seem a bit counter-intuitive as a business practice, leading and creating through instinct and (wait for it) emotions like empathy, compassion and love can actually bring you closer to the audiences you’d like to connect with the most. Is this a ploy or a trick? No.

Forbes wrote back in 2013 about empathy as sound strategy and noted, “There is growing evidence that organizations that have happy employees, strong organizational health, empathetic leaders, and maybe even a social mission, outperform their peers (see, for example, the study of more than 600 companies showing that those with organizational health in the top quartile registered two times higher financial performance: ‘Beyond Performance’ by Scott Keller and Colin Price). Many corporations—including household names Google and General Mills and Shell—are embracing employee leadership programs based on meditation and mindfulness practices.”

We’ve entered a time when authentic connections with customers (and employees) are critical to the solvency of a business. Millennials, which represent the largest and fastest growing sector of consumers, need to know that companies are giving back and participating in the betterment of society, not just turning a profit. Check out these stats:

  • 91% of global consumers expect companies to do more than make a profit, but also to operate responsibly to address social and environmental issues.[1]
  • 62% of millennials — the largest consumer segment today– say that if a brand authentically engages with them, they’re more likely to become loyal customers.[2]
  • Only 1% of millennials say that an advertisement will make them trust you.[3]

Sources:  [1]2015 Cone Communications/Ebiquity Global CSR Study[2][3]2015 Elite Daily/Millennial Branding Study on The Millennial Consumer

By adopting a “heart-centered” approach, leadership can be active listeners to their employees and gather rich and powerful data that may inform strategy and culture. At Verb, we developed a positive and productive methodology to giving feedback that team members believe foster mutual respect, innovation and progress.

So how does this translate to customer loyalty? The bridge between employee loyalty and customer loyalty is rapidly shortening. What is comes down to is “Can I trust this company to deliver on promises?”

When you have loyal employees and a culture of trust and excellence, those values are embedded in every product meeting, every PR pitch, every marketing program and every customer service protocol.

 Your circle of influence widens with more active product ambassadors, like engaged employees.

Of course, customer support and services plays a huge role in prioritizing “heart” over “head.” According to CMO Magazine, “Customers who feel a company isn’t empathetic to their needs may take their business elsewhere, hitting a company where it hurts—its bottom line. Didn’t think a lack of empathy had an impact on sales? Surprise. You’re missing out on the opportunity to better connect with your customers and earn more of their business.”

Brands need to work hard to prove that they care about the world around them. Because that’s what customers (and potential employees) are looking for. They want to patronize and work with companies that don’t want a percentage of your paycheck, but who want to be part of your life.

Tommy Lynn is the Chief Brand Officer of Verb, Inc., an Austin-based company dedicated to creating authentic connections between rising innovators and companies to enable measurable social impact through social innovation.