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Tuesday, February 20, 2018

Retail revenue may rise 5% with high emotional engagement

Bangla Apparel Desk

December 06, 2017

The retailers who are able to foster loyalty through higher emotional engagement with consumers, are most likely to see 5 per cent rise in their annual revenue, says a report. Creating an emotional connection with consumers will drive multiple benefits for retailers while it was found that traditional loyalty programmes are failing to engage consumers.

The report, which surveyed more than 9,000 consumers and 500 executives, found that emotions have the strongest impact in driving consumer loyalty. 82 per cent of consumers with high emotional engagement would always buy the brand they are loyal to when making purchasing decisions (compared to 38 per cent of consumers with low emotional engagement), according to the report titled 'Loyalty Deciphered— How Emotions Drive Genuine Engagement'. The report was recently released by Capgemini’s Digital Transformation Institute. The Digital Transformation Institute is the in-house think-tank on all things digital of Capgemini, a global leader in consulting, technology services and digital transformation.

The report has also identified a stark disconnect between executives and consumers on how well organisations are making emotional connections; where 80 per cent of executives feel their brand understands the needs and desires of their consumers, only 15 per of consumers agree.

"Retailers need to change the way they build relationships with consumers so they are focused on building engagement and mutual trust, rather than being transaction focused. Emotions have the strongest correlation to loyalty over rational factors and brand values. Specifically, honesty and trust were noted as having the greatest influence on loyalty. However, there does need to be a balancing act with rational benefits. Consumers with high emotional engagement still believe rational factors and brand values are important when they decide on which companies they will bestow their loyalty," the report stated.

"Consumers are immune to transaction based loyalty programmes of the past, so a retailer’s engagement with consumers needs to shift from being transactional to more emotional and meaningful. Decoding human emotions will ensure that brands have a better understanding of their consumers leading to building deep-seeded engagement and long-term loyalty with them. With a potential revenue boost of 5 per cent for grabs, and weak emotional connections ready to be exploited by the competition, no retailer can afford to ignore this reality," Kees Jacobs, consumer goods & retail lead, Insights & Data Global Practice at Capgemini, said.

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