Loyalty in uncertain political times

01 May 2019

In personal crisis, human response is fight, flight, freeze or flopi. And in unfamiliar situations, it is a rare person who strikes out into the unknown. In other words, when things go wobbly politically, we stick to what we know; we freeze and flop, and don’t take risks. Given the current political situation in the UK and Europe, this may be good news for any company with a focus on emotional loyalty. 

Loyalty programmes strive to foster feelings of communityii and belonging to something bigger. These emotions seem to be scarce in these Brexit times, where there has been a retreat into tribalism and division. But consumer psychology and behaviour changes during uncertain periods, and for good reason. In recent periods of financial ambiguity and austerity, consumer spending has been controlled and firm priorities setiii. Topical news coverage has suggested food price increasesiv and shortages of important essential items post Brexitv. House sales have slowed, and people are definitely hunkering downvi. The wide consumer choice that we have all enjoyed for decades, that has fuelled our multi-brand purchasing behavioursvii, may no longer be possible. With the resolution of our relationship with Europe now pushed to October, we know that 2019 is likely to be a poor year for growthviiii. However, although consumers loyalty may be driven by scarcityix, it doesn’t necessarily have to be the case. 

Companies with a loyalty programme, that can be flexible enough to respond to the emotional attitudinal, behavioural changes of their members, can benefit hugely in such doubtful times. What needs to be considered? Before the last financial crash, banks with large lending profiles focused considerable energy in identifying mortgage customers who would not be able to meet their payments, should the interest rates increase substantially. They worked to communicate with customers and manage risk. Loyalty programme managers might do well to take a leaf out of their book. Instead of behaving as they always have done, consumers are taking the temperature of the economy and political climate to form their attitudes and behaviours. And right now, consumers are freezing. 

There are two consequences for marketing activity based on emotional loyalty. The first is that communications using previous purchasing behaviours and segments will not speak to members effectively. The second is that emotional loyalty and engagement, if well-established, will reap benefits. The Harvard Business Review suggests that there will be new, attitudinal rather than behavioural customer segments that they have named: slam on the brakes; pained-but-patient; comfortably well off and live for todayx. They suggest that marketeers identify which segments their members fall into and address four key communication types: essentials, treats, postponables and expendables. 

Most loyalty programmes traditionally work with two of these (essentials and treats), but perhaps it now is worth considering more seriously the postponable and expendable communications and your approach towards them. Trust the value of emotional commitment that loyalty programmes build.  Have reciprocal conversations with members and understand your relationship with them. Engage with members who are reacting to Brexit with freeze and flop behaviours, without fearing a loss of revenue. And by doing this, your loyalty programme can engage meaningfully with your members, and flourish in this time of political uncertainty.

 


i https://www.psychologytoday.com/gb/blog/%C3%A9volution-the-self/201507/trauma-and-the-freeze-response-good-bad-or-both
ii Mark S. Rosenbaum Amy L. Ostrom Ronald Kuntze, (2005),"Loyalty programs and a sense of community", Journal of Services Marketing, Vol. 19 Iss 4 pp. 222 – 233
iii https://hbr.org/2009/04/how-to-market-in-a-downturn-2
iv https://inews.co.uk/news/food-more-expensive-brexit-list/
v https://www.theguardian.com/commentisfree/2018/jul/31/prescription-drug-brexit-pharmacy-supply-chains-shortages
vi https://www.theguardian.com/business/2018/dec/18/house-prices-will-stagnate-in-2019-as-sales-fall-rics-says
vii (Currim & Schneider, 1991; East, 1997)
viii https://www.theguardian.com/business/consumerspending
ix (East, 1997; Chandon, 1995).
x https://hbr.org/2009/04/how-to-market-in-a-downturn-2