The distinction between these two kinds of loyalty came home to me last summer when I was participating in a brainstorming on behalf of a major Big Box retailer. They wanted to develop a loyalty scheme for their customers.

The context they gave us was limited, but even from the perspective of a fairly frequent customer of the category (as I am) they had a big issue. Actually, it was embarrassing. For the couple of hours when we were focusing on that company none of us could remember its name and kept confusing it with their main competitor. (Embarrassing because they were watching us via a live video feed.) Clearly they operated in a commodity market. We all agreed they needed to create some affinity in a market where little existed.

And a loyalty card was unlikely to be the answer.

In any event, the jury is out on the ROI of these schemes, as many have noted (this review ‘Do customer loyalty programs really work?’ is especially good at weighing the pros and cons). But even if reward schemes were undoubtedly a good thing I would argue (and did during this event) that transactional loyalty…loyalty based on a fairly rational trade of your commitment to a store/airline/publication in exchange for miles, points, access, information or whatever…should never replace emotional loyalty. Ideally you should have both. But emotional loyalty trumps the transactional kind every time.

What is emotional loyalty and how do you get it?

There are many sources and kinds of emotional loyalty. For brands, political parties, sports teams, religions…actually most everything…close identification between the person and the organization, especially at the level of shared values, is often a fundamental requirement. You may self-identify as a non-conformist and creative person and align yourself with Apple and so never consider another brand. Or you see yourself as a rebel deep down despite being a dentist or management consultant by day, and slap on your tattoos and slip on your leathers at the weekend to hang out with your Harley Brothers. Getting a ‘rice-burner’ (their term, not mine) would literally be an anathema. Identification between individuals and a political party or religion is even clearer to see.

What I’m interested in is the loyalty that comes from membership of some kind of community or social structure. I’m interested in this because I’ve come to see that community is the engine of loyalty. The kind of loyalty that effective social structures create trumps all others. Things like identification at the level of shared values between members and the organization, be it the Tea Party, Apple or Wicca, is normally just one of the outcomes alongside the fundamental drivers of commitment that community creates: a sense of belonging, a shared worldview, mutual support, a common goal and many, many more. But more of that later in this this blog.

One quick example of the power emotional loyalty vs. transactional loyalty.

At Meetup we undertook a big quantitative and qualitative research exercise to identify the pain and stimulus points in the Meetup experience that we could either fix or develop. We wanted to increase joining, participation and commitment to Meetup Groups. How can we get more people not just to sign up, but to show up at a Meetup? How do we get them to attend more than once? What is the trigger to becoming an active contributor to the group? What prompts someone to become an Organizer and how can we make it easier?

One of the key findings is that real commitment to a group kicks in when the emotional drivers do. Most people say they join a Meetup for the ‘transactional’ benefit: “I want to practice my Spanish.” “I want to learn to knit.” “I’m going crazy staying at home with my two year old and need to meet other mothers for play dates.” These transactional benefits never go away but the real loyalty occurs when they attend an event for the fourth or fifth time. And the reason they want to return is not just to learn how to pearl one, drop one, but to see Jake again, or catch up with Jessica or Ahmed. And that’s when the benefits of these social ties start to develop into the real sticky glue of a community: things like the mutual support of “others like me”. We would frequently see comments such as: “About half of the moms in the group are military spouses and understand what I am going through. It’s a great support group and whenever a group member has needed anything, I am proud to say, my members have come through.”

To leave that community would be very tough. As it is to leave the Harley brotherhood, or perhaps your local church. The emotional bonds to the organization are sourced in social bonds. And leaving would be like saying goodbye to your friends and family. And letting go of your shared values and experiences. A greater cost, I would argue, than not accruing a few hundred more purchase points on your card.

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