Emotions are a core part of what makes us human, yet many people don’t talk about them, much less acknowledge their role in the decision-making process.
Advancements in psychology and neuroscience have greatly enhanced awareness of the central role that emotions play to decision-making. The latest findings in behavioral economics understand that people don’t necessarily behave rationally, a big shift in overall economic theory. Clearly, understanding emotions has substantial implications for many fields, especially marketing.
So, we know how important emotion is to decision-making, and how it’s a critical part of effectively engaging and connecting with customers, but to what degree? How much of an impact does what consumers think and feel about a brand have on how they act?
Emotions and the bottom line
New research by Forrester Consulting, commissioned by FocusVision, found that how a customer thinks and feels about a brand are statistically significant drivers of their loyalty, advocacy and purchasing decisions. Further, a customer’s emotional connection with a brand has a 50% greater impact on driving positive business outcomes than what they think.
In short, emotions drive business results.
This isn’t just nice to know information. Companies can predict business outcomes by understanding how their customers think and feel about their brand, and then making improvements to those perceptions. The return is apparent. With just small tweaks, brands can increase purchasing rates, improve loyalty and maintain subscriptions, according to the study.
Big data vs. small data
Emotion’s role in decision-making is widely accepted in the marketing community. The same Forrester study found that 93% of companies agree that consumers are more likely to spend money with a brand that they feel connected to. Additionally, 88% agree that better understandings of how their customers think and feel will help them win new customers.
However, despite the recognition of the role of emotion, only 38% strongly agree they know why one customer chooses to buy from their brand and another doesn’t.
One explanation for the disconnect is seen when taking a closer look at the data companies use to understand their customers. More than half (56%) report relying on big data to answer questions about how their customers think and feel. But big data (i.e., clickstream, transactional, POS, CRM, location, etc.) can only indicate what consumers are doing, not why they are doing it.
This is demonstrated in the Forrester study, which found that big data—such as the frequency with which consumers interact with the brand, the length of time the consumer has subscribed to the brand, and the frequency with which consumers purchase from the brand—are not statistically relevant indicators of how they’ll act.
Find out why customers act
Not knowing why your customers act the way they do leaves opportunity on the table. The need to get close to them through small data in the form of surveys, online research communities and interviews is clear.
Understanding their likes, dislikes, routines, and values as well as other contextual information around how, where and why they are using your product or service provides essential information to drive your brand forward. The Forrester study shows that small data isn’t just nice to have, it’s essential when it comes to winning over your customers’ hearts and minds.
In sum, understanding customer truth helps you create positive experiences across all brand touchpoints and can be used to predict business outcomes.