🧠 CHAPTER 6: The Modern Buyer Brain: THE NEW LOYALTY: BEYOND POINTS & DISCOUNTS

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0:31Or you can just use the code J30, J-A-Y-3-0 when you sign up. Now, if you're using another email and SMS platform and you want to switch to OmniSend, which is a great idea, they will do the migration for you. Just give them five days and then you show up with everything set, ready to go. Now, they've migrated thousands of stores from Klaviyo. And on average, they're saving 35 % on their email and SMS bills. If you're listening to this show, you clearly care about your Shopify business. If your store isn't backed up and protected, it could all be for nothing. That's why I tell every store owner I know who cares about their business, you 100 % need Rewind installed.

1:07It's a non-negotiable for me. One bad CSV import, one app that edits your store the wrong way, which has happened to basically everyone I know. One bulk edit gone wrong, and now AI making changes for you. Listen, Shopify does not have an undo button. Rewind is the undo button. Go to shopify1percent.com slash rewind for 30 days free on us. Links in the show notes too. Okay, we're on to chapter six of our series here. Just a quick reminder, there's 10 of these. And if you're just joining now and you found this podcast and you haven't listened to the first five, I highly recommend it. We're doing a deep dive into the buyer brain and the modern buyer brain and what it takes for brands to win in the next five to 10 years in e-commerce.

1:56Chapter six, what I want to dive into right now is the new loyalty, which I say is it's beyond points and discounts. So let's dive into it. We're going to talk about loyalty because the old version of loyalty, you know, the version that most brands still cling to, it's completely dead. Now, for decades, loyalty meant points. Punch cards, buy 10, get one free, collect enough tokens or points, and we'll give you a discount on your next purchase. and those worked in the 90s when customers only had a handful of options. They absolutely did work. But today, customers have 300 tabs open, 7 ,000 alternatives and the attention span of a distracted goldfish.

2:35So points really don't work like they used to. Now, discounts don't create loyalty. Punch cards definitely don't create loyalty because old loyalty was transactional. New loyalty is emotional. Have you ever walked into a store at a mall and you're buying something and at the cash register, They said, hey, would you like to join our free loyalty program? And it's free. And you can probably save money if you join it. But you just don't. You're like, no, I don't have the time. It's crazy because there's other loyalty programs that you actually pay to be a part of, right? And there's some loyalty programs you can't take two minutes to sign up.

3:08Now, here's the shift. True loyalty happens when customers choose to engage and advocate and belong, not when they redeem points. the loyalty that actually works today real loyalty isn't when a customer buys from you again real loyalty isn't when a customer defends you they advocate for you they choose your brand even when it's not the cheapest that's true loyalty loyalty isn't earned by giving people stuff loyalty is earned by making people feel something think about what true loyalty actually means true loyalty is Like there's probably very few people in the world. I would say I'm truly loyal to like, would I take a bullet for like what I go to the ends of the earth for, you know, and it's hard to do as a brand because obviously you can't have that same connection with everyone, but you can make them feel something.

3:59And this is the part that most brands miss completely. People don't stay because you give them 5 % off. They stay because you give them a moment. They don't stay because you give them 5 % off. They stay because you give them a moment. Now, let me give you two examples of this that I know of that are awesome. Chewy. Chewy is the pet company. Now, Chewy, I would say is a, is a gold standard for this in modern loyalty. Not because of their points program, not because of their branding, not because of their pricing, because of this one thing. What happens when you have a subscription to dog food? Most brands or most people, their dog eventually dies.

4:40and what happens when they call most companies while they say, oh, I'm so sorry to hear that. We will cancel your subscription. Maybe some of the good ones might say, oh, you know what? I'll refund you for this most recent one you just got. And what Chewy does is they of course do that. They tell them they'll refund them if they want to give that bag of dog food they just got to someone for someone for completely free that's on them. And then what they do, because they have that person's address, they don't say this on the phone, but the next day flowers show up at their door from Chewy with a note from a real person, a handwritten note.

5:19Now, what happens when people have a dog that passes away? I don't know the exact number, but it's something like 90 % of people get another dog within two years. Where do you think that person is going to go for their dog food? a thousand percent chewy because chewy just created an amazing moment that what are those flowers cost$20$30 it's not the cost that matters it's not the big discount that matters it's the moment that matters and the internet explodes every time you talk about chewy every time this happens people post it on their social media and these screenshots they go viral you can google it it's the brand sentiment just skyrockets because it wasn't customer service that was humanity.

6:01And it's not hard when you're thinking the right way, but you can't buy that with points. Like you can't fabricate that. That's just real humanity. You can, what you can fabricate is you can look for opportunities, identify them as these are moments that you can create this experience and then take advantage of it. But you can't fabricate it like by giving more points. Example number two, I want to share is Starbucks surprise moments. Starbucks actually figured out something brilliant. They know that customers don't remember the points they earn. They remember the moments, the unexpected free drink, the random upgrade, the barista knowing their name, the, Hey, this one's on us today.

6:45Now let me ask most coffee shops. They have a punch card. In fact, the coffee shop that I go to, they have a, on my 10th coffee, I get a free one. when I get my free coffee, I don't run around raving. Oh my gosh, I got a free coffee. I don't take a picture of it and post it on the internet. Like, no, I bought my 10 coffees. Now I deserve my free coffee because I got my little card that has the 10 to 10 punches on it. You think I'm loyal to that brand because they gave me a free coffee? No. I mean, I did buy my coffees there already, but what if that brand, that coffee shop, you know, they knew who I was.

7:20I said, what if they had another way of kind of keeping track of how much coffee I've purchased, but I didn't have a punch card. And what if I just went in one day and bought a coffee and the barista said, this one's on us. I would just be taken aback. I'm what? Yeah. You know what? You buy your coffee here all the time. This one's on us. Like the emotional connection I would have with that coffee shop would be huge. And you know what? maybe I even bought 20 coffees before I got that free one. Where at the other coffee shop, I bought 10 and I got a free one, but one is transactional and one is emotional and customers don't stay around for the rewards chart.

8:03They stay around because of that feeling. So how do you create that feeling? Loyalty is advocacy. Now in the interview, which is this podcast, I'm going to put a link to it in the show notes where we did a deep dive on this. We talked about loyalty, not as a reward system, but as a behavior system. Loyalty isn't measured by points redeemed, coupon dollars saved. Because remember we saw during the pandemic that everyone who thought they had loyal customers, 75 % of shoppers switched brands during the pandemic simply because someone offered curbside pickup a cheaper price. People went online. We saw that loyalty wasn't what we thought.

8:46Loyalty is measured by engagement, advocacy, community behavior. When someone posts something about you on social media, are they going to bat for you? Participation, commenting, willingness to defend your brand publicly, choosing your brand even when there are cheaper options. That's real loyalty. That's the new loyalty. And discounts don't create loyalty. You know who loves discount-driven loyalty? Customers who will leave you the moment someone else gives a bigger discount. That's who loves your discount driven loyalty. Discount loyalty is fake loyalty. Let's be real. If someone sticks around because of the price, they'll leave because of the price.

9:26Remember that if they're sticking around because of the price, they will leave because of the price. What keeps them there will take them away. The only thing you've trained them to care about is the price. It's the discount, not the brand, not your mission, not the experience you create. This is why points programs fail. They create transactional customers, not loyal customers. So the science is emotional loyalty equals ironclad retention. Now, let me give you some research here. Deloitte actually found that 60 % of customers are more loyal to brands that surprise them with unexpected rewards, not scheduled ones.

10:08So if you just took your, what you give away in your point system, your free reward system, if you took that away and you rebuilt it from the ground up and you said, I'm just going to surprise and delight customers. So let's say you added up last year, how much you gave away in, you know, store credit or product from your points. Let's say it was a hundred thousand dollars. If you said, we're going to take that exact same budget, but we're going to use it to surprise and delight customers. So last year, customers redeemed$100 ,000 worth of credit. Instead, we're going to take$100 ,000 and we're going to do amazing surprise and delight things for our customers.

10:56I guarantee you, you will have more raving fans than just a store that has the same loyalty program as anyone else. People are going to be posting about on social media. They're going to be sharing with their friends. They're going to actually be loyalty, loyal to you. If you see someone on, on social, who's one of your customers and they're complaining about something and you reach out and you know, you've got a product that can solve their problem. Comment on and just say, Hey, we're sending you a thing to fix that. We got you. And like people see that. Anyways, I think you get the idea. But 60 % of customers are more loyal to brands that surprise and delight them with rewards, not expected ones.

11:38So it doesn't mean you need to spend more, just how you deploy it. There was another study that discovered that emotional loyalty actually increases lifetime value by 200 to 300 % over rational loyalty. So emotional loyalty is that connection. Rational loyalty is transactional. And emotional loyalty is 300 % higher LTV, lifetime value, than rational. And last one is a McKinsey study showed that customers with strong emotional attachment are five times more likely to refer a brand, even without incentives, not share a company and get some reward just because they have an emotional connection. So if you really want retention, build emotion, build surprise, build belonging, and build moments.

12:27It's that simple. Those four things. When something goes wrong, this is actually a golden opportunity. This is one of my favorite things because it actually feels counterintuitive. I talk about this with our team at Bold a lot. When something goes wrong with a customer, it's actually a huge opportunity. When something breaks or if an order is late or when the product arrives damaged, it's your chance to create a raving fan. You don't get a raving fan when someone just orders something, gets it and that's it. You get a raving fan when something goes wrong and you solve the problem. And then you've got a customer raving about that.

13:01And you know, the example I always use is my sister-in-law bought dinner from a drive-thru one time. It was a Tim Hortons up here in Canada and it was some sandwiches for her family and some drinks. It was like dinner. She got home, noticed that a couple of the sandwiches were missing and she tweeted, thanks a lot, Tim Hortons. You couldn't get my order right. Now I have to figure out something else for dinner, you know, something along those lines. Well, Tim Hortons DMed her, asked her where she lived and said, one of our staff is going to drive the sandwiches to you. And she was blown away. And here I am years later talking about it, but it's counterintuitive.

13:42but that mistake actually turned her into a raving fan. So those are golden opportunities. If you say like, well, I don't know how, how do I create this emotion? How do I create opportunity or these moments? Everyone makes mistakes. Teach your team, you to use them as opportunities. When something breaks, an order is late. That is a chance to create a fan. If you solve a problem, customers become more loyal than if the problem never happened. It's just a fact. It's actually called the service recovery paradox. It's you can Google it. So a customer who sees you go above and beyond during a mistake, it becomes emotionally bonded to your brand.

14:19Not someone who just sees you do what you're supposed to do. If you make a mistake and you fix it, they're building emotional ties to you. But brands respond to mistakes like lawyers. They say, well, this is, uh, this is not our fault. Mistakes happen. Yes. There's shipments break shipments get lost. We understand there was a sizing chart. You should have known what size to order. They get defensive. They follow scripts and policies with no refunds, no exceptions. This is our company policy. As soon as you find yourself saying these words, you'll, you've lost it. You've missed the opportunity and customers will remember that.

14:54They'll remember everything about that moment. Not only did you miss the opportunity to build it, you actually ruined an emotional connection. It's even worse, but when you own the mistake and you fix it and you add a human touch, that becomes a core memory. like it's a core memory and that becomes storytelling. Like I just told that story and that becomes advocacy that they tell their friends. You can't engineer moments like that with points. You just can't. You can, you can't create them, but sorry, but you could create them with empathy. You create them with emotion and service that feels human.

15:28The new loyalty formula. Let me give you a new way to think about loyalty. loyalty equals emotion plus engagement equals emotion plus engagement plus identity plus moments of delight. Points are optional. They're good. Go ahead and go ahead and have them discounts optional. They're good. Go ahead and have them. But emotion is mandatory. Loyalty today is built through community, behind the scenes access, founder connection, surprise experiences, unexpected gifts, empathy, personalization, advocacy loops, belonging. That's how loyalty is built today. This is how you beat the Amazonification of commerce, not by being cheaper or faster, but by being more human.

16:11So here's the takeaway. Old loyalty was math. New loyalty is psychology. Old loyalty was transactional. New loyalty is emotional. Old loyalty was points and punch cards. New loyalty is engagement, advocacy, belonging. Customers don't remember the reward. They remember the moment. And the brands that create more moments, they win more loyalty. That's simple. So here's my challenge to you. At the end of each of these chapters, I'm giving a challenge. My challenge is build emotional loyalty this month. And here's five kind of steps that you could do this. Step one, identify one surprise moment that you can implement.

16:49one surprise moment. I know you have it in your customers. One way that you can surprise them, a free upgrade, free shipping, a handwritten note, some kind of free sample call. I saw a brand doing this the other day. They call one customer a month and they actually do it on social media live. They call one customer a month and they say, we're refunding your whole order. We're still shipping it, but we're just refunding the whole order and shipping it to you. And sometimes the customer cries on the phone. They're so thankful and it goes viral, but find one moment that you can surprise your customers.

17:20Number two, map one emotional touch point into your customer journey. Like Chewy is a perfect example of this. They mapped an emotional touch point into the customer journey. They know that every subscriber part of their journey is that their dog is going to eventually pass away. And how do they map an emotional touch point into that? So what moment in your journey could become unforgettable? Does your product eventually wear out? Does it have breakage? What emotional touch point could you build in? Number three, build a service recovery playbook. Now you need to empower your team to fix problems, not build policies to shield them.

18:00Give autonomy, allow them to work with speed and generosity and humanity. I always loved the Zappos examples that their customer service reps were allowed to spend. And I think it was up to$300 per customer issue. And it had, even if it had nothing to do with a shoe. So I remember people would send flowers at funerals or, but give, you have to give that control. I always remember I was on an airline one time and I wanted two pillows. I'm a bit of a big guy. And anyways, I needed an extra pillow for my head. And I asked the flight attendant if I could have an extra pillow. And she said, oh, I'm sorry, sir.

18:37Our policy is one pillow per person. Even though I could look up and I could see there was like 30 pillows in the overhead thing and no one was using them. But if they were empowered and if they had a principle, not a policy, and the principle was to make your customers as happy as possible, that as long as it didn't affect other customers, she would have been empowered to give me an extra pillow. So build a service recovery playbook that empowers your team to fix problems, not put up walls of policy between you and them. Number four, add one community driven engagement mechanic. So challenges, events, founder Q and A's, private groups, do one community driven engagement thing that builds belonging.

19:17And then the last one, number five, remove one transactional perk and replace it with one emotional one. I love this, this concept of if could you, and we talked a little bit about it already, but just to kind of clarify it, could you change your points into surprise gifts? So instead of giving points, you take that budget and you do surprise gifts. Instead of coupons, could you turn them into recognition moments? Instead of punch cards, could you give surprise gifts, surprise early access, different things? Because remember, loyalty is not something you buy. It's something that you earn. You earn that loyalty with your customer.

19:58You can't buy it. You cannot buy their loyalty. So the new loyalty belongs to the brands that are brave enough to go beyond points and build true emotional connection. That's it for this chapter. Make sure you join our next one, chapter seven. Really enjoying going through all these with you. And hope you're learning a lot more about the modern buyer brain and how to win in the next five to ten years. Thanks for listening. See you on the next one.