Why creating emotional loyalty could be the key to SMB growth

As the cost of living continues to climb and a potential recession looms, small businesses are facing new challenges. The pandemic, which already brought about an accelerated shift to online shopping, has piled the pressure on high street brands to keep pace with online counterparts.

But now even businesses in the ecommerce space are feeling the strain of retaining customers while seeking to increase sales amid an unfavourable economic outlook and growing consumer caution around spending.

As brands across all sectors battle for consumer attention, customers are being bombarded with messages via multiple channels from all manner of directions, making it harder to fight for their attention. And changes to privacy rules and third-party data is making it even trickier for brands to get to know their customers and offer them more personalised, rewarding experiences. 

So, how can small businesses overcome these challenges? First, by focusing on building loyalty. 

Loyal customers offer greater lifetime value, as they’re more likely to repurchase again and again. It is also far more cost effective: studies show that acquiring new customers is five times more expensive than retaining an existing one. 

There are various ways to build loyalty, such as benefit programmes, personalised rewards and the effective use of marketing channels including SMS messaging. But there are two aspects of building loyalty that can be overlooked but which need to be priorities by businesses in these turbulent times.

Encourage emotional loyalty

The first is emotional loyalty. There are various forms of customer loyalty, and most loyalty schemes focus on the value exchange between the brand and its customers. Building emotional loyalty is a step up from that, as it aims to bring the consumer closer to a brand by creating trust and belief in the brand's vision. 


Key to emotional loyalty is having a brand stand for something, whether that’s giving back to a community, taking care of the environment, or voicing an opinion on a topical issue. The brand needs to demonstrate values that consumers identify with. 

This is especially important in order to win over many Gen Z and Millennial shoppers, who are more vocal about social issues and will “vote with their wallets” when it comes to whether or not brands are living up to their values. 

For example, a McKinsey study found that one in four consumers say they are planning to focus more on environmental issues and will pay more attention to social aspects in their shopping behaviour. Meanwhile, 83% of consumers now prefer positive activism – showing support for companies by buying from them, rather than avoiding those whose practices they disagree with. This trend is partly driven by the pandemic, which has prompted customers to reconsider the brands they use. 

Connect with customers through effective loyalty programmes

The second aspect and effective method to connect shoppers with a brand’s value is through loyalty programmes. 

One example is tentree, a sustainable fashion brand that plants ten trees for every item purchased. They created Impact Wallet as a way for customers to tangibly see the positive impact they made on the environment, which allows customers to unlock achievements based on their actions and see how many trees they’ve planted, what types of tree and how much carbon dioxide they’ve taken out of the atmosphere. 

In this way, customers get to play an active role in combating climate change and reinforces the brand’s values, further building customer loyalty. 

Many brands have latched onto social issues, recognising that expressing their values and taking a stance on news events can lead consumers to becoming more committed and loyal to a brand. This approach does require tact and balance, as brands do not want to alienate portions of the customer base who may not agree with their views, but that shouldn’t discourage them from expressing an opinion. 

As more and more brands adopt this approach, those that decide not to may find themselves at a competitive disadvantage as end users are swayed by other brands that do endorse social issues close to their hearts.

Of course, there are many critical factors involved in seeking to grow small and mid-sized businesses. Having a solid business model, a compelling product and an efficient production line and sales and marketing teams are key components.

However, as SMB brands face the realities ahead such as the predicted squeeze on household budgets and heightened competition, by taking steps to create and instil a greater sense of emotional loyalty to their brand and consolidating a greater customer base, these small and mid-sized players will be better equipped to weather the potential economic storm that lies ahead.