Developing connection between customers

and brands - Customer experience and

customer engagement
Customer Loyalty Programs

Authors:

Oana Ruxandra Cristea

Teodora Madalina Chelcea
Table of Contents

Introduction…………………………………………………………………………………..2

Review of the current stage of research on the topic………………………………………2

Research methodology……………………………………………………………………….3

Research results………………………………………………………………………………4

Conclusions…………………………………………………………………………………...5

Implications for research and for managers………………………………………………..5

Bibliography………………………………………………………………………………….6

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 1. Introduction
In today's dynamic and highly competitive business landscape, the relationship between
customers and brands has evolved into a critical determinant of success. Brands are no longer
just products or services; they are living entities that thrive on the connections they forge with
their customers. At the heart of this transformation lies the intertwined concepts of customer
experience and customer engagement.

Customer experience represents the sum of all interactions, emotions, and perceptions that
customers have with a brand throughout their journey. It encompasses every touchpoint, from
initial awareness to post-purchase support, and it profoundly shapes the way customers
perceive and remember a brand. On the other hand, customer engagement focuses on the
depth of the relationship between customers and brands. It reflects the extent to which
customers actively participate, interact, and identify with a brand.

In an era where customer expectations are constantly evolving, understanding how to develop
and nurture these connections has become indispensable for brands seeking sustainable
growth. By shedding light on the intricate dynamics of customer experience and engagement,
this paper aims to equip businesses with the knowledge and insights necessary to build
enduring, mutually beneficial relationships with their customers and, in turn, drive success in
today's competitive marketplace.

The journey of building strong customer-brand connections is no longer a one-size-fits-all

process; it is a tailored, ever-evolving endeavor. This paper aims to provide insights and
practical strategies for businesses looking to develop more meaningful relationships with
their customers, enhance customer loyalty, and ultimately bolster their brand's competitive
position in the marketplace. As we embark on this exploration of the nexus between customer
experience and engagement, we recognize that, in the modern business world, these
connections are the lifeblood of brand development and success.

2. Review of the current stage of research on the topic

Nowadays, understanding the current state of research is essential in the dynamic world of
marketing and customer relationship management. Through the lenses of customer
experience and customer engagement, this chapter seeks to present an overview of recent
developments, trends, and key findings on the subject of developing relationships between
customers and brands. Researchers and practitioners alike face the challenge of adapting
approaches to meet growing customer expectations as the digital era continues to transform
consumer behavior and interaction patterns.

A crucial aspect of a successful customer experience and customer engagement is

personalization. Recent studies have dug deeper into the complexity of personalisation,
investigating innovative analytics techniques like machine learning and artificial intelligence
to tailor customer experiences. To develop ethically personalization strategies that appeal to

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today's sensitive customers, studies have looked into the delicate balance between
customization and privacy concerns.

The advancement of customer experience and engagement initiatives continues to be driven

by technology. To improve customer interactions, cutting-edge technology like sentiment
analysis, chatbots, and virtual assistants are currently used. In parallel, research has switched
its emphasis to data ethics, focusing on responsible data usage as well as transparent
procedures for handling client data. Investigating customer perceptions and reactions to
collection and usage constitutes a component of this.

Brands are working harder than ever to establish emotional connections with customers
beyond functional attributes. Research has looked into the use of narrative techniques and the
art of storytelling to evoke particular feelings in customers, such as empathy and nostalgia.
In-depth studies into emotional branding and the use of neuroscience concepts to understand
customer emotions are shedding light on the irrational factors that influence brand affinity.

Recent study investigated crisis management more closely from a customer experience
perspective in the light of recent global concerns, including the COVID-19 pandemic.
Researchers are looking at how companies might change their engagement strategy during
crises, focusing on creating trust, empathic relationships, and the flexibility to switch to
digital communication channels when necessary.

The significance of understanding cultural variations in customer experience and engagement

has been accentuated in the context of globalization. In order to develop strategies for various
markets, researchers are actively investigating how cultural differences affect customer
preferences, expectations, and communication styles.

As this chapter illustrates, the landscape of research on developing connections between

customers and brands through customer experience and engagement is both diverse and
dynamic. For researchers and practitioners alike, staying updated about these evolving trends
is essential because it enables them to change their strategies and build lasting connections
with customers in a constantly shifting market.

3. Research methodology
In the pursuit of understanding and enhancing customer engagement with brands, this chapter
delves into an in-depth examination of the research article titled "Are loyalty program
members really engaged? Measuring customer engagement with loyalty programs" (2018)
authored by Virginie Bruneau, Valérie Swaen and Pietro Zidda.

For a comprehensive understanding of the concept of loyalty program engagement, the

researchers selected a qualitative approach. When investigating complex and diverse
phenomena like customer engagement, qualitative approaches are well-suited. The
researchers designed a semi-structured interview guide to gather all possible reactions to
loyalty programs. These interviews were conducted between June and December 2013. The

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study examined 22 respondents with a variety of profiles. This group consisted of 4 industry
experts and 18 customers who were members of various loyalty programs in different
industries.

In order to reach information saturation, the researchers conducted interviews until no

additional information or insights were being disclosed. This ensures that the information
gathered is comprehensive and representative. The interviews took place in an informal
atmosphere in the participants' houses. This setting was chosen to facilitate a relaxed and
open exchange of information between the researchers and the participants.

The researchers asked the individuals to talk about their loyalty cards and the various actions
they engaged in as a response to loyalty programs, in order to better understand how loyalty
program engagement is reflected in behaviors resulting from loyalty program incentives.
Each interview lasted roughly one hour and it was recorded. The audio interviews were
eventually converted into written transcripts for analysis.

The researchers used ATLAS.ti, a qualitative data analysis software, to analyze the 222 pages
of transcribed interview data. The analysis began with a line-by-line examination of the data
to identify a range of possible codes. Afterward, open coding was performed on the
transcripts to identify recurring patterns across data sets. Codes were developed to
characterize different behaviors related to loyalty program engagement. Throughout the
analysis, the researchers moved back and forth between the collected data and existing
literature on engagement and loyalty programs. This iterative process heloyalty programsed
in the interpretation of emerging findings, enriching them with insights from prior research
and experiential knowledge.

4. Research Results
The replies' thematic analyses demonstrated that loyalty programs engagement is a
multifaceted notion; when respondents explained their interactions with loyalty programs,
they mentioned six main types:

First, the responders discussed proactive card use, such as planning ahead for purchases and
then using the card. Thus, remembering to hand over their card demonstrated an active
participation in the connection. Secondly, they made a greater effort to exchange points for
rewards. The participants would make an attempt to visit that specific store in order to
redeem their points and receive a reward once they reached a predetermined point level.

Fourth, participants indicated that exchanging information about the program was a sign of
participation. This action involved promoting the program and having conversations about it
in a variety of media and to varying degrees of intensity.

Fifth, the respondents listed actions they took in response to loyalty programs communication
stimuli; being proactive meant digesting information and being open to such stimuli,
including opening an email or flier that was related to the program and reading it through.

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Sixth, participants thought that actively seeking out program information was a sign of
activity. It required them to stay informed about the loyalty programs by going to loyalty
programs kiosk, website, or app, for example.

But not every activity had the same correlation with how participants felt about their
involvement with the loyalty programs. Some participants said that even being proactive
about using their loyalty programs card was a relatively weak indicator of involvement. But
reading emails they received or looking up more information was linked to their loyalty
programs engagement more.

Additionally, the qualitative results show that consumers do not need to exert the same
amount of mental, emotional, or even physical effort in order to engage in these six
behaviors. Some participants noted, for instance, that using the loyalty programs card and
showing it to the cashier were simple (and therefore frequent) behaviors, but searching for
information on the store website or posting on social media to share their experiences with
the loyalty programs or a specific promotion required more time and effort and was therefore
less common.

As a result, the level of effort (and frequency) needed for engagement activities can be
ranked. According to this ordering, there is a hierarchy: those who made more of an effort to
engage in certain activities (such sharing information about their experiences) also tended to
make less of an effort. Conversely, though, there was no solid indication from exhibiting a
less demanding behavior that the consumer would do a more demanding task.

5. Conclusions
For marketers, increasing customer interaction with loyalty programs is a key goal. However,
there is insufficient customer involvement in loyalty programs even with rising enrollments.
Although they may be more open to joining a program, customers are taking part in fewer of
them. Companies are unable to interact with customers through their loyalty programs if they
do not take part in the programs in which they enroll. Prior studies on customer involvement
have typically focused on the customer's presence in the relationship with the business on a
worldwide scale.

However, in order to boost customer engagement through loyalty programs, it's important to
comprehend how customers behave in response to this more precise, latent construct.
Therefore, by clearly defining loyalty programs engagement and creating a reliable scale to
quantify it, our research addresses the demand for a deeper knowledge of customers'
participation in loyalty programs.

6. Implications for research and for managers

Many companies focus on enrolling customers in loyalty programs (loyalty programs) but
often fail to establish meaningful engagement with members. Customer engagement in

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loyalty programs is crucial for building strong relationships, and the effectiveness of loyalty
programs should be evaluated from a customer engagement perspective. Companies often
wrongly assume that card usage and point redemption indicate customer engagement in the
company relationship, which is not accurate. To enhance customer engagement with the
company, managers should encourage more demanding customer behaviors, such as adapting
purchases and sharing/searching for information about loyalty programs, through promotions
and relevant content.

To understand the dynamic nature of engagement, longitudinal studies should be conducted

to track how loyalty programs engagement behaviors evolve over time and during various
interactive experiences. Further analysis of the framework should consider potential
moderating variables and additional company outcomes, taking into account industry
differences, product involvement, and customer characteristics. Research should explore the
antecedents of loyalty programs engagement, such as program design and perceived benefits,
to offer concrete recommendations for increasing participation in loyalty programs.

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