Emotions matter. The old model of assuming that customers act rationally in their decision-making is no longer enough to explain their attitudes and behaviour towards companies. Emotion is, to quote neuroscientist Antonio Damasio, “in the loop of reason”. It guides our thoughts and deeds.

But while accepting intuitively that emotion is important is one thing, demonstrating in a business case that a focus on emotion delivers value is quite another. For many firms, rightly or wrongly, a belief is simply not enough to deliver change.

Traditionally, of course, market research does a pretty good job of investigating the effect on value of rational factors such as price, product, promotion and place. Predictive modelling, whether based on conjoint or regression designs, is a well-established approach. But how can we demonstrate a similar level of rigour to show how emotions drive and harm value and what we should do to engineer a new and better experience?

The problem of measurement
This search for quantification naturally calls for a scale measure of emotion, something that can tell us statistically about your emotional as opposed to your rational experience. However, getting to grips with the idea of emotion is not as easy as simply asking how satisfied someone is. For a start, what is emotion? Can we even find a valid scale for emotion and if not, how do we go about constructing one?

Development of a reliable and valid scale would allow us to avoid the problem of trying to measure any and all emotions (or things that might sound like emotions).

Over the last five years Beyond Philosophy has investigated emotional measurement and how we can understand the extent to which emotions drive or destroy value. In the process we have developed a scale, Emotional Signature, in collaboration with Chris Voss of London Business School, Jane Raymond of Bangor University, statistician Jeremy Miles of non-profit research body Rand Corporation and Mark Johnson of Cranfield Business School. The scale is focused on 20 emotions that we have determined to influence value, including things like ‘pleased’, ‘trusting’, ‘neglected’ and ‘hurried’.

To measure value we created an index of the key attitudinal and behavioural indicators that organisations track, including satisfaction, recommendation, trust, spend and tenure.

We have established a database of reported emotions from online customer experience surveys completed by over 20,000 respondents as part of over 80 studies conducted between 2006 and 2010 in Europe and the US. From this we are able to benchmark how emotions differ between industries and whether emotions really make a difference in terms of value, or in fact play any part at all. Crucially, through comparison with the touchpoints that drive these emotions, we can also determine how resources should be allocated for emotional effect.

What we found
An important finding is that all experiences have an identifiable emotional fingerprint or profile, which meant we were able to aggregate data from experiences in different industries and compare them to the average for all business experiences in our database.

In the financial services industry, for instance, we found that negative emotions were well controlled, but that positive emotions were hovering below average, not much stronger than the scores for negative emotions. This is fairly typical - most companies would not be in business unless they had a degree of control over the negatives in their experience (reacting to customer complaints, for instance). Very few, however, focus on developing the positives. A key implication of this is that by simply focusing on developing positive moments of delight, an organisation can differentiate themselves emotionally.

We notice, for instance, that those organisations that have a strong ethical and brand foundation, including many public sector bodies, gain advantage in the market from a positive emotional profile. In our profile of the public sector we found that positive emotions were mostly well above average and negative emotions were well below. There is a dual benefit, with the advantages of positive emotion reducing the negatives. We also found that emotions related to attention such as ‘interested’ and ‘exploring’ correlate strongly with positive emotions of pleasure. If you like, this is the ‘buzz’ factor.

While simple satisfaction scores tend to be similar between sectors and segments, an emotional view really highlights the differences between them. We also see in other studies we have conducted that the emotions felt by those who say they are likely to recommend a company or product differ in every case substantially from those who say they are not.

Interestingly we have seen how b2b organisations could in fact be more emotional than b2c.

What this means for resource allocation
If organisations and customer segments differ in how they feel towards you, the next question is, what does this mean in terms of resource allocation? Does this emotional pull actually drive more value to the business?

To put it simply, if we compare the way corporate touchpoints are allocated to drive, say, recommendation or any other desired response and then compare this with how those same resources would be allocated if emotion were included in the model, we can see if they are the same or different.

Spotlight on pharma
In the pharmaceutical industry we looked at how taking emotion into account could help us better determine how levels of trust and likelihood to recommend are influenced by touchpoints falling into the four categories of product, promotion, people and place. This was done using multivariate analysis to model the proportion of value coming from each of the four categories – once with the 20 emotions on our scale taken into account, once without.

Pharma is an interesting sector because of the role it plays in healthcare experiences, which can bring strong emotional reactions. In this case we looked at reported levels of trust and likelihood to recommend, although the analysis could equally be applied to satisfaction or more behavioural outcomes such as tenure. Based on these findings we believe that traditional metrics may be inadequate in indicating how resources need to be allocated.

Without emotion, all predictions of value were substantially less accurate. Of total predicted levels of trust and likelihood to recommend earned from customer experiences, about three quarters was (either directly or indirectly) derived from emotional, not rational, factors. Without emotion, the total value predicted to be derived from the whole experience was underestimated by 41%; likewise the value predicted to be derived from recommendation was underestimated by 25%.

Without emotion taken into account, resources would be allocated incorrectly. Including emotion broadens the frame of reference by which you can measure the impact of the customer’s experience, making it possible to pick up the influence of any undefined touchpoints – unexplained aspects of your experience that have an emotional effect. We have found that the importance of product, promotion, people and place varies hugely depending on whether you include emotion in the model or not (see above). In our pharma example, leaving out emotion led to results suggesting that people and product are the only aspects of the experience that were important. With emotion taken into account, the influence of product remains the same, but the people side reduces in impact and the promotion side (the buzz factor, the brand halo) becomes the second most important area for an intervention.

Furthermore, without emotion, organisations cannot see all their value drivers. Research is increasingly looking to measure influences on value that are subconsciously felt – things like tone of voice that consumers cannot necessarily pin down but which are actually critical. By taking and modelling the emotional view we can look beyond the rational-only view of consumer response.

What it means for managers
For management decision-making there is a real problem in determining how best to allocate resources to generate value if the information being received doesn’t relate to how consumers respond. Traditional research, while making a good job of considering rational response, fails in its efforts to deliver a more realistic 360-degree view of the customer because it assumes that people make decisions unemotionally. As we have seen, this is an ineffective way to allocate resources and make strategic decisions.

What is needed is an emotional measure that can divine more accurately the nature of a consumer’s emotional (together with rational) experience, and determine through its use those parts of an experience, both consciously and subconsciously perceived, that influence rises and falls in value.

In the world of customer experience we see how under the pressure of commoditisation it is the emotional connection that is increasingly becoming the key competitive differentiator. After all, how much further can you differentiate on product features alone in a market where the time from innovation to imitation is increasingly making such manoeuvres meaningless?

The guidance for management, then, is clear: measure your emotional experience, drive change from the results and track these emotional changes over time.

?Steven Walden is senior head of research and consulting at Beyond Philosophy and a lecturer at London Metropolitan University. Qaalfa Dibeehi is chief operating and consulting officer at beyond philosophy. Colin Shaw, Nigel Marlow, Kalina Janevska, Zhecho Dobrev and Kolby Brailsford also contributed to this article