How to define brand loyalty?
Do you have favorite brands or brands that you always buy from? What would change your mind about them? What would make you switch your interest to a new brand?
Among my first few cars, there were a couple of old 80s and early 90s Mercedes Benz models. I loved those rides and loved the brand. But the late 90s and 2000s models were so average that today I am not particularly interested in the brand.
By definition, brand loyalty is the state of mind based on a positive set of feelings, thoughts, and experiences that customers associate with a particular company. Loyal customers are devoted to a product or service, which is demonstrated by their repeat purchases despite competitors’ efforts to lure them away.
Companies put serious efforts into retaining customers, and optimizing for brand loyalty is arguably the most important strategy in this segment. Some brands try to keep their customers with repeat purchase discounts – which is a very lazy way to keep buyers around. Other companies where the psychology and emotional driving force of purchases are understood can capture customers by their hearts.
People like to buy from brands they want to be associated with. That is in line with what they need, and more importantly how they want to be seen. The success of Apple was not in their products – it was in their philosophy. Mercedes losing its position as a status symbol in the 90s was because of its mass-market focus and car buyers who used to differentiate themselves from the average folks have turned to other luxury car brands.
What makes brand loyalty work?
Loyal customers are the ones who will purchase from the same brand and company, no matter what. Not only they are satisfied with the product, but they like the brand so much that they rule out checking out any alternatives from similar companies.
Brand loyalty is the result of positioning, marketing communication, and brand experience done right. Some of the most established and loved brands operate in highly competitive markets, where products are extremely similar. Think of mobile phones. There is not so much difference between a Samsung and a Xiaomi smartphone. Both are a slab of glass with capable internals, often similar specs. Their biggest and most important differentiation is their brand. Some people buy the reputation of Samsung, others buy the cool “try something new” feel of Xiaomi or other brands.
A brand cannot be good for everyone. But brands that have the most loyal customers are polarizing. Some people will love them, others will never like them but polarization is a key element in developing a loyal fan base. Talking about mobile phones, iPhones are undoubtedly the most popular smartphones but there are groups of people who don’t buy them because they don’t like Apple in general.
Polarization is where loyalty starts. A brand daring to be different in some ways can earn more respect and like from groups of people than companies that want to be good for everyone. This is the starting point of brand loyalty. A brand needs to stand for something, to be purposefully the best for specific groups of people.
How to earn long-term customers and establish brand loyalty?
Going beyond concept, establishing brand loyalty is achieved through following consumer buying trends closely and work to build relationships with customers through active customer service.
Auditing what buyers and potential customers like about your brand is a the basis of developing brand loyalty. Understanding what makes people buy from your company enables to deliver more of what they like, and take your brand and marketing communications, as well as your entire brand strategy to directions that will attract more customers for the same reasons.
Brand auditing is an important part of any brand building and loyalty strategy.
Consumer trends are the habits and behaviors exhibited by consumers regularly and over time. Some trends are static, but most trends evolve. Companies collect and analyze data on customer spending habits to better understand how to market their product. Marketers track changes in trends and create a corresponding marketing campaign to help the company acquire and keep the brand’s loyal customers.
Unique brand experience, and excellent customer service
Perhaps one of the most important tactics for building brand loyalty is to provide exceptional customer service. Oftentimes, this is the only thing that sets a company apart from its competitors. Customer service done well contributes to a positive brand image and reassures customers that they are needed and valued.
Within the customer service framework, brands should develop a system whereby customers can submit feedback, register complaints, and provide feedback. A dedicated team of skilled associates should be assigned to address their submissions promptly. Through these interactions, the company can develop and maintain strong relationships with customers, who will often commit to the brand and share their experiences with others.
Companies hire brand ambassadors to be spokespersons for their products. Brand ambassadors are chosen for their appeal to the target market. They can effectively disseminate positive word of mouth. A brand loyalty campaign is most successful when it addresses the attributes that are crucial to its segment of the market. For example, a Subaru will keep your kids safe, and a Lincoln will make you as cool as Mathew McConaughey.
When a company ignores consumer trends, they lose brand-loyal customers.
Why companies lose brand loyalty?
Continuous monitoring and research are needed to measure the utility of products and identify modifications that will offer additional consumer benefits and increase brand loyalty. Utility is an economic measure of the level of satisfaction consumers derive from a product or service.
When a company ignores consumer trends, it might lose brand-loyal customers, which could lead to forfeiting potential profits and eroding the company’s market share. Many large corporations, which once had a monopolistic advantage, such as Blockbuster, failed because their product was misaligned with their customers’ changing needs. To assume that a product will always meet the needs of the consumers is a certainty for failure.
Loyalty is also compromised when consumers lose trust in the brand.2 When companies are embroiled in scandals, their customers often suffer and, as a result, lose trust in the brand to continue delivering value.
For example, Tylenol suffered a devastating blow to its brand when some of its products were laced with cyanide, causing the deaths of 7 people. However, the company immediately addressed the issue by taking accountability and creating a strong crisis management program to address concerns and prevent future occurrences. Eventually, Tylenol regained the trust of its customers and repositioned itself as a leader in its industry.
Brand Loyalty and the Internet
Before the internet, the most common way to build brand loyalty was through the interaction of a salesperson and a customer. Today, the internet provides access to thousands of consumer products and services without the salesperson as the intermediary. Consumers, empowered to conduct independent research and compare competitors’ offerings, can make informed choices and are less committed to specific brands.
Because the Internet presents the power of choice, companies have shifted from a brand-focused agenda to a customer-centric model.3 To gain market share and retain customers, emphasis is placed on building customer relationships, providing excellent customer service, and delivering value.
Companies with large consumer bases often review their processes to ensure that they are delivering upon the needs of the customer and in a manner that makes their experiences rewarding. Using the power of the internet, many companies allow customers to contact them via social media, and many have dedicated social media accounts to promote the brand, enhance its customer relationships, and accept feedback.
Frequently asked questions about brand loyalty
Why is brand loyalty important?
Customers who are loyal to a brand will continue purchasing and will often try new products. These customers will likely spread positive word of mouth, persuading others to try the brand’s products.
What is the difference between brand loyalty and customer loyalty?
Although closely related, there are subtle differences between customer loyalty and brand loyalty. Customer loyalty is the commitment from customers to continue purchasing from a company based on the benefits received from those purchases. Customer loyalty is largely based on price, benefits, and rewards. The more value or benefits a customer receives, the more likely they will shop with that company in the future.
On the other hand, brand loyalty is the commitment from customers to continue purchasing from a company because of their experiences and perception of the brand. Brand loyalty is not dependent on price or substitutes. Customers value the experiences and value gained from their association with the brand.
Why people leave brands?
People leave brands for various reasons, including when the brand no longer fulfills or is misaligned with their needs. Brand loyalty is also diminished when consumers lose trust in the brand’s ability to deliver value.