Regardless of the product or service a brand provides or the industry vertical(s) it serves, competing for and retaining brand loyalty from customers in a world with seemingly endless alternatives and a sometimes less than stellar economy has never been more challenging. While overcoming that obstacle may feel daunting at first, creating lasting brand loyalty is far from impossible given the right strategy, willingness to be agile, and the commitment to putting the customer first.
In this guide, we will cover the following key aspects of brand loyalty:
- What is brand loyalty and why should it matter
- How to build brand loyalty
- Implementing a loyalty program and why personalization is important
- How to lose brand loyalty
What is Brand Loyalty?
Brand loyalty is the proclivity for customers to choose a brand repeatedly regardless of the existence of similar options that may be less expensive or more readily available. Brand loyalty, as opposed to customer loyalty, is more about the overall perception customers have of a brand and is sometimes referred to as emotional loyalty. At the end of the day, a brand’s reputation, and perceived value in the market, coupled with its level of consistency in those two areas, are what build brand loyalty, spur customer engagement, and drive repeat purchases.
Customer loyalty, in contrast, is transactional and focused more on price, discounts, and deals. While those things are important and can be very effective, the priorities for brand-loyal customers are instead focused on quality products, great customer service, and overall trust, making price less important and sometimes totally insignificant. Once it’s established, brand loyalty is much easier and cheaper to maintain compared to customer loyalty.
Why Brand Loyalty Matters
So, if your prices are competitive and you’re making sales, why should you care about brand loyalty? The reason is that building a sustainably strong brand is a marathon, not a sprint. Those sales might be there today, but without some semblance of a meaningful, brand-loyal relationship with customers, will they still be there tomorrow?
Gaining that assurance means brands must view their customers holistically, rather than transactionally, and consider what’s called customer lifetime value (CLV). CLV is a business metric used to determine the amount of money customers will spend on a brand’s products or services over time. The outcome of this metric influences everything from customer acquisition cost to profitability potential to overall business strategy, and ultimately affects what your revenue growth could look like long term. According to Zendesk, some 52% of customers have gone out of their way to buy from their favorite brand. So how do you become one of the favorite brands and in turn maximize customer retention?
How to Build Brand Loyalty
When trying to build a loyal customer base, the table stakes are having a quality product and providing top-notch customer service. Remember, price is not the driver in this instance, and checking those two boxes will lay the foundation for developing brand-loyal customers. Consumers need to know they can implicitly trust a brand’s product to solve their problem, and if something is amiss, know the brand is ready and willing to listen to feedback at any given point in the customer journey and address it promptly and appropriately.
Customers who consistently experience those qualities become loyal to a brand and not only become repeat buyers, but often become advocates willing to freely share their positive experience with others. In the age of the internet and social media, brand advocacy can make or break a brand. There’s really nothing that builds trust and credibility in the market better and faster than authentic positive reviews. It’s that warm and fuzzy about a purchasing decision a customer didn’t necessarily know they needed but are grateful to have. As the saying goes, it’s cheaper to keep an existing customer than to find a new one. So, when the customers a brand is retaining are also becoming advocates, suddenly marketing costs go down and growth potential flourishes.
Implementing a Loyalty Program
Another way to grow and sustain brand loyalty is through a loyalty program. These programs remain one of the core ways for brands and companies to grow connections with their customers or partners and encourage repeat business. According to Accenture, 90% of companies currently have some type of loyalty program in place, with more than 3.3 billion loyalty memberships in the U.S. alone. Furthermore, a late 2022 survey from Statista showed that seven out of ten U.S. shoppers considered loyalty programs important to keep them connected to their favorite brands. These programs reward customers for their continued patronage, create a deeper bond with the brand, and foster future buying activity.
The most common types of programs are point-based, tier-based, or value-based, but all provide a meaningful way to grow relationships with members and show appreciation for their loyalty. Point-based programs allow members to gain points with every purchase and redeem them for free product, discounts, experiences, etc. With tier-based programs, members advance through tiers that unlock more valuable rewards at each level. And value-based programs focus on a customer’s lifetime value or certain actions such as reviews or referrals.
When designing a program, brands should first consider what they’re trying to achieve and create measurable goals. Next, identify the needs, interests, and motivations of the customer base so the program focuses on rewards that matter most to them. Then, choose a program type and experience that is user-friendly, easy to understand, and aligns best with the brand’s goals and objectives. Finally, start crafting a multi-channel strategy to promote, monitor, and adjust the program based on how it performs.
Why Personalization is Important in a Loyalty Program
Successful loyalty programs are ones that not only reward customers, but also offer a personalized customer experience. When determining how to communicate with members, brands should take advantage of the power of their data from tools like preference centers to create these personalized experiences. The ability to tailor things like email communications, reward types, and recommendations can go a long way to strengthen customer relationships, increase engagement, and grow brand loyalty.
Speaking of preference centers, due to the phasing out of the third-party cookie, the marketing world has needed to pivot how they collect data and the types of data they need to inform how best to advertise to their consumers with a guarantee of engagement, loyalty, and ROI – depending on the item at hand. As a result, zero and first-party data is paramount in modern day marketing. Organizations understand they have much better leeway when utilizing zero-party and the more traditional first-party data verses prospect data. This is especially true with zero-party data since consumers have full control over it. With zero-party data, consumers, prospects, and/or potential leads provide the organization information based on exactly what they want them to know about themselves. These selections, or preferences, can be changed and evolved over time to keep things fresh and up to date where all parties are concerned. zero-party data also has a baked-in sense of privacy as the organizations do not own zero-party data, the consumers do, thus it cannot be transferred or sold to be shared with others.
This all brings us back to the heart of the conversation at hand. Preference centers not only aid companies in the proper collection of data in a world where consumer data privacy is paramount, but also allow consumers to feel infinitely more seen and heard, which in turn can deepen their connection and loyalty to the brand. With preference centers, organizations can build in questions that grant them access to a powerful data set to market to their consumer groups more surgically and with greater purpose.
Personalization adds value to the customer experience and shows the brand understands the needs of the customer. However, personalization is not set it and forget it. It must be refined over time as the program grows and as customer needs and behavior change. This not only better serves loyalty program members, but also keeps things fresh to avoid lost interest over time that may lead to member attrition.
How To Lose Brand Loyalty
Consistent brand loyalty isn’t easy to build and requires care and attention in critical areas to maintain. For instance, if a brand doesn’t maintain product quality and prioritize customer service, things can go south in a hurry. Inconsistency or flat-out failure to provide a great product again and again, while not being attentive enough to customer needs and feedback, tells customers the brand can no longer be trusted to meet their needs which may naturally force them to look at alternatives. According to Microsoft, poor customer service has caused 61% of consumers to switch brands.
Other areas of concern for customers might be a brand not keeping up with current trends and changing market expectations, having a loyalty program that’s overly complicated or doesn’t deliver enough value, or even deceptive marketing practices or dishonest product claims, whether purposeful or through carelessness. All of these can damage a brand’s reputation and destroy trust, and once that happens, earning it back can be a high mountain to climb.
Just because your program can generate significant revenue, that alone is not the end game. You must also keep a watchful eye on the customer experience and protect it at all costs. If your pursuit of profits sacrifices a best-in-class customer experience, especially for those best customers most loyal to the brand, then it may be time to change course. To be clear, both profitability and outstanding customer experience are achievable, but it requires constant attention and communication with your customers.
Building and retaining brand loyalty comes down to a brand’s ability to consistently meet the needs of their customers with high-quality, reliable products and make them feel valued and heard at every touchpoint. Brands that can do that successfully will earn greater customer satisfaction, increase customer retention, spend less on finding new ones, and ultimately grow their bottom line. If your company needs guidance with improving brand loyalty, growing or creating a loyalty program, or simply developing loyalty strategies to better serve your customers, we can partner together to design a brand loyalty program that will create brand fanatics for life. Contact us today.
