Brand Loyalty: What It Is, Examples, Best Practices

Most people have a tendency to buy products or services from a company they’ve already purchased from in the past and are now acquainted with. No matter if we realize it or not, all of us are loyal to certain brands. And this brand loyalty has a big influence on our purchasing decisions.

When a customer is loyal to a brand, they feel much more comfortable purchasing from that brand than from its competitors. This is the basis of a good customer-brand relationship, so if you want to learn how to take advantage of brand loyalty, you need to become familiar with it.

What Is Brand Loyalty?

Brand loyalty is the positive association customers attach to certain brands or their products. Those who exhibit brand loyalty are loyal to that company as well as the products or services it provides. This is demonstrated by their constant purchases from the brand while ignoring its competitors.

Companies invest a lot of time and money into making the best products, improving their customer service, and developing great marketing strategies so they can build and maintain this loyalty. One brand that has amazing brand loyalty is Coca-Cola, and they have kept it for years.

Why Is Brand Loyalty Important?

Finding loyal customers isn’t easy at all. You need to get their attention and maintain it, gain their trust and prove you’re worthy of it, and have a good understanding of their needs at all times. All businesses try hard to build brand loyalty because it positively affects customer retention and boosts profits.

A customer that feels brand loyalty knows you’re the best choice and there’s no need to convince them over and over again. You have those customers for good, and this is proven by the fact that 93% of consumers say that they’re willing to make repeat purchases with a brand that they are loyal to.

Not only that, but customers will spend over 2 times more with a brand they’re emotionally connected to. And not only will they spend more, but they’ll also talk about your brand and your products! So if you’re wondering “Why is brand loyalty important?”, know that it helps increase word-of-mouth marketing. 

You’re probably aware of how much some consumers are willing to talk about their favorite brands, in fact. And when people hear positive things about a brand from someone they know, they’re very likely to purchase from the brand too.

Advantages of Brand Loyalty

To sum up, here are some benefits of brand loyalty for both the companies and customers:

  • It gives an edge over competitors by making customers better remember a brand.
  • Generates positive brand value and word of mouth marketing.
  • Makes customers willing to pay more.
  • Reduces customer retention costs and helps to get new customers.

Disadvantages of brand loyalty

Brand loyalty is a goal for many companies, but it’s useful to know that it also comes with some downsides. One of the biggest setbacks of brand loyalty is that customers constantly want to buy your products. 

But, sometimes, you won’t be able to keep up with the demand due to unexpected shortages. During a shortage, customer frustrations rise and they can be very vocal about it, finding multiple ways to express their dissatisfaction with your company.

Additionally, when a company has great brand loyalty, most of the time people will purchase their products only because of their reputation. This usually makes the brand pay less attention to improving their products, leading to a decrease in quality over time.

How to Build Brand Loyalty (And Maintain It)

Now that you know why brand loyalty is important, let’s explain how to build brand loyalty and what you need to do to create a loyal customer base. While building this loyalty can be industry-specific, there are still a few areas every company needs to focus on.

High engagement

If you don’t have engaged customers, then you don’t have loyal customers either. By working on customer engagement and making an effort to interact with your audience, you’ll create a sense of belonging, and that way people will be more interested in your company.

Highly engaged customers will care more about what you have to say, all of your offers, and the steps you’re taking to improve your business.

Reasonable pricing

Overcharging for products won’t get you anywhere, especially now that the pandemic has caused most of the population to live on a tighter budget. It’s important to be self-aware and realize how much your products are actually worth, setting a price your target audience actually wants to pay.

Reliability

For a business to be successful in today’s competitive market, it needs to provide instant gratification and deliver high-quality products or services. Not only that, but companies also need to prove they’re reliable and they can show that quality with quick deliveries and amazing services.

Customers want you to meet them halfway and want to know they can trust you when it comes to the quality of products, but also details such as delivery and returns.

Active listening

Nowadays, customers want to know that their opinions matter, that you’re willing to listen to them and actually hear what they have to say. It’s your responsibility to listen to everything the customers have to say and find ways to learn from those conversations.

Through feedback, customers tell you about their pain points and what they want to see from you. If you’re willing to take their feedback seriously, you’ll be able to make improvements to your brand and products to fit their needs.

How to Measure It

It’s not enough to know how to build brand loyalty, you also need to learn how to measure it. 

One of the easiest and most reliable methods is using surveys to measure the following metrics:

  • Customer satisfaction. Overall customer satisfaction shows if you’re meeting the expectations of your customers. You can measure it with questions like “How satisfied are you with our products/services?”
  • Trust. In case you handle any type of sensitive information, building loyalty means that you also need to build trust. Ask your customers if they trust your brand and what your company did to earn that trust.
  • Esteem. Esteem measures how much respect and attraction customers have towards your brand. It can be measured with questions such as “How positively do you regard our brand?”
  • Perceived quality and value. By asking questions such as “Do you find our brand reliable?” and “What rating would you give to our products?”, you’ll see whether your customers feel that your brand is valuable and how much.

Other important metrics to track

Another way to measure customer loyalty is to keep track of the following metrics:

  • Net Promoter Score – A score that shows how likely your customers are to purchase from you again. It divides customers into promoters, passives, and detractors.
  • Repurchase Ratio – The number of customers who repeatedly come back to your business divided by one-time purchasers.
  • Upsell Ratio – The number of customers who bought a new, usually more expensive product.
  • Customer Lifetime Value – The total revenue a person brought to your business during their lifespan as your customer.
  • Customer Loyalty Index – A standardized tool that tracks loyalty over time. It shows how likely a customer is to buy from you again, try your other products, and recommend your business to other people.
  • Customer Engagement Score – A score that is assigned to every customer based on their individual activity, allowing you to segment your customers and see how well each segment is performing.

Examples of Brands With Successful (And Not So Successful) Brand Loyalty Strategies

One of the easiest ways to learn how to build brand loyalty is to take a look at some brands that do it well.

  • Costco. The company first served small businesses but then it decided to allow membership to anyone who wanted to enjoy their low prices for bulk items. Shortly after that, the business took off and their profits have been skyrocketing ever since.
  • Red Bull. A product that started off as an energy drink for low-income earners in 1976 became extremely popular when carbonation was added to the recipe. The brand soon found a lot of success in the emerging energy drink market and people are still very loyal to it.
  • Zappos. This shoe brand started catering to online customers back in 1999 when the internet was still a new and exciting thing. They coupled it with amazing customer service, and this combination is what still keeps the company popular and successful.

However, one brand that tried to increase customer loyalty but did it in a very bad way was the convenience store chain Cumberland Farms. They focused their loyalty efforts on fuel discounts and there are a few reasons why this tactic was a bad idea.

Conclusion

Creating brand loyalty isn’t as easy or as straightforward as business owners would like it to be, but it isn’t an impossible task to achieve. If you have a unique brand that prides itself on authenticity, amazing customer service, and acknowledging customer feedback, you won’t have any issues with loyalty.

Competition is all around and if you want to stand above the crowd, you need to have something that makes you unique and techniques that increase brand loyalty among your target market. And when you know how to build brand loyalty, maintain it, and why it’s so important, you won’t have any issues going forward.