What is Brand Loyalty and How To Build It?
While there are lots of different facets to it, the simplest brand loyalty definition is this:
The behavior exhibited by customers who prefer your brand to any other, despite alternatives that might be cheaper or more convenient.
A customer exhibiting brand loyalty will choose your services or products time and again, but they’ll also advocate on your behalf – often recommending you to friends and family.
Brand loyalty differs slightly from customer loyalty in that it’s a higher-level, more reputational achievement. Customers who are truly brand loyal will foster an emotional link with your brand, rather than one just based on price or value.
There are lots of factors that go into building brand loyalty – factors which we’ll dive into in detail in this piece – but at its simplest, brand loyalty is won or lost through a combination of great products, top-notch customer experience (CX), and efforts to reward those customers who stick by you.
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What are the three characteristics of brand loyalty?
Brand loyalty is pieced together from a mix of three key characteristics that customers believe your brand embodies: Perceived brand value:
Do your products and services provide competitive value in your market? Perceived brand quality:Are your products and services of a better quality than their nearest alternatives? Perceived brand trust: Can customers feel like their faith in your products and services will be justified?
Why is brand loyalty important?
In short: building brand loyalty drives growth. New customers who purchase your products and become ‘brand loyal’ will become repeat customers. But they’ll also recommend you to their peers, and they’ll become ambassadors for your products out in the real world.
Because of that, you can think of brand loyalty as an overarching indicator of some seriously important metrics, namely: Trust, Advocacy and
Likelihood to repeat purchase
On top of this, identifying your frequent and most loyal customers can help free up marketing and advertising spend, as they’ll need less in the way of direct targeting than new customers when it comes to influencing purchases. Attracting new customers can be up to 25 times more expensive than keeping ones.
Importantly, brand loyalty can become a self-sustaining machine. If you manage experiences well across every touchpoint and have products and purchasing processes that are all firing on every cylinder, then you’ll soon find that you have customers buying more and more – and who are becoming more and more loyal each time they do.
So it stands to reason that brands must constantly look for ways to track and improve their brand loyalty.
How customer experience affects brand loyalty?
It might seem obvious to say that having customers who’ve had a bad experience with your brand are unlikely to feel loyal to it, but the numbers behind that statement can be startling. If we’re thinking of brand loyalty as a combination of trust, advocacy, and likelihood to repeat purchase, then you can see how CX can directly impact revenue.
In our recent report on The ROI of Customer Experience, we found that a customer who’s had a positive experience is 4.3x more likely to trust a brand, 5.1x more likely to recommend them, and 3.5x more likely to purchase again.
In other words? Positive customer experiences directly impact loyalty, and that loyalty manifests as sales won or lost. On average, organizations risk losing 9.5% of their revenue due to bad experiences, while 85% of consumers are likely to purchase more after a very good experience.