Brand loyalty can feel a bit slippery. We all know it when we see it, but how does a company get it? Is it something you can strategically build? Once you earn it, can you lose it?
These questions and their answers have far-reaching consequences for businesses, and we’re going to show you exactly how you can develop and improve your brand loyalty.
What is Brand Loyalty?
“The greater your command of brand loyalty, the less you must worry about price sensitivity and competitive promotions-and the less you must pay for marketing.” — Jim Mullens [*]
Brand loyalty can be defined as a consumer’s commitment to celebrate and be a part of a brand’s story, even when presented with perfect substitutes.
Customers that have brand loyalty tend to:
- Be repeat buyers
- Buy at a higher frequency
- Spread a brand by word-of-mouth
- Engage with marketing activities
- Defend a brand in controversy
Brand loyalty varies in strength, but it can sometimes be so strong that customers sacrifice convenience, price, or other buying considerations to remain loyal. In other words, they can sometimes behave counter to their own economic interest in order to elevate their status, be a part of a tribe, or save time on decisions.
Are customer loyalty and brand loyalty the same thing?
While customer loyalty often extends into brand loyalty, they are not the same thing. Say you raised your prices or altered your offer, your brand loyal customers are likely to stick around, but habitual customers who lack brand loyalty could opt for a substitute. For example, if someone who usually buys Bounty paper towels saw a good sale on a store brand and chose the store brand over Bounty, then that’s an example of a loyal customer who doesn’t have strong brand loyalty.
Why Does Brand Loyalty Matter?
The benefits of managing and growing brand loyalty in your business are enormous. Here are just a few:
- Gives you an instant audience for new products
- Allows you to take risks
- Empowers brand evangelists
- Helps you defend against price elasticity
Companies With Fantastic Brand Loyalty
You know it when you see it, and brand loyalty is evident in the intersections between culture, social behavior, and buying behavior.
Here are a few companies with incredible brand loyalty:
Apple’s fanbase is legendary. Diehards buy every new iPhone with the tenacity of a religious zealot, and nothing could make them switch to the dreaded “green text”. Even when a particular update or product is disappointing, the idea of switching brands is anathema.
Apple built its brand loyalty on a relentless pursuit of tasteful minimalism and a stunning record of innovation.
Other mechanisms include:
- Pairing hardware with unique software and IP.
- Making owning multiple Apple products a seamless and better experience.
- Using its high prices to tap into the psychology of status.
If you know anyone who is into backpacking, they’re probably a fan of REI. REI is an outdoor apparel and equipment company that has a stellar reputation.
They built their brand loyalty by:
- Dominating a niche space
- Championing quality (being selective about inventory)
- A cheap lifetime membership that gives access to exclusive offers
- 1-year “no-questions-asked” returns for members
- Giving fantastic customer service both in-store and online
- A general willingness to trust the customer and take short-term losses for long-term loyalty
Trader Joe’s fans are so in love with TJ’s products that a man named Pirate Joe built an entire business smuggling Trader Joe’s products across the Canadian border until he was sued and shut down[*].
Trader Joe’s created its brand loyalty by:
- Being unabashedly themselves (e.g. not having traditional vegetable aisles)
- Having a reputation for treating their staff well (customers feel good about contributing to a kind company)
- Creating a wide group of exclusive products instead of relying on third-parties
- Staying in touch with trends, particularly plant-based foods
- Devoting additional labor and resources to customer service
How to Build Brand Loyalty
“Rewarding loyalty for loyalty’s sake–not by paying people for sticking it out so the offering ends up being more attractive–is not an obvious path, but it’s a worthwhile one. Tell a story that appeals to loyalists. Treat different customers differently, and reserve your highest level of respect for those that stand by you.” — Seth Godin
Quality over quantity
Assuming you are trying to build long-term loyalty, avoid sacrificing quality for growth. If your business is thinking about subbing in a cheaper material or outsourcing an aspect of your business because it would save money, think carefully about how this could impact the experience of your brand. If it would sacrifice too much, don’t do it.
The data doesn’t lie:
Reciprocity is a fundamental effect in human psychology that ties back to our most basic instincts. If someone does a favor for us, we feel bound to do a favor for them. Or even more powerful, if we do a favor for someone, we are more likely to do another favor for them.
Use reciprocity to build brand loyalty by giving back to your customers. Maybe you surprise them with an extra item in your order. Or maybe you extend a free trial to someone who needs a bit more time to decide. All of these small moments of reciprocity add up to form a group of people who respect you and want to see your business succeed.
Consistency is another core psychological principle your business needs to respect. Consistency is related to reliability, and it boils down to expectations vs. reality and quality control. A breach in consistency may be interpreted as a betrayal, which can make customers turn on you. So whatever you do, do it well and don’t change anything without being explicit.
Take a stand
It’s riskier, but if you align your business values with those of your core customers, you can develop brand loyalty faster. You could donate a portion of sales to a particular organization, use your brand as a platform for what you believe in, and choose to voice your opinion instead of staying silent during sensitive moments.
For example, if you were a “zero-waste” drink company, you may want to consider discussing environmental concerns.
Personalize your messaging
People want to be known. Talk to them like they are individuals and do your best to develop actual relationships. Nothing is more important to brand loyalty than the relationships you build, and these grow deeper and faster with personalized messaging and hands-on approaches like phone calls over robocalls, recognizing their buying history with you during customer service calls, and segmenting your email list to be more specific. These tactics may be more expensive to implement, but they are worth it.
Invest in customer service
Mistakes are inevitable, so how you handle them matters. Examine your customer service apparatus and see if there are opportunities where you can bend a bit more for your customers. Seek to understand and satisfy first, and watch your repeat customers grow and grow. This is also a fantastic way to get reviews — people love to tell stories about good experiences.
Another clever way to build brand loyalty is to create a space for value and connection to happen outside of your products and services. Maybe you sell cameras and set up a place for creators to meet each other. Or perhaps you moderate a forum on email marketing if you’re an ESP platform.
Whatever you do, build mechanisms that reward brand loyalty. From Chick-fil-A’s reward program to flight points, “getting something back” for spending is a critical component of building loyalty. The trick? The program has to be good, which usually means being more expensive, but when designed correctly, the results are worth it.
Plus, new technology like cryptocurrency are presenting some fascinating opportunities to create monetary incentives around brand engagement. Imagine being able to give consumers a crypto kickback for every ad they watch and every purchase they make. That tech would encourage users to seek out new opportunities to interact with your brand, increase engagement during the ad experience, and build goodwill through reciprocity and rewards. It does wonders for ROI, and it’s where the internet is headed.
Threats to Brand Loyalty
Negative changes in a product
55.3% of consumers are brand loyal because they love the product, and poor product quality is the number one reason why a brand would lose a loyal customer (51.3%) [*].
One bad experience with a product can lose a long-term customer. People are terribly unforgiving, which is why having good customer service is so important.
Change is usually good, but if you’re caught on the wrong side of it, you could be left in the dust. Environmental concerns are a great example. If your business uses a ton of plastic, you may be losing customers over time who don’t want to contribute to that degree of waste, and the flow could be slow enough to disguise where you’re hemorrhaging.
Dishonesty and Controversy
We’re looking at you, Papa John’s. After founder John Schnatter’s infamous racial slur, sales plummeted by 16%[*]. With clear substitutes for cheap pizza, Papa John’s was at particular risk for losing customer and brand loyalists.
Your next steps with brand loyalty
Your first step is to build an action plan. Start with a top-down analysis of all of your customer-facing mechanisms and see how you can promote the elements of brand loyalty we discussed above. Then, turn that into a to-do list and start making it happen. The sooner you can make these changes, the better.
ASK: your new secret power for creating unrivaled brand loyalty
Brand loyalty is built on relationships and respect, and while some tools let you attempt this at scale, many fall flat and feel impersonal.
Instead of treating people like cash cows, start respecting them by using the ASK cryptocurrency to compensate and pay people for their data and time. By using ASK as the vehicle for your marketing incentives, you can dramatically increase your short-term conversion rates and generate long-term good will, which builds brand loyalty.
For example, let’s say a new customer starts a free trial for your SaaS company, and you know that when people invite a team member into your platform, your sales conversion rate increases by 30%. In other words, sharing the platform with a team member is a critical KPI for your team.
Now, let’s say instead of just having a prominent CTA, you attach a cryptocurrency value to that KPI, say 100 ASK. This creates a monetary incentive to take that critical step with you, and the effect this has on conversion rates is incredible.
That’s the power of ASK, and you can start using it right now.