What Is Brand Loyalty?

Brand loyalty is the positive association consumers attach to a particular product or brand. Customers who exhibit brand loyalty are devoted to a product or service, which is demonstrated by their repeat purchases despite competitors' efforts to lure them away. Corporations invest significant amounts of money in customer service and marketing to create and maintain brand loyalty for an established product. Coca-Cola Company is an example of an iconic brand that has resulted in customers demonstrating brand loyalty over the years despite Pepsi's products and marketing efforts.

Key Takeaways

  • Brand loyalty is demonstrated by repeat purchases of a product even when the consumer has choices of competing alternatives.
  • Marketing campaigns are designed to nurture brand loyalty.
  • Brand loyalty can evaporate when consumer trends change, but the product doesn't.
  • Brand loyal customers commit to a brand without respect to price.
  • Although the internet presents many choices, it also provides a new opportunity for companies to enhance their image and build meaningful relationships with customers.

How Brand Loyalty Works

Loyal customers are the ones who will purchase the same brand regardless of convenience or price. These loyal customers have found a product that meets their needs, and they're not interested in experimenting with another brand.

Most established brand name products exist in a highly competitive market overwhelmed with new and old competing products, many of them barely distinguishable. As a result, companies employ many tactics to create and maintain brand loyalty. They spend their advertising budgets on messages targeted at the segment of the market that includes their loyal customers and like-minded people who could become loyal customers.

How to Create Brand Loyalty

Marketing departments follow consumer buying trends closely and work to build relationships with their customers through active customer service. 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.

90%

The percent of consumers who are brand loyal despite having many alternatives. 

Stellar 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.

Brand Ambassadors

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.

How Brand Loyalty Is Lost

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. 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. 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.

Real-World Example

Apple Inc. (AAPL) has nearly 2 billion iPhone customers, many of whom are loyal to the brand. Each year, the iPhone has new upgrades, and consumers rush to the stores to buy the latest version. Apple's reputation for innovative products and excellent service has helped to create a loyal customer following that's extremely unlikely to switch to a competitor.

As the company rolls out more fee-based services, including Apple TV and gaming, the company is likely to add to its share of wallet, meaning more revenue per client. As consumers get hooked on new shows and other services, they'll gladly upgrade to the latest iPhone or tablet when needed. Through innovative products and new services, Apple can further cement the brand loyalty of their existing clients and attract new ones as well.

What Is Brand Loyalty FAQs 

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.

What Companies Have Good Brand Loyalty?

Apple and Nike are examples of companies with good brand loyalty. Apple consistently introduces new models with cutting-edge technology and provides unique customer service experiences. It delivers products and services based on what consumers want and need, pursuing the goal of creating rewarding experiences through innovation.

Nike creates campaigns to tell compelling stories and sponsors communities where consumers share common interests and goals, fostering an emotional connection to the brand. It also allows customers to explore their individuality and uniqueness by allowing them to customize their selections. These measures make customers feel seen and valued.

Why Do 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.