XM Knowledge Base
What is brand loyalty?
While there are lots of different facets to it, the simplest brand loyalty definition is this:
The behaviour 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.
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
- 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, organisations 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.
Tips on how to create brand loyalty
Brand loyalty is something that needs to be nurtured over time – research from Yopto says most customers consider themselves loyal after more than three purchases. But there’s lots you can do to grow loyalty on a continual basis…
1. Be consistent
Customers are more likely to relate to your brand if you have a tone of voice and sense of identity that’s consistent across every touchpoint. That means messaging that feels recognisably the same whether it’s in an ATL ad campaign, an email newsletter, or a one-to-one customer support session. If every outreach feels consistent, your customers will be able to clearly describe your values and attributes, which will help grow their sense of advocacy.
2. Improve your customer service
Maintaining great customer service is a key way to build brand loyalty, so doing whatever you can to improve how you listen for, escalate and solve customer issues is of the utmost importance – but doing so professionally and quickly is key. In 2022, customers are easier to lose than ever before, with 60% saying they would purchase more if brands treated them better, so the expectation is for customer service agents to go above and beyond when it matters most.
3. Understand the customer journey
Our 2022 Global Consumer Trends Report shows that 63% of customers believe companies need to get better at listening to feedback. Being able to identify and fix problems along the buying journey will help customers feel valued, listened to, and respected – but doing that relies on taking a holistic, omnichannel approach to feedback. When you transition to real-time, always-on monitoring of the customer journey, you can find and fix pain points as they happen.
4. Reward loyalty
Many brands pour time, money, and effort into attracting new customers at the risk of ignoring those who’ve been the most loyal to them over the years. With research showing that 68% of customers who leave a brand do so because of a feeling of indifference, it’s important to do what you can to reward loyalty over the long term with the help of a curated loyalty program. We’ll delve deeper into how to do that further in this article.
How brand loyalty is lost
Building brand and customer loyalty takes careful effort, so you’ll want to do everything you can to ensure you keep it. Here are three key reasons loyalty can waver:
- Not being agile to trends
One of the biggest reasons that customer loyalty dulls over time is a sense of stagnation – either with products and services, company image, or brand values. Brands looking to keep their brand-loyal customers need to keep an ear to the ground and keep up with market trends. Sustainability is a great example – its importance as a driver of consumer decision-making has become huge, so any brand not adapting to suit will find itself losing customers over time as a result.
- Not listening to customers
Across social media and in person, customers are discussing your business daily, whether you’re listening or not. It only takes one instance for a customer to feel ignored, so finding a way to monitor and react to those discussions – wherever they’re happening – is a surefire way to destroy brand loyalty. The best approach is to gather and act upon customer feedback continuously, rather than at sporadic junctures.
- Losing reputational trust
If a customer thinks that your values no longer align with theirs, they’ll move on. So trust must be nurtured as a brand-wide endeavour. While no company can guarantee that they’ll never receive bad press, the important thing when it comes to keeping your hard-earned brand loyalty is that customer service and marketing communications are considered an equal part of limiting reputational damage.
Companies with great brand loyalty
Let’s look at a few quick examples of companies with famously high levels of customer loyalty – and explore how they nurtured it.
Apple
Apple routinely tops brand loyalty charts, and in 2021 the company reached an all-time brand loyalty score of 92%. People who buy Apple products tend to keep buying Apple products, and there are lots of reasons why. Image is a key driver for Apple with its products firmly positioning itself as high-value, aspirational products that are an apparent league above the competition.
This works in tandem with a well-maintained company story that Apple is for people that “think different”, and an origin that gave it innate underdog status against rival Microsoft.
But arguably the most important factor in its brand loyalty success is a focus on excellent customer service. The company continually tops customer satisfaction indexes, scoring in the 80s year on year (across the smartphone and computer segments) thanks to famously forgiving and robust repair programs and in-store excellence.
Nike
Like Apple, Nike’s brand loyalty success has been built on a bedrock of aspirational, motivational image building. Nike uses famous athletes as brand ambassadors to great effect, but in recent years a lot of Nike’s brand loyalty efforts have been focussed on the omnichannel customer experience as a way to foster a sense of both community and exclusivity.
Through a collection of free apps (Nike Run Club, Nike Training Club, etc.), customers are incentivised to create an account that offers priority tickets to events, exclusive deals, free training advice/programs, and community features. This ecosystem works to build brand loyal customers who see Nike as their first choice for all things sport.
Starbucks
In 2020, Starbucks reported that its Starbucks Rewards loyalty program had crossed 19.3 million members, growing by 10% YoY despite the global pandemic causing a dip in overall transactions. Globally, this loyalty scheme is now responsible for almost 50% of the company’s total sales, and stands as a fantastic example of customer loyalty being rewarded with real intelligence.
Starbucks Rewards uses a combination of in-app user data, specific store insights, and purchase history to build-out offers and discounts that feel genuinely unique and personalised to each customer.
How to reward loyal customers
We’ve highlighted the importance of rewarding customer loyalty, but there’s an art to building out a successful loyalty program that’ll increase trust, advocacy, and the likelihood of repeat purchases.
- Provide flexibility
What appeals to one customer won’t be what appeals to everyone, so it’s always good to design a range of rewards to choose from. Better still, tap into audience data to deliver personalised rewards based on their location and habits.
Similarly, if your rewards program is a paid one (as with Amazon Prime), flexibility in the form of payment options (monthly or annual) will go a long way.
- Gamify things
Gamification is a great way to get people hooked on their rewards. That might be as simple as adding visual sparkle that turns collecting coffee tokens into a mini dopamine hit, or as complex as adding tiers to your program so that loyal customers get better rewards the more they shop with you.
The important thing is to be crystal clear from the outset that there are bigger and better rewards to be had for those who exhibit great brand loyalty.
- Keep an eye on effort
Are people finding your customer loyalty scheme more hassle than it’s worth? Striking that balance can be difficult, but a Customer Effort Score (CES) survey is a great way to learn how easy or hard collecting and redeeming rewards actually is. And this can be really important.
As customer loyalty guide The Effortless Experience puts it: “96% of customers with a high-effort service interaction become more disloyal compared to just 9% who have a low-effort experience.”
How to measure brand loyalty
True brand loyalty is the result of a brand experience that hits every mark, so it’s never a ‘solved’ problem, but rather an ongoing journey. That said, there are several ways you can measure and chart brand loyalty over time:
Track NPS
Your Net Promoter Score (NPS) is one of the easiest and most widely-recognised ways to understand loyalty to your brand. It effectively asks people one simple question: “How likely is it that you would recommend [Organisation X/Product Y/Service Z] to a friend or colleague?” The results are typically measured out of ten, and that puts respondents somewhere on a three-point scale as either promoters, passives, or detractors.
Measure your CLI
Like NPS, your Customer Loyalty Index is a survey that tracks people’s intent to make repeat purchases. It’s complimentary to both NPS and CSAT (Customer Satisfaction) scores so it won’t give you a full picture by itself, but CLI data can be combined with other metrics to see how intent stacks up against past behaviour.
Monitor repeat purchases and churn
Customer retention software can help you understand how many customers are new, how many are returning, and where problems along the buying journey are creating customer churn. By monitoring the experience closely you’ll be able to see where people are leaving your brand for a competitor, alongside how many are staying loyal.
Ultimately, measuring brand loyalty requires a holistic and ongoing view of a range of metrics, capturing both past performance and future intent. In this space, the right software solutions can make all the difference – you can learn more about how Qualtrics can help boost your brand loyalty here.
eBook: Start Tracking Your Brand Loyalty