What is Brand Loyalty? How to Build, Increase, and Measure It

You know that feeling when you just have to get your morning coffee from your favorite cafe, or you won’t feel right for the rest of the day? That’s brand loyalty in action. 

What is brand loyalty? It’s when customers continue to support a particular brand over time. They choose that brand over competitors and promote it to others. 

Today’s competitive marketplace inundates consumers with multiple choices. That’s why you need a loyal customer base to ensure a consistent revenue stream. 

This article explores brand loyalty definition, steps to build brand loyalty, and real-world examples of brand loyalty. You’ll also learn how to measure the impact on your bottom line and create a superior customer experience.

Why Brand Loyalty Matters

Loyal customers are the lifeblood of any business. One way they contribute to sustainable growth is by continuous patronage.  Brand loyalty research reveals that repeat customers spend 67 percent more throughout their relationship with your business. And they also cost less to retain since You don’t need to win them repeatedly. 

Moreover,  loyalty reduces price sensitivity. Your most loyal fans care more about the value and experience you provide than saving a few bucks. They will pay premium prices and are less likely to switch to competitors based on price alone.

Also, brand loyalty contributes to the long-term success of businesses through organic marketing. Word-of-mouth marketing from loyal customers is one of the most effective promotions. Loyal customers who rave about your brand on social media or to friends can expose your business to new potential customers, helping you reduce your marketing costs.

What is the Difference Between Brand Loyalty and Customer?

Brand loyalty and customer loyalty are related but different concepts. Customer loyalty refers to a customer’s willingness to continue purchasing from a company over time. Brand loyalty is a customer’s emotional devotion to a specific brand.

Loyal brand followers will choose your brand over competitors, even if lower prices or more convenient options are available. On the other hand, customer loyalty is more transactional. Loyal customers will continue purchasing from your company out of habit, convenience, or satisfaction. 

However, they can easily switch to competitors for a better deal or experience. In summary, brand loyalty is an emotional connection, while customer loyalty is based on convenience or satisfaction.

Factors Influencing Brand Loyalty

Several factors influence how loyal customers are to a brand. Four of the most significant factors include:

1. Quality of Products/Services

Top-notch products or services consistently exceeding customers’ expectations are fundamental to brand loyalty. Customers who receive value and reliability are likelier to stick with a brand.

2. Customer Experience

Creating a positive customer experience involves every interaction with your brand, from the moment they discover your brand to the post-purchase support. Being super helpful and quick to respond can create a lasting impression on customers and keep them devoted to your brand.

3. Consistency in Branding

Consistency in branding implies using the same logo, tagline, voice, and messaging across all channels – your website, social media, email marketing, customer service, etc. This way, you can increase omnichannel engagement and meet customers’ expectations. Additionally, avoid making significant changes to your brand identity. Small, gradual changes are better. 

4. Trustworthiness and Reputation

Customers want to know a brand has their best interests in mind. Be transparent in your business practices and communications. Deliver what you promise. Admit when you’re wrong and make things right. All of these build trust in the long run.

Strategies for Building Brand Loyalty

Building brand loyalty requires time, effort, and consistency. Here are some key strategies to strengthen your loyal customer base:

1. Loyalty Programs

Offer rewards and incentives for repeat customers like discounts, coupons, or loyalty points. Make the rewards worthwhile and easy to redeem so people stay engaged with your brand. Studies have shown that customers who are members of loyalty programs tend to generate 12-18% more revenue growth per year than non-members.

2. Exceptional Customer Service

Provide fantastic service and support. Respond quickly to questions and complaints. Make customers feel valued through personal touches, offering tailored recommendations, and sending handwritten thank-you notes. These little gestures go a long way in building strong connections and loyalty.

3. Emotional Branding

Emotional branding involves building an emotional connection with your audience. To make this strategy work, align your brand’s mission and values with what your customers care about. Share compelling narratives that resonate with customers’ emotions. Spotlight the people behind the scenes. Use appealing visuals and a consistent brand voice. 

4. Content Marketing

Content marketing involves creating valuable, engaging content that resonates with your target audience. Publish helpful content that entertains and educates your customers. Videos, blog posts, social media, and email newsletters keep your brand top of mind. Here are 12 tools to find topic ideas.

5. Social Responsibility

Support causes your customers care about. Donate some of your profits to charities or get involved in your local community. 

According to Corporate Social Responsibility (CSR), 55 percent of global online consumers are willing to pay extra for products and services from socially conscious brands.

Measuring and Analyzing Brand Loyalty

You must measure and analyze key metrics to truly understand your customers’ loyalty to your brand. Here are a few of the most important ones:

1. Net Promoter Score (NPS)

The NPS measures how likely your customers are to recommend your brand to others. It’s calculated based on responses to a single question: “How likely are you to recommend [brand] to a friend or colleague?” on a scale of 0 to 10. Those who respond 9-10 are “promoters,” 7-8 are “passives,” and 0-6 are “detractors.” Subtract the percentage of detractors from that of promoters to get your NPS. An NPS of +50 or more is excellent.

2. Customer Lifetime Value (CLV)

CLV represents how much revenue customers will generate throughout their relationship with your brand. The CLV value is a critical metric influencing customer acquisition, retention, and marketing strategy decisions. It helps companies see the bigger picture: how valuable their customer base can be in the long run.  You can calculate it with this formula:

• CLV = (Average Purchase Value x Average Purchase Frequency x Average Customer Lifespan)

The higher a customer’s CLV, the more loyal they are. 

3. Churn Rate

Your churn rate is the percentage of customers who stop using your product or service over a period. To calculate the churn rate, you would divide the number of customers lost during a given period by the total number at the beginning. 

A high churn means low loyalty, so aim for a churn rate under 5 percent. Look at which customer segments have the highest churn and why, then make improvements to serve them better.

4. Social Media Mentions and Reviews

Monitor how often your brand is mentioned on social media and the sentiment of those mentions. Mandala’s Social Listening tools can help you keep track of customers’ online conversations about your brand, whether positive or negative. Also, look at reviews on sites like Yelp or Google to see your average rating and what customers say about their experience.

Case Studies

Some of the most successful brands have built long-lasting relationships with their customers. Let’s look at a few case studies of brands that have achieved an almost cult-like following:

1. Harley Davidson

Harley Davidson has created a community and lifestyle around their motorcycles that inspires passion in their customers. They sponsor local and national events where riders can connect. In addition, the brand started the Harley Owners Group (HOG) in 1983, which now has over one million members.

2. Lululemon

Lululemon’s brand is built on more than just high-quality yoga pants. They foster a mindful lifestyle and community. Local stores host free yoga classes and events, and their shopping bags read, “Friends are more important than money.” Lululemon’s loyal customers feel they’re joining a movement, not just buying clothing.

3. Starbucks

Starbucks offers an experience, not just coffee. Their cozy cafes give customers a “third place” to escape, work, socialize, or relax. They offer attractive incentives like free Wi-Fi, loyalty programs, and a personalized experience. Starbucks’ brand is built on quality, convenience, and community.

Challenges in Building Brand Loyalty

Building brand loyalty is more complex than running an ad campaign and waiting for lifelong customers to appear at your door. Here are some of the biggest obstacles companies face in gaining and keeping loyal customers:

1. Lack of Trust

Today’s consumers are skeptical and wary of empty marketing promises. If your brand’s messaging doesn’t match the actual customer experience, people will see right through it. You must prove you genuinely care about your customers and will keep your word.

2. Competition

You’re not the only game in town. Your competitors want your customers, too, and they’re working hard to get them. You must give people a convincing reason to make them stick with your brand. Whether through superior products, memorable experiences, brand loyalty programs, or another differentiator, you must stand out.

3. Changing Needs

Customer needs and desires are constantly evolving. If you don’t keep up with trends and make changes to meet new demands, your loyal fans may start looking for alternatives that better fit their needs. Stay on top of industry developments and adjust your offerings accordingly.

4. Lack of Value

At the end of the day, the biggest reason customers leave a brand is simply a lack of value. Why would anyone stay loyal if your products, services, or experiences are not delivering tangible benefits and satisfaction? You have to continue providing superior value to keep customers coming back again and again.

Key Takeaways for a Lasting Connection

Remember, brand loyalty is critical to the long-term success of your business. It can help you increase customer retention, stabilize your revenue stream, and reduce marketing costs. Additionally, brand loyalty can provide valuable insights for product development and marketing strategies.

While the strategies and tools will evolve, the principles behind brand loyalty remain the same. Focus on understanding your customers, building a solid brand identity, delivering exceptional customer experiences, and staying committed to continuous improvement.

If you’re ready to start building customer loyalty to your brand, we can help at Mandala AI. Our AI-integrated tools have helped many businesses in Asia and Europe attract and retain customers to their brands on social media through a comprehensive array of helpful loyalty-building features. We want to help if you contact us!