What Is Brand Loyalty?

According to Harvard Business Review (HBR), companies with high scores on brand loyalty and customer loyalty market research metrics grow revenues 2.5 times faster than industry peers and deliver two to five times the returns to 澳洲幸运5开奖号码历史查询:shareholders.

Brand loyalty is a consumer's commitment to repeat purchases of a particular brand regardless of price. Company 澳洲幸运5开奖号码历史查询:profitability relies on repeat business with existing clients and proves less expensive than marketing to🥂 attract new customers.

Building Loyalty

Brand-loyal customers believe a certain brand represents higher quality and better service than competitors. Once established, brand loyalty is retained if the product quality and service level remain high. Brand loyalty differs from 澳洲幸运5开奖号码历史查询:customer loyalty programs, which require offering low pricﷺes and regular discounts to maintain best-deal-on-the-market statusꦕ.

Most established brand-name products operate in highly competitive markets, jockeying for 澳洲幸运5开奖号码历史查询:market share with new and old rival𒈔 products. Marketing🦩 departments employ various tactics to create and maintain brand loyalty, including monitoring buying trends, analyzing spending data, and designing advertising campaigns targeting customer segments.

Company Strategies

• Best-in-Class Quality: Companies that consistently deliver best-in-class quality will convert customers into brand-loyal advocates who spread positive word-of-mouth and never feel the need to shop elsewhere.
• Customer Service: Exceptional customer service includes 24/7 chat reps, social-media managers, phone operators, and support-ticket staff. First-rate service that makes customers feel valued might be the only thing that sets a brand apart from its competitors.
• Brand Ambassadors: Companies hire spokespersons for their products. A successful brand ambassador should have an authentic, professional presence, in-depth knowledge of products and services, and highly developed expertise in building loyal customer relationships.
• Loyalty Programs: Establishing a program to reward existing customers for their business is one of the most direct ways to build brand loyalty. This is especially true for premium-priced brands because an exclusive discount for loyalty program members can be the right incentive to choose the pricey brand over a less expensive option.
• Online Community: In 2024, U.S. online spending was $1.37 trillion with 2030 projections of over $2.5 trillion. Unlike static advertisements, social media has a range of tools to forge deeper, more personal connections with customers, from hosting Q&As and live streams with employees to taking customers on behind-the-scenes tours of the business. A digital community is an easy access point for customers who spend hours online.

Brand-Loyalty Leaders

According to data compiled by Brand Keys for 2024, brand loyalty leaders and the products for which they hold the highest consumer favor include:

• Apple: Smartphones
• Amazon: Online Retail
• TikTok: Social Networking
• Domino's: Pizza
• Netflix: Video Streaming
• Levi Strauss: Apparel Retailers
• Dunkin': Coffee
• Mattel: Toys

Measuring Customer Loyalty

Companies rely on the following metrics to measure brand loyalty:

• Customer Retention: Percentage of customers a company retains during a specific time frame.
• Customer Lifetime Value (CLV): Profit a customer has generated for the company.
• Customer Satisfaction: Companies often look to customer surveys to ask customers how satisfied they are with product interaction.
• Net Promoter Score: Companies may rely on a Net Promoter Score (NPS), a customer experience metric that measures the likelihood of customers recommending a product or service to others.

Customer vs. Shareholder

The Harvard Business Review (HBR) has intimated that financial accounting and 澳洲幸运5开奖号码历史查询:shareholder primacy affect how co🎃mpanies treat loyal customers. HBR argues that quarterly earnings and reporting undermine how loyalty affectsඣ profitability. Two profitability strategies—shareholder primacy vs. customer capitalism—have affected how customer metrics like brand loyalty are ranked as profit drivers.

In the 1950s, Peter Drucker referred to as “the father of business consulting” by Forbes and “the greatest management thinker of the last century" by GE Chair 澳洲幸运5开奖号码历史查询:Jack Welch, said that “the true purpose of a business is to create and keep customers." Conversely, in the 1970s, 澳洲幸运5开奖号码历史查询:Milton Friedman said that companies exist to maximize shareholder value, the argument HBR said introduced "the age of shareholder primacy."

In 2019, CEOs from the Business Roundtable, including Tim Cook of Apple, 澳洲幸运5开奖号码历史查询:Jeff Bezos of Amazon, 澳洲幸运5开奖号码历史查询:Mary Barra of General Motors, 澳洲幸运5开奖号码历史查询:Robert F. Smith of Vista Equity Partners, and Larry Fink of BlackRock, broke with decades of corporate orthodoxy by stating that “the purpose of a corporation” is no longer to advance only the interests of shareholders. Instead, companies must deliver value to customers indirectly by supporting customer values on issues like protecting the environment and dealing ethically with suppliers.

The Bottom Line

Brand loyalty occurs when companies can retain customers across product lines. Instead of investing capital to land new clients, companies with high brand loyalty hꦯave the advantage of deploying resources to improve their products or enhance their customer service to repeat consumers.