What Is Brand Loyalty?

What Is Brand Loyalty?

You know how companies depend on a loyal consumer base and those repeat buys to boost their revenue? Well, according to the Harvard Business Review, firms scoring high on brand and customer loyalty metrics grow their revenues 2.5 times faster than their industry peers and deliver two to five times the returns to shareholders.

Let me tell you directly: brand loyalty is essentially a consumer's commitment to keep buying from a particular brand, no matter the price. Your company's profitability hinges on this repeat business from existing clients—it's far less expensive than constantly marketing to attract new ones.

Key Takeaways

Here's what you need to grasp: brand loyalty means repeat purchases regardless of price, and leaders in this area often see higher revenue than competitors. You measure it through consumer retention and customer satisfaction surveys.

Building Loyalty

Brand-loyal customers stick with you because they believe your brand offers higher quality and better service than the competition. Once you've got that loyalty established, you retain it by keeping product quality and service levels high. Remember, this differs from customer loyalty programs, which focus on low prices and regular discounts to stay the best deal out there.

Most big brand-name products operate in cutthroat markets, fighting for share against new and old rivals. Your marketing team uses tactics like monitoring buying trends, analyzing spending data, and crafting ad campaigns for specific customer segments to build and maintain this loyalty.

It's important to note that existing brand-loyal customers buy 67% more than new ones, so focusing on them is cheaper than chasing fresh faces.

Company Strategies

If you deliver best-in-class quality consistently, you'll turn customers into loyal advocates who spread positive word-of-mouth and never look elsewhere. Exceptional customer service—think 24/7 chat, social media managers, phone support, and ticket staff—makes customers feel valued and can be the key differentiator from competitors.

You might hire brand ambassadors as spokespersons; they need an authentic presence, deep product knowledge, and expertise in building relationships. Loyalty programs reward existing customers, which is especially effective for premium brands where exclusive discounts tip the scale over cheaper options.

In 2024, U.S. online spending hit $1.37 trillion, projected to exceed $2.5 trillion by 2030. Social media lets you build deeper connections through Q&As, live streams, and behind-the-scenes tours, creating an online community that's easy for digital-savvy customers to access.

Fast Fact

Brand loyalty reportedly began in the 18th century when American merchants gave copper coins to repeat customers.

Measuring Customer Loyalty

You rely on metrics like customer retention—the percentage of customers kept over time; customer lifetime value, the profit generated from a customer; customer satisfaction from surveys; and Net Promoter Score, which gauges how likely customers are to recommend your product.

Customer vs. Shareholder

The Harvard Business Review points out that financial accounting and shareholder primacy can undermine how companies value loyal customers, with quarterly earnings overshadowing loyalty's role in profitability. There are two strategies: shareholder primacy versus customer capitalism, affecting how brand loyalty ranks as a profit driver.

In the 1950s, Peter Drucker, hailed as the father of business consulting, said a business's true purpose is to create and keep customers. But in the 1970s, Milton Friedman argued companies exist to maximize shareholder value, ushering in shareholder primacy.

By 2019, Business Roundtable CEOs like Tim Cook and Jeff Bezos shifted away from that, stating corporations must deliver value to customers by supporting issues like environmental protection and ethical supplier dealings.

What Is the Difference Between Brand Loyalty and Customer Loyalty?

Brand loyalty stems from image and experience, while customer loyalty is price-driven, relying on discounts. Brand-loyal folks see your brand as superior in quality and service, regardless of cost, whereas customer loyalty demands you keep prices low and discounts frequent.

What Are Brand Ambassadors?

They're professional marketers you hire to act as spokespersons for your products.

What Is the Role of Corporate Social Responsibility in Brand Loyalty?

CSR makes your company socially accountable to stakeholders and the public. According to the Journal of Consumer Psychology, customers respond positively to firms engaging in CSR.

The Bottom Line

Brand loyalty lets you retain customers across products. Instead of pouring money into new clients, you can invest in improving products or service for your repeat buyers.