Advantages & Benefits Acquired From Brand Loyalty

Brand loyalty is defined as the pattern a consumer demonstrates to a particular brand by making repeated purchases over long periods of time (Staff, I., 2018). As these loyal consumers associate a positive relationship to the brand, they may be insensitive to things like price or convenience. For most companies, acquiring this loyal following is the ultimate goal, thus they implement creative marketing strategies like loyalty programs, influencers, or samples to begin the relationship. Regarding how companies measure loyalty, there are many different metrics.

For instance, there is the Net Promoter Score which is a 10 point scale based on one question: How likely is it that you would recommend our service/product to a friend or colleague? Another method is the Consumer Loyalty Index which uses a 6 point scale based on three questions: (1) How likely are you to recommend us to your friends/contacts? (2) How likely are you to buy from us again in the future? (3) How likely are you to try out other of our products/services? Ultimately, it’s the company’s discretion to decide which metric to use (Carson, 2018).

There are many advantages and benefits acquired from brand loyalty. For instance, loyal customers are essentially the cornerstone of a brand’s equity (Smith, 1992). Many companies rely on these repeated purchases in order to be successful. Once these companies gain a loyal following, they can choose to limit their marketing budget as there’s less necessity for attracting new consumers (Chaudhuri, 2001). They can instead focus on maintaining their relationship with existing customers, which costs 7-10 times less than acquiring new customers (Association of National Advertisers, n.d.). Continuously satisfying these loyal customers can successively attract new customers, like their family and friends, through referral.

Another benefit is less risk with new product releases. Often times when new companies introduce premium products or add trending fads to their products, new consumers are reluctant to purchase as they’re unsure of the of the brand’s overall performance. Consequently, companies with strong brand loyalty can release such products knowing that, even if they don’t necessarily enjoy the product, they’re less likely to entirely leave the brand (Bhasin, 2018).

Contrarily, one downside is that if they release a new product that is too “different” than what they’re known for, or, if they direct the company into a completely new direction, consumers will discontinue supporting the company and find a new substitute (Bhasin, 2018). The main issue is, how does one attain brand loyalty in today’s society? Although there are no specific rules or guidelines for attainment, there are several drivers to consider aside from product functionality. Before the internet, customers had very few brands to purchase from, hence loyalty was dependant on sales associates, product functionality, and for some brands, the first-movers advantage. However, with the introduction of the internet, there are new challenges companies have to consider in order to attain loyal customers.

One prevalent challenge is the the difficulty in retaining loyal customers due to the increasing number of start-up companies and the growing attraction for e-commerce and digital platforms. With the emergence of e-commerce platforms and social media, online stores are taking consumers away from physical stores. With quick search engines and international connections, technology has opened up numerous online options for consumers in the comfort of their own home and is giving them the opportunity to experience different brands through “frictionless” commerce (Portell, 2018).

An additional challenge companies may face is innovating customer experience. As stated earlier, brand loyalty in the past was created by having sales associates push customers into purchasing products repeatedly. Back then, sales associate were concerned with what they would say to buyers. However, today’s companies are moving away from this mindset and are now concerned with what customers say to one another and how they can influence and create a demand for customers to use their product (Bonchek, 2018).

The more ways a company can influence a demand, the more likely a consumer will remain loyal. Some examples of influencing demand include purchasing products due to friend referrals, in-store product demonstrations, online reviews, influencers and brand ambassadors, etc. With all of these new factors to consider, what does this entail for the future of brand loyalty? Some hypothesize that, as new brands continue to emerge, the concept of brand loyalty will begin to fade in the near future. This is already being seen as the internet has made it easier for consumers to conduct their own research, and, 34% of online consumers stated that they’d trust a stranger’s review over a large corporation’s marketing claims (Olenski, 2013).

Despite this fear, a study conducted by Facebook suggests that out of 14,700 adults in the United States, 77% were still loyal to their favorite brands (DeMer, 2017). As a result, companies must now understand that brand loyalty should no longer be viewed as a binary concept; it has diversified into varying levels. To start, brands should begin viewing their “loyal” customers in two different groups: satisfied and committed customers. Satisfied customers are ones who purchase products regularly because they are satisfied with the brand’s performance. The brand has become almost habitual for them to purchase from and there’s no reason for change (Aaker, 2017).

These consumers are loyal to the company for a specific product and make up 40% of a brand’s “loyal” customers but would go to another brand if a cheaper alternative was present (DeMers, 2017). Examples of brands with satisfied customers are: Betty Crocker, Band-Aids, and Clorox (Aaker, 2017).Committed customers are much more emotionally invested into the brand. They resort to the brand for an experience that’s beyond just the product’s functionality. They make up 40% of a brand’s loyal customers and wouldn’t resort to another company despite the option of a cheaper alternative. Examples of brands with committed customers are Apple, Microsoft, and Netflix. Between these two types of customers, brands tend to strive for the committed (Aaker, 2017).

Knowing this, brands should focus on retaining this 77% of consumers by analyzing how well consumers perceive themselves to emotionally align with the company's values. Some refer to this as how well they can correlate and express themselves through the brand’s “personality” -- that is, the brand’s presence, values, and distinctive characteristics. For instance, Levi’s, a denim company, has expressed themselves as a “rugged” brand as they strictly focus on denim clothing. Customers who purchase from this store may find that Levi’s aesthetic, an all denim store who capitalizes on vintage looks, aligns with their personal fashion values. The more a consumer is able to express themselves through a brand, the more satisfied and loyal they will be (Brakus, 2009).

Another example of a popular brand personality is Whole Foods -- they market themselves as a company who supports sustainable food production and has amounted a large loyal following for those with similar values (Evans, 2017). By redefining what it means to be a “consumer” and focusing on the actual relationship, brand’s will continue to develop new ways to adapt alongside consumer needs. With challenges emerging from consumers trends and emerging technology, it is important for brands to maintain their relationships or else brand loyalty may soon become a passing marketing trend.