Brand Loyalty: What It is & How to Build It, with Examples

In an ever-growing competitive world of business, companies are praying at the altar of brand loyalty to accelerate business growth. It’s no wonder, brand loyalty is the magnetic pull that compels customers to buy from you time and time again.

This is invaluable because this rewards you with more than just cash flow. Word-of-mouth marketing. Enhanced brand value. Lead generation. New customers. Bigger profit margins. 

The reality is that when you get brand loyalty right, it creates a ripple effect that will affect every corner of your business. But what do the stats say?

Loyal customers spend an average of 33% more per order than regular customers. With this loyalty also comes trust - 56% of customers claim that they would spend more even if they had cheaper alternatives from other brands. 

What’s more, is that with this brand loyalty, you can prevent the robbery that comes with customer churn but enjoy the riches of customer retention: a 5% increase in a brand's customer retention rate has the potential to generate a profit increase of anywhere from 25% to 95%.

Brand loyalty can be the launchpad that takes your business to new heights.

What is Brand Loyalty?

Brand loyalty refers to a consumer's consistent preference for a particular brand or product over other available alternatives. It is the degree to which a consumer feels committed to a brand and exhibits a repeat purchase behavior.

Research indicates that customers tend to develop loyalty towards a brand only after making at least four purchases from that same brand.

Characteristics & Markers of Brand Loyalty

Brand loyalty is what accelerates growth. Get enough of it and you’ll grow at a pace that your competitors can’t keep up with. 

But if we were to unpack it with more complexity, brand loyalty can be viewed as a reflection of the quality of your products/services, as well as your values. Foster enough brand loyalty amongst consumers and you’ll see a substantial impact on every corner of your business. 

That’s the simple way of looking at it.

Repeat Purchases

Customers crave value but are not always sure where to find it for the right price. When there’s a strong balance between the two, they’ll make a repeat purchase, again, and again. Over time, this positive experience will compound and create a strong emotional connection with your brand that’s built on trust and confidence. 

The financial reward of this can be astronomical. Consumers who have an emotional attachment to a brand have a 306% higher lifetime value. What’s more, is that loyal customers are worth up to 10x as much as their first purchase.

And for many, repeat customers are the oxygen that keeps businesses alive, with over 65% of purchases coming from returning customers.

All of this stems from brand loyalty, fostering enough amongst your consumers, and you’ll take one giant leap closer to your goals.

Word-of-Mouth Marketing

Imagine acquiring an influx of customers without having to spend a single penny on marketing. That’s the power of word-of-mouth marketing. A loyal customer puts you on a pedestal and this means that they’ll be more inclined to speak positively to their friends and family about the value of your brand. 

If an entire community of loyal customers does this and you’ll have more customers than you can handle. The true power of word-of-mouth marketing is its ability to remove skepticism from new customers - a recommendation from a friend or family immediately pins you as a trustworthy brand. 

Less Price Sensitivity

‘Price sensitivity’ describes how responsive individuals are to changes or variations in prices for products or services. Loyal customers are less price sensitive when making purchasing decisions, while non-loyal customers are often more sensitive to price fluctuations.

With enough brand loyalty, you’ll be able to increase your profit margins by raising the price of your products or services, whilst still retaining a significant portion of your customer base. This is encompassed by the Pareto principle, whereby 80% of your profits are generated from 20% of your customers. 

Foster enough brand loyalty and you’ll be able to raise your prices without losing profit. 

Increased Revenue & Customer Lifetime Value

One of the greatest byproducts of brand loyalty is the ecosystem it creates that’s primed for driving revenue. The dynamic interplay of each brand loyalty benefit has a compounding effect that compels customers to consistently spend more money on your business, placing you in a strong position to achieve growth. 

This isn’t based on mere assumption. Studies show that consumers who have an emotional attachment to a brand have a 306% higher lifetime value than those who don’t. And only a 7% increase in brand loyalty yields 85% higher customer lifetime value.

It just shows that a little loyalty can go a long way. 

What Defines a Brand Community?

A brand community is a group of individuals who share an emotional affinity towards one particular brand due to common values, passions, or styles.

Loyal customers are indispensable assets that play a significant role in creating a strong brand identity by fostering a sense of shared values, experiences, and identity among customers. Here are some ways that brand communities can help create a strong brand identity:

Sense of Belonging

Brand communities create a sense of belonging among customers who share a passion or interest in the brand. This can lead to a strong emotional connection between customers and the brand, which can help reinforce the brand's identity and values.

Co-creation

Many brand communities involve customers in the co-creation of products, services, or experiences. By involving customers in the brand's creation process, the brand can reinforce its identity and values and create a sense of ownership among its customers.

Word-of-Mouth Marketing

Brand communities can serve as a powerful word-of-mouth marketing tool, as customers are more likely to recommend a brand they feel connected to. This can help reinforce the brand's identity and values among new and potential customers.

Feedback and Insights

Brand communities can provide powerful insights and feedback to the brand, helping it to understand its customers' needs, preferences, and experiences. This can help the brand tailor its products, services, and messaging to better align with its customers' values and identity.

Aside from this, creating a feedback loop that customers are aware of makes them feel more involved with your brand and helps with fostering loyalty.

Shared Experiences

Brand communities often involve shared experiences, such as events or activities, that reinforce the brand's identity and values. These shared experiences can create a sense of community and reinforce the emotional connection between customers and the brand.

How to Create and Increase Brand Loyalty

Strong Brand Image

A strong brand image is an essential component of building brand loyalty. This includes factors such as the brand's visual identity, messaging, and reputation.

By presenting a clear and consistent brand image, businesses can build trust and familiarity with their customers. This can also include creating a brand personality that resonates with the customer's values and aspirations. A strong brand image can lead to increased customer loyalty and advocacy.

Brand Communities

Brand communities are groups of customers who share a passion for a particular brand or product. These communities can be created and nurtured by businesses through social media platforms, forums, and other online groups.

By fostering a sense of belonging and commonality among customers, businesses can create a strong sense of loyalty and brand advocacy. Members of brand communities can become brand ambassadors and actively promote the brand to others.

Consistent and Personalized Communication

Consistent and personalized communication is critical to building and maintaining brand loyalty. This can include targeted email campaigns, personalized product recommendations, and other forms of direct communication.

By providing customers with relevant and personalized information, businesses can create a sense of connection and trust. Consistent communication can also help to reinforce the brand's messaging and image, building customer loyalty over time.

Loyalty Programs

Loyalty programs are a popular tool used by businesses to build customer loyalty. These programs typically offer rewards, discounts, or other incentives to customers who make repeat purchases or engage with the brand in other ways.

Provide tangible benefits to loyal customers and you can create a sense of appreciation and value. Loyalty programs can also help to keep customers engaged with your brand while giving you tools such as email marketing.

Creating Exclusive Content

Providing customers with exclusive content, such as behind-the-scenes glimpses or sneak peeks, can help build a sense of loyalty and connection to the brand. For customers that are already interested in your brand, extra access is always a treat.

Creating gated content that is only available to members of your loyalty program or brand community is a great way to generate subscriptions.

Social Responsibility

Aligning the brand with a social cause or promoting environmentally friendly practices can help build loyalty among customers who share those values. Businesses can also incorporate charitable donations on behalf of customers as a reward for their loyalty.

This also gives customers a feeling of doing something with their favorite brand, which has a similar effect to co-creation.

Authenticity

Being authentic and transparent in communication and actions can build trust and loyalty among customers. A study by Stackla found that 86% of customers say authenticity is important when deciding which brands they like and support.

When it comes to brand loyalty, it goes beyond just product loyalty or a matter of convenience. That's exactly why ensuring you're authentic in your branding, communication, and values is essential for both consistency and fostering brand loyalty.

Excellent Customer Service

Providing excellent customer service can create positive experiences and foster loyalty. A study by HubSpot found that 93% of customers are more likely to become repeat customers if a company provides excellent customer service.

A great example of how customer service can grow your business is in the Service Profit Chain, which looks at how you can enable employees to boost their employee experience, which gives your customer service a welcome boost.

Gamification

Adding game-like elements to a loyalty program or customer experience can create engagement and loyalty. A study by Loyalty360 found that gamification can increase customer engagement and loyalty by up to 68%.

Examples of Companies with Strong Brand Loyalty

Apple

Apple is known for its strong brand image, innovative products, and exceptional customer service. The company has also been successful in creating brand communities through events like its annual Worldwide Developers Conference. Additionally, Apple offers a loyalty program through its Apple Card, which offers cashback rewards on purchases.

Nike

Nike has built a strong brand image around its "Just Do It" slogan and its association with athletes and sports culture. Nike has also been successful in creating brand communities through events like its Nike Women's Half Marathon and its Nike Run Club app. Nike offers a loyalty program through its NikePlus membership, which offers rewards like free shipping, exclusive products, and personalized training plans.

Starbucks

Starbucks has built a strong brand image around its premium coffee products, cozy atmosphere, and exceptional customer service. The company has also been successful in creating brand communities through its social media presence and events like its Starbucks Reserve Roastery tours. Starbucks offers a loyalty program through its Starbucks Rewards program, which offers perks like free drinks and food, birthday rewards, and personalized offers.

Amazon

Amazon has built a strong brand image around its convenience, selection, and fast delivery. Amazon has succeeeded in creating brand communities through its membership program.

The Amazon Prime program includes perks like free shipping, exclusive deals, and access to streaming services. Additionally, Amazon offers a loyalty program through its Amazon Rewards Visa card, which offers cashback rewards on purchases.

Sephora

Sephora has built a strong brand image around its high-end beauty products, exceptional customer service, and personalized shopping experiences. The company has also been successful in creating brand communities through its Beauty Insider program, which offers perks like free products, exclusive events, and personalized recommendations. Sephora also offers a loyalty program through its Sephora Credit Card, which offers rewards like cashback, free shipping, and exclusive offers.