What is Brand Loyalty and How Can Companies Build it?

Brand loyalty is when people strongly favor a particular brand over all the others. 

These customers don’t need to be persuaded to consider your brand because they are already enjoying your products. Heck, they even prefer your business to competitors with similar offerings.

Bottom line: brand loyalists are the dream customer. 

But as with most things that are good in life, brand loyalty doesn’t come easy. 

What is brand loyalty?

By definition, brand loyalty is when a customer continues to purchase from your company, not because you're the only option, but because they trust your company.

Take a second to think of some of the brands you favor. What drives that preference? Is it good service? Is it about price point? Is it the experience? Maybe it’s a combination of all three?

People like to shop with brands they can trust, and that preference for familiarity is why every brand needs to be in the loyalty race. It’s worth the fight.

Consider these statistics from a Yotpo survey of 2,000 consumers in the US:

• 36.5% of shoppers said they will spend more on products if they’re loyal to a brand.
• Nearly 60% of brand loyalists will also refer their friends and family to brands they love.

Brand loyalty will not just fall into your lap – businesses of all sizes need to keep pushing to ensure they don’t lose their preferred position in the hearts and minds of consumers. 

Why is brand loyalty important?

It’s no small feat to elicit loyalty from a consumer. You must gain their trust, maintain their attention, and understand their needs (sometimes before even they do). 

It’s a lot of effort to compete in a saturated market, but businesses don’t compete unless there is something to be won. Brand loyalty is a coveted prize because it improves customer retention, increases word-of-mouth referrals, and ultimately boosts profits. 

Again, we turn to the data. Did you know that 90% of American customers share their customer service experiences with others? Or that 81% of customers trust recommendations from family and friends over those from companies?

When a customer falls in love with your brand, they’re going to shout it from the rooftops. This is free marketing. It travels from consumer to consumer, adding a level of trust to the recommendation. It’s an entry point for new customers and a source of pride for old ones. 

Of course, it’s hard to track word-of-mouth. It’s not hard, however, to track the money. Hubspot reports that 93% of consumers say that they’re willing to make repeat purchases with a brand that they are loyal to. Another study by Motista found that emotionally-connected customers will spend over 2x more with a brand versus regular, satisfied customers.

We can throw data around all day, but at its core brand loyalty is a great indicator that your company is doing good things. Customers aren’t just being served, they are being delighted with wonderful experiences. It’s affirmation. It’s validation. It’s a big win. 

Why are consumers loyal to brands?

We know brand loyalty is important but what drives customers to stick around? 

There’s actually a lot of nuance in advocacy conversations – some brand attributes or behaviors are more likely to prompt a positive online promotion than others. Consumers today expect more from their brands. Here are just a few areas that contribute to winning your audiences over. 

The product is high-quality

It’s hard to build brand loyalty when the product isn’t up to par. Consumers may be tightening their spending a bit but research shows us people are still willing to pay for quality.

In fact, our recent Customer Loyalty Report found that approximately 40% of consumer brand advocacy discussions mentioned staying loyal to a brand because they offer quality products amd fair prices.

During our research, we asked: What would motivate you to promote your favorite brand online? Quality was consistently the most popular reason for promotion with nearly 70% of respondents selecting it.

They’ve engaged with the brand before

In an otherwise virtual world, people are constantly searching for a sense of human interaction and emotion. Making the effort to engage your customers can go a long way. It’s about the stories we tell before we sell – those are the moments that spark connection.

When you interact with your customers directly – whether on social media or from behind a counter – you create a memorable impression for your brand. A great way to do this is by asking for feedback. Not only will you show them you care about what matters to them, you’ll also have some great points for improvement to consider straight from the customer's mouth.

Gain their trust by making good on your promises and watch your base of loyal customers grow.

The customer service is exceptional

Did you know that 65% of US customers find a positive experience with a brand to be more influential than great advertising? Research from PwC found that 73% of consumers point to experience as an important factor in their purchasing decisions.

You could have the best product ever invented but without good customer service you won’t get far. Your customers want to feel valued and respected when they do business with you.

Treat each interaction as a loyalty-earning moment. Frustrated customers aren’t looking to ruin your day, they’re just people with a problem to solve. Listen, learn, adjust, repeat. 

How can you build brand loyalty?

Now for the last piece of the puzzle. We have the drivers of loyalty, we understand the benefits, but how exactly should you approach building a base of brand loyalists for your business? 

1. Engage your customers

You can’t have brand loyalty without customer engagement. That’s like asking for a promotion without doing your job. 

Interacting with your audience helps to create a sense of belonging and community. You can use social media to inform customers of new trends, special deals, or the next steps for your company. The more it feels like a conversation, the better. 

It takes time and attention to truly build relationships with your customers but the benefits are pretty sweet. According to this Motista study, customers with an emotional relationship to a brand have a 306% higher lifetime value and will recommend the company at a rate of 71%, compared to the average rate of 45%. 

Reach out, nurture, and retain the customers who really make your business – the loyalty will come naturally. 

2. Keep your prices reasonable

We will be feeling the impact of the pandemic for a long time. This especially rings true when it comes to finances.

Research for our Customer Loyalty Report found that consumers frequently discussed where to get the most affordable household essential items, specifically at the beginning of Covid-19 lockdowns in the US and UK.

In fact, throughout February 2021 consumers in the US and UK said they’d been opting for cheaper options for both small and large purchases, expressing an appetite for promotions and discounts.

Value for money is not only the main driver for customer advocacy online but also a vital consideration for consumers when making purchase decisions. To continue to build loyalty businesses would be wise to keep an eye on their price tags. 

3. Be reliable

We live in a world where instant gratification is the standard. So while things like product quality and consumer trust play a big role in loyalty, so do things like quick delivery and reliable service. 

According to data from our report mentioned above, some of the top activities that prompted consumers to advocate for a brand online included positive experiences returning items and receiving a delivery order.

It’s an important reminder that customers want to be met where they are. In the case of the past couple years, that means at home, preferably on the front doorstep.

4. Listen and learn

It’s a simple concept that still rings true. Every one of your customers wants to feel heard. 

It’s your responsibility to listen. But you should also be thinking about how to turn those conversations into learnings. Every interaction with your customer is a feedback session.

By understanding customer pain points and the things that delight them, you can stay ahead of potential issues and improve your products and services accordingly.

Bottom line: Building brand loyalty is worth your effort

The name of the game today is choice. Consumers have access to more information than ever. They do research before they shop. They engage with brands that are not only trustworthy but ethical. They value price point and quality.

Customer retention is important to every business, but loyalty is hard won – especially when a single bad customer experience can be broadcast to other consumers in just a few clicks.