Brand loyalty is a pattern of consumer behavior where consumers become committed to brands and make repeat purchases from the same brands over time. Loyal customers consistently purchase products from their preferred brands, regardless of convenience or price. Companies often use different marketing strategies to cultivate loyal customer, including loyalty programs (i.e. rewards programs) or trials and incentives (such as samples and free gifts).
Why Brand Loyalty Matters to Business
Brand loyalists don’t purchase a substitute brand if their preferred brand isn’t available. They’ll travel to multiple stores in search of their preferred brand and are more likely to forgo making a purchase if their brand cannot be found than they are to purchase a substitute. Brand loyalty is based on an emotional involvement that develops between the consumer and the brand. The consumer’s perception is that the brand fulfills some kind of physical need or emotional want in such a unique way that some kind of emotion is evoked during the purchase process and while using the brand. For example, purchasing the same brand might elicit feelings of security. “When I buy Crest toothpaste, I know my teeth will be as clean as possible all the time.” On the flip side, not being able to purchase the brand might elicit feelings of fear or impending doom. “If I don’t get Crest toothpaste, my teeth will rot!” It’s that emotional connection to a brand that separates brand repurchases from brand loyalty. How do you feel about your favorite brand of toothpaste? If it’s not available will you just purchase another brand without concern or will you visit another store to find your preferred brand? Do you feel like you might get a cavity if you don’t use your regular toothpaste? A powerful brand with a loyal consumer audience behind it can withstand any micro- or macro-environmental factor thrown at it. Whether there is a recession at the macro-level or a corporate re-organization at the micro-level, brand loyalists will keep on buying the brands they love. The Toyota recalls of 2010 provide the perfect example of a brand that survived and continued to thrive despite micro-environmental factors because consumers still trusted the brand and remained loyal to it. Brand loyalty equates to long-term, sustainable, business success. You can count on loyal customers to keep buying your branded products and telling their friends about them. There is a value to that loyalty that correlates directly to brand equity. In other words, brand loyalty is an indicator of intangible value as well as a quantifiable measurement of your brand’s success to-date and future performance predictions. Don’t underestimate the importance of brand loyalty. Emotional involvement is a powerful thing that trumps just about every other purchasing factor you can think of. Stay tuned for Part 2 of the Building Brand Loyalty series where you’ll learn how to build brand loyalty.
Factors influencing Brand Loyalty
It has been suggested that loyalty includes some degree of pre-dispositional commitment toward a brand. Brand loyalty is viewed as multidimensional construct. It is determined by several distinct psychological processes and it entails multivariate measurements. Customers' perceived value, brand trust, customers' satisfaction, repeat purchase behavior, and commitment are found to be the key influencing factors of brand loyalty. Commitment and repeated purchase behavior are considered as necessary conditions for brand loyalty followed by perceived value, satisfaction, and brand trust. Fred Reichhel, one of the most influential writers on brand loyalty, claimed that enhancing customer loyalty could have dramatic effects on profitability. However, new research shows that the association between customer loyalty and financial outcomes such as firm profitability and stock-market outcomes is not as straightforward as was once believed. Many firms may overspend on customer loyalty, and then do not reap the intended benefits. Among the benefits from brand loyalty — specifically, longer tenure or staying as a customer for longer — was said to be lower sensitivity to price. This claim had not been empirically tested until recently. Recent research found evidence that longer-term customers were indeed less sensitive to price increases. Byron Sharp showed empirically that behaviour affects attitudinal response not the other way round. Longer term customers are less sensitive because it is harder for them to completely stop using the brand. The ability of an organization to attract and retain customers is vital to its success. Customer loyalty requires a strong appetite by the customer for a product. Marketing tools such as integrated marketing communications (IMC) and branding can be used in ways to increase perceived attraction between the consumer and the brand. These tools are used to boost emotional response and attachment to the brand, as well as to influence feelings the customer has for a brand, both are important for congruency and a relationship, this in turn leads to the development of brand loyalty. Relationship development and maintenance can also be achieved through the use of loyalty programs or a celebrity endorser. These can help to increase a bond between a brand and a consumer (Pauwels-delassus & Mogos Descotes, 2013). IMC is defined as “integrating a variety of convincing messages across various forms to communicate with and develop relationships with customers”. (Lazarevic, 2012). IMC can be used to convey the brand image, increase awareness, build brand equity, and achieve shared values between the consumer and the brand. IMC and branding are both relevant marketing tools for increasing the brand loyalty of consumers. The decisions made around communications and branding should be based on solid and factual market research about the consumers. If the brand or the IMC do not seem to be relevant to the target market, consumers will not pay attention. An example of this is that high customization, creativity and a more direct voice is recommended for messages directed towards generation Y consumers as generation Y want to be treated differently from the rest of the market and marketers should acknowledge this (Schivinski & Dabrowski, 2015). Loyalty programs help to reward and encourage customers, which is a necessary factor for customers to want to repurchase. The consumer should feel a connection with the brand to want repeat purchase and portray other brand loyalty behaviours such as positive word of mouth. “A loyalty program is an integrated system of marketing actions that aims to make member customers more loyal to a brand” (Melnyk & Bijmolt, 2015). The main goal of a loyalty program is to create or enhance customer loyalty towards a brand whilst being sustained even after a loyalty program is discontinued. Thus, to an extent a loyalty program motivates customers to change their behavior (Melnyk & Bijmolt, 2015). The reason for marketers to use such tactics as a loyalty program is to increase likelihood of repeat purchase and retrieve vital information about the spending habits of the consumer. Loyalty programs that enhance the consumer’s opinion about how much the firm can offer them may be essential for building a relationship. Even though these programs can cost a lot of money, they help to create a relationship between the brand and the consumer (Melnyk & Bijmolt, 2015). An example of a loyalty program is a simple point system. Frequent customers earn points or dollars, which transform into freebies, discounts, rewards or special treatment of some sort, customers work toward a specific amount of points to redeem their benefit (Grace & Chia-Chi, 2009). Celebrity endorsers moderate the relationship between the consumer and the brand by personifying the brand to match the perceptions of the consumer themself. Using a celebrity endorser can facilitate a relationship built between consumers and a brand because endorsers can represent similarities between themselves and the consumer, and themselves and the brand. Celebrities are used to make marketing tactics more convincing and marketing communications more effective (Lazarevic, 2012). An example is that a celebrity may be influential to a generation Y consumer because that generation views them as likeable, real and beautiful. In order for celebrity endorsers to effectively reach the audience, they must connect and identify with the audience (Liljander, Gummerus & Söderlund, 2015). The use of a popular celebrity endorser could personalize the brand for the consumer and create the relationship between the consumer and the brand. To ensure endorsement is successful the celebrity should match the brand and the consumer (Ludin & Cheng, 2014). The effect of using a celebrity endorser that consumers look up to and want to emulate can lead to increased congruency between the values of the consumers and the brand, and improve the relationship between the two.
Benefits of Brand Loyalty
The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price. Recent research found evidence that longer-term customers were indeed less sensitive to price increases. According to Andrew Ehrenberg, consumers buy "portfolios of brands." They switch regularly between brands, often because they simply want a change. Thus, "brand penetration" or "brand share" reflects only a statistical chance that the majority of customers will buy that brand next time as part of a portfolio of brands. It does not guarantee that they will stay loyal. By creating promotions and loyalty programs that encourage the consumer to take some sort of action, companies are building brand loyalty by offering more than just an advertisement. Offering incentives like big prizes creates an environment in which customers see the advertiser as more than just the advertiser. Individuals are far more likely to come back to a company that uses interesting promotions or loyalty programs than a company with a static message of "buy our brand because we're the best."