The Ultimate Guide to Brand Loyalty in 2020

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Himanshu Singh

Senior editor

Parul Saxena

Chief editor

Last updated: May 21, 2021

Brand loyalty can do wonders for your business, it can help you generate recurring revenue from the same set of customers. Moreover, it can also come in handy for acquiring new customers as well.

Looking for Customer Loyalty Software? Check out SoftwareSuggest’s list of the best Customer Loyalty Software solutions.

Customer Loyalty: An Overview

Although brand loyalty is essential, it is not easy to achieve and sustain. Let’s briefly discuss brand loyalty, its significance, and how to pull off a customer loyalty program successfully.

Brand loyalty or Customer loyalty is defined as the consumers’ tendency to stick to purchasing products from one brand instead of testing out multiple brands. Loyal customers tend to buy from a brand again and again, mainly because of the satisfaction and positive experience customers receive from it. 

According to industry giants, brand loyalty is one of the significant factors determining a business’s success. 

Several factors can contribute to building up loyalty, as discussed below.

  • High-quality products
  • Affordable prices
  • A customer-centric approach, high customer satisfaction
  • Great brand personality

It is essential to address this fact that if customers purchase from you regularly, they are not necessarily loyal. Maybe you are selling your product at a lower price compared to others, or your product is high in quality. 

If you increase your prices, you will see them saying goodbye to your brand. Customer loyalty comes from within and is based on emotions and trust. However, customer loyalty is not permanent, and if you compromise your quality or customer service, your customers will no longer be loyal. 

Therefore, sustained brand loyalty is as crucial as maintaining one. 

Importance of Brand Loyalty

As a business owner, you should strive for loyal customers as they can increase your business. Loyal customers not only make frequent purchases, which increases your revenue but refer your brand to their friends and family as well, which in turn, brings in new customers. 

Let’s dive into some of the benefits of brand loyalty. 

Increased Profits

According to Constant Contact, recurring customers tend to spend 67 percent more than new customers, which is an enormous difference. And if you successfully maintain a loyal customer base, you can generate regular profits without worrying too much about customer acquisition. 

Therefore, not only does brand loyalty enable you to generate consistent profits, but helps you reduce marketing costs as well, which can otherwise eat up a hefty share of your profits. 

Brand Reputation

Brand reputation and brand loyalty go hand in hand; a large loyal customer base results in an improved brand reputation. 

Let’s take a while and understand what brand reputation is. When you have loyal customers, they will refer you to their network. When your brand comes in front of a large number of people, and more people start talking about it, it creates a “buzz.” 

Buzz is an official marketing term that refers to a marketing strategy to capture the attention of new customers. And when your brand creates buzz, its reputation increases. 

Protection against Trend Changes

This point is essential, especially because almost all business owners overlook it. Trend changes are sudden, and sometimes, unpredictable. Many brands like Kodak and HTC have lost the race because they did not evolve as per the changing trends. However, the same happened with Nokia too. 

Nokia lost it all when smartphones came into the market and were on the verge of shutting down. But it had, and still has, a loyal customer base, which allowed it to bounce back, and emerge as a dominant player in the medium and premium-range smartphone market. 

The only difference between Nokia and other brands was customer loyalty, which helped it survive the trend change. 

You Get a Second Chance

Forgiveness is a rare word in business, and if you make a mistake, it can cost you your entire customer base, brand reputation, and business. However, if you have a loyal customer base, you can withstand a reputation blow as well. 

Let’s understand this with a quick example. You must have heard about Maggi; an instant noodles brand popular in South Asia, South East Asia, and Australia. A few years back, Maggi suffered a huge blow in India, when it was banned by the Food Safety and Standards Authority of the country due to the presence of lead and other chemicals over the prescribed limit. 

But Maggi had a solid customer base in India, so strong, that it bounced back and still holds more than 90 percent share in the country. 

Brand Loyalty Program: Why and How

A brand loyalty program or customer loyalty program is an extended, structured marketing strategy that involves providing benefits and incentives to customers that demonstrate loyalty towards the brand. Such programs intend to attract new and existing customers to return and make purchases often. The purpose of a customer loyalty program is to attract loyal customers and improve brand loyalty. A brand loyalty program is of three different types, as discussed below. 

Point-Based Programs

In point-based programs, you can award your loyal customers points for certain actions, which can be redeemed afterward. Point-based programs are one of the most popular loyalty programs, as they allow customers to accumulate points and use them to redeem all kinds of products you offer. 

Tiered Loyalty Program

Tiered loyalty programs are also based on points, but they include tiers as well, in which customers are divided into different tiers based on their engagement and participation. Customers in the higher tier get more benefits compared to those in the lower tier. Some perks you can include in your brands tiered loyalty program include early access to products, free delivery charges, beta testing, etc. 

VIP Loyalty Programs

VIP loyalty programs are an upgraded level of tier loyalty programs, in which you give your loyal customers some amazing perks like free merch, free company visits, exclusive insider stories, etc. Some gaming companies like SuperCell and Tencent offer their loyal customers partnerships and roles as well. 

In general, you can go down the list as your brand grows. If your brand is new, you should stick to point-based programs, and once your business grows, you can explore other programs as well. 

Some Additional Tips to Build and Improve Brand Loyalty

Although brand loyalty programs play a vital role in developing customer loyalty, they cannot sustain. Here are a few factors that will help you acquire and retain customers regularly.

  • Provide Excellent Customer Service: Customer service is a trait that can singlehandedly help you develop a loyal customer base. 
  • Personalization: If your customers receive a personalized user experience, they will perceive your business as a brand that cares for its customers. If your customers consider your brand as caring and customer-oriented, you will retain customers seamlessly.
  • Recognize Your Customers: If your customers purchase from you and upload it on social media, be courteous enough to share it on your social media handle along with credits. If you keep recognizing your customers, they will keep purchasing from you. 

The Bottom Line

Customer loyalty is one of the most powerful weapons for a brand that can help it grow exponentially, along with surviving trend changes and reputation blows. One of the best ways to increase brand loyalty is by introducing loyalty programs; however, you will need to keep other factors like customer satisfaction and product quality in mind as well.

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Himanshu Singh is a Marketing Specialist at SoftwareSuggest, He is well versed in software platforms like eCommerce, project management, document management. He is also interested in domains like Machine Learning and Semiconductors. In his spare time, he enjoys Guitar, Badminton, and Photography.

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