how to build brand loyalty
most established brand name products operate in highly competitive markets jockeying for market share with new and old rival products many of them barely distinguishable to thrive in this dynamic marketing departments employ various tactics to create and maintain brand loyalty including monitoring buying trends analyzing spending data and designing advertising campaigns targeting their existing loyal and likely to become loyal customer segments here are some of the most frequently cited strategies to create and maintain the brand loyal customer base that can take your business to the next level 4best in class quality the first and most important qualification the essential condition for brand loyalty is quality no matter how large your marketing budget is or how many celebrity endorsements you have low quality products and services will always be ridiculed on social media on the other hand companies that consistently deliver best in class quality will convert customers into brand loyal advocates who spread positive word of mouth and never feel the need to shop elsewhere customer service exceptional customer service is expensive 24 7 chat reps social media managers phone operators support ticket staff but ensuring that customers always receive first class service is an investment that drives the level of brand loyalty that generates big returns in fact in a crowded market first rate service that makes customers feel valued might be the only thing that sets a brand apart from its competitors for customer service to maximize brand loyalty customers must have access to user friendly systems to submit feedback and register complaints and a dedicated team of associates should be trained to address their submissions promptly brand ambassadors in addition to brand loyal customers who provide free word of mouth advertising on social media companies hire spokespersons to function as brand ambassadors for their products in addition to having a solid marketing background and an established online presence with an engaged network across platforms via blog emails webinars a successful brand ambassador should have an authentic professional presence in depth knowledge of products and services and highly developed expertise at building loyal customer relationships beyond this the best brand ambassadors are also skilled at gathering the critical customer and competitor intelligence that can translate into profitable business improvements loyalty programs establishing a program to reward existing customers for their business is one of the most direct ways to build brand loyalty it is worth repeating that no matter how expensive the redemptions for store credits discounts and free products are investing in the retention and loyalty of existing customers is far less expensive than marketing for new customers this is especially true for premium priced brands because an exclusive discount for loyalty program members can be just the right incentive to choose the pricey brand over a less expensive option online community as e commerce continues to accelerate u s online spend for 2022 is expected to hit 1 trillion building an online community to drive brand loyalty is essential for businesses across industries 5 unlike static advertisements social media has a range of tools to forge deeper more personal connections with customers from hosting q as and live streams with employees to taking customers on behind the scenes tours of the business not only does a digital community serve as an easy access point to interact with customers who spend hours online but as an extension of the website a community can also serve as a bridge from social interaction to purchase conversion brand loyalty is said to have started in the 18th century when an american merchant would hand out copper coins to repeat customers 6brand loyalty leadershere are two examples of companies who have made highly profitable investments in brand loyalty by prioritizing quality and customer service not only can these brand loyalty leaders charge more for their products but they also save on marketing costs social media and email marketing to existing customers is a fraction of the cost of attracting new customers apple in 2021 apple had an outstanding brand loyalty score of 92 the tech giant retained a higher percentage of existing clients than any other company in any industry 7 apple s status as the world s most valuable brand is based not only on revolutionary technology and state of the art design but also on unparalleled brand power and stellar customer service anyone who has ever seen a line of customers wrapping around an apple store in anticipation of the latest release understands that brand power impacts the true value of a product as much as or more than any other driver of market performance as apple rolls out fee based services including apple tv and gaming the company is likely to add to even more share of wallet sow the dollar amount a customer spends on one company s brand at the expense of competitors nike one of the most important reasons that nike is the most valuable sports brand in the world is an industry leading membership program that delivers four drivers of brand loyalty statistics on brand loyalty and profitabilitythe correlation between brand loyalty and profitability has been well documented for decades here are a few impressive statistics customer retention in 2020 harvard business school reported that in industry after industry increasing customer retention rates by 5 increases profits by at least 25 and up to 95 a statistic that set off a rush to craft retention strategies many of which continue to pay large dividends 9customer lifetime value clv one of the most significant statistics linking loyalty to long term rewards was reported by microsoft a 7 increase in brand loyalty increases the customer lifetime value clv of each client by 85 clv a metric to measure the growth of a company is the total expected revenue earned from a single customer over the lifetime of the relationship 10customer service 83 of customers would switch brands because of a bad customer service experience 11consistent quality 74 of consumers say that product quality is the main reason to stay loyal to a brand 12corporate social responsibility csr 25 of gen z and millennial consumers will spend more for a brand that takes a strong stand on corporate social responsibility csr issues 13brand loyalty is deeply tied to psychology disposition as a consumer may intentionally forego a logical choice in favor of supporting their preferred brand brand loyalty customer capitalism vs shareholder primacyone might ask if the connection between profitability and customer metrics like brand loyalty is so well established why do businesses often neglect their most valuable customers the harvard business review hbr proposes a few interesting answers to that question financial accounting and shareholder primacy 1the hbr article argues that because financial disclosure rules and corporate accounting practices require almost no reporting on customer value a short term mentality that prioritizes quarterly earnings over customer relationships has blinded both management and shareholders to the crucial role that loyalty plays in profitability compounding the financial reporting omissions two very different profitability strategies shareholder primacy vs customer capitalism have affected how customer metrics like brand loyalty are ranked as profit drivers 1on one side in the 1950s peter drucker who was called the father of business consulting by forbes and the greatest management thinker of the last century by ge chair jack welch said that the true purpose of a business is to create and keep customers 1415 on the other side in the 1970s milton friedman said that companies exist to maximize shareholder value period an argument that hbr said introduced the age of shareholder primacy current adherents of the customer capitalism approach argue that companies that put customers not shareholders first can create even greater value for shareholders for example in 2019 the new york times reported that ceos from the business roundtable including power players like tim cook of apple jeff bezos of amazon mary barra of general motors robert f smith of vista equity partners and larry fink of blackrock broke with decades of corporate orthodoxy by issuing a statement that the purpose of a corporation is no longer to advance only the interests of shareholders instead companies must now deliver value on several new fronts both directly to customers and indirectly by supporting customer values on issues like protecting the environment and dealing ethically with suppliers 16