How To Build Brand Loyalty: Everything You Need To Know
The value of brand loyalty cannot be underestimated. In fact, a brand's success or failure depends on it. Long-term, loyal customers are a blessing for business. It's not only good for your reputation and word-of-mouth endorsement, but it's also a highly cost-effective way to market to a customer base who's already familiar with your brand, has purchased from you before, and can be targeted with virtually no incurred expenses through social media and email. It’s a no-brainer.
Business-wise, repeat business is much more sustainable – and cost-effective – than cultivating a completely new customer base – as you know, it takes time, money, and campaigns to attract new customers. As for customers, they prefer brands they can rely on to return to repeatedly. According to a 2019 retail study conducted by Yes Marketing, more than 50% of consumers would pay more for a trusted brand.
All this being said, earning customer trust and gaining their loyalty can be a difficult task. In order to gain customer loyalty, companies must work hard to form meaningful customer relationships and provide customers with incentives that ensure lifetime value.
In this article, we’ll dive into why brand loyalty is so important, explain how to build your own, and discuss the generational differences that separate each demographic. Let’s dive in!
What is brand loyalty?
A brand-loyal customer continuously buys from the same brand despite similar offerings from competitors. Essentially, brand loyalty is choosing Starbucks over Costa Coffee, Apple over Samsung, McDonalds over Burger King, Nike over Adidas, Waterstones over Amazon, New York bagels over Sainsbury’s own brand and so on. Everyone has a favourite brand, and brand loyalty is all about winning that top-of-mind spot.
In contrast to customer loyalty – which is based on perks, rewards or money – brand loyalty is an investment in your brand and the experiences and associations that come with it. Customers who are brand loyal care about your brand’s reputation, mission, and values and believe that a certain brand represents both superior quality and services than its competitors – regardless of its price.
Customer retention and repeat purchases are the core of brand loyalty. Essentially, it’s the ability to keep existing customers returning for more and the effort you put into the process after converting your leads.
Why is brand loyalty important?
Several strong brands owe their success to loyal customers, including Amazon, Sweaty Betty, Nike, and Domino’s Pizza. Brand loyalty has numerous benefits, but why is it so successful at generating a competitive advantage? Here’s why:
- It contributes to revenue generation. Investopedia reports that 65% of revenue comes from repeat business with existing clients, and loyal customers purchase 90% more frequently than new customers.
- It generates word-of-mouth leads. Your brand has struck gold when a loyal customer base starts recommending it to others. Another benefit? When your brand is shared organically, you can cut back on content marketing costs.
- It enhances brand awareness. As reported by Oracle (2020), customers are 60% more likely to buy from a brand they’ve heard of than from one they’re unfamiliar with. Investing in loyalty can help a brand stand out from the competition, increase brand awareness, and help it grow.
- It boosts customer satisfaction and creates brand advocates. Keep your audience loyal and exceed their expectations, and they’ll refer their friends and family to you. It’s that simple.
- It can give you a competitive edge. Brand-loyal customers are brand aware and emotionally connected to their favourite brands. This loyalty benefits brands hugely, giving them an advantage over their competitors.
Loyal customers purchase 90% more frequently than new customers.
Eight tips for building brand loyalty and taking it to the next level
1. Clarify your brand’s purpose
What is your brand all about? Determine your purpose, mission, and values by identifying the distinctive elements of your brand identity. What sets you apart from your competitors? What drives you? What services do you offer to your customers? What motivates your employees? What is your brand’s personality, and how does it speak?
2. Provide excellent customer service.
Whether it’s social media, a phone line, or email inquiries, customer service is about being there for your customers when they need you. In order to win your customer’s loyalty, ensure you provide a consistent, reliable, and high-quality experience – even after the transaction is complete.
Fluid, responsive, effective, and human customer service – that consistently responds to your customer’s needs – not only keeps your loyal customers happy, but can increase your customer lifetime value.
3. Offer an outstanding customer experience.
This may sound similar to the point above, but it deserves its own bullet point, even though they are intertwined. Brand loyalty is built on exceptional customer experiences. Salesforce (2018) reports that 80% of customers see customer experience as important as the company’s product or service, and 57% went elsewhere because they were unhappy with the company’s CX. Convenient, effective customer service is essential for building brand loyalty and, ultimately, business success.
4. Be authentic and active on social media.
In a study conducted by Marketing Dive, 90% of people purchased products from brands they followed on social media, so it’s fair to say that social media is essential for building brand loyalty.
Today, customers want brands that are authentic, transparent, and humane. A brand that appears ‘real’ on social media builds a stronger customer connection, directly translating to loyalty. The truth is, customers will continue to support the brand if they feel a sense of involvement and deep-rootedness beyond the sale.
Use your social media to boost customer engagement, conduct Q&As, provide videos of helpful insights or tips, use hashtags to communicate faster with your followers, encourage user-generated content, and simply and converse and interact with them.
5. Rewards customers through loyalty programmes and incentives
Rewards programmes are an excellent way to reward – and incentivise – loyalty. It doesn’t matter where customers are in the customer journey, they love a good deal – whether it’s a limited-time offer, a referral bonus, a discount, a gift card, a coupon, a points system or a giveaway. These incentives give your customers an exclusive experience while potentially boosting your sales. It’s a win-win situation.
A loyalty program is especially useful for brands that sell premium products. By offering a slight discount to loyalty program members, you can encourage them to choose your brand over a lower-cost option.
6. Built a brand community
A great community bolsters advocacy, and brands with a great community tend to perform better than those without. You need to give people a reason to join your community in order to build one. What are the benefits of joining your community for your customers? In addition, consider whether your customer base will want to join an inclusive or exclusive community. It is important to note that one that is easy to join will be able to grow organically and without much involvement or marketing.
As E-commerce grows, creating an online community is a great way to boost brand loyalty. The key to creating a group and bringing your audience together is understanding your audience’s expectations. To create a sense of exclusivity and excitement, let your customers know first about new products and promotions or provide a mobile app that lets them stay up to date with brand activities.
7. Ensure high-quality products/services are delivered
Loyal customers deserve loyal brands, so make sure that you deliver on everything you’ve promised – and more – if you want to remain their brand of choice.
Whatever you do, whether it’s customer service, digital marketing, social media posts, or products, you should maintain a high-quality standard. If you consistently provide high-quality products and services to your customers, they won’t need to look elsewhere – it’s as simple as that.
8. Listen to your customers
Even though this one sounds obvious, you’d be surprised how many brands ignore the voice of their customers. Your customers love to feel heard and taken seriously – so be sure to do just that!
Consider using social listening tools, reviewing customer service transcripts, consulting with your sales staff, and creating a customer advisory board to understand better your customers, their needs and their pain points. Consider offering community forums, reviewing chat transcripts, conducting customer surveys, reading online reviews, and more.
By meeting customers’ needs through these customer-centric marketing efforts, you will encourage repeat customers, grow your business and, of course – improve brand loyalty.
Does brand loyalty vary across generations?
In terms of branding and marketing strategies, there is no one-size-fits-all approach that works for all generations. Millennials, Generation Xers, and Generation Zers are all affected differently by brand loyalty. Different demographics have different attitudes depending on their age, gender, annual income, spending habits, and various other factors.
Some of the differences are obvious. A Boomer, for instance, may not be as interested in a brand’s social media presence as a millennial. However, let’s dig deeper into what makes each generation unique.
Born 1965 – 1976
With most G Xers now in their mid-forties or mid-fifties, they are likely in their best earning years. Authenticity, value, and information are important to them.
How to build brand loyalty for Generation X
1. Ensure quality and reliability.
Generation X consumers value products that are high-quality and reliable. They are willing to pay a premium for products that will last longer and perform better than cheaper alternatives.
2. Leverage nostalgia.
Generation X grew up in a time of rapid cultural change and technological innovation, which can create a sense of nostalgia for the past. Brands that can tap into this nostalgia can build an emotional connection with Generation X consumers and earn the most important thing – their trust.
3. Focus on customer service.
Generation X consumers value good customer service and are willing to pay more. Brands that prioritise customer service can build trust and loyalty with this demographic.
4. Offer deals.
Despite having higher-than-average household incomes and impressive spending power of $2.4 trillion, Generation X is the biggest bargain-hunter group (Oracle, 2020). So, be sure to offer them discounts and bargains to sink their teeth in to – and they’ll be sure to reward you with their loyalty.
5. Offer loyalty programs.
Loyalty programs can be an effective way to build brand loyalty among Generation X consumers. These programs can offer rewards, discounts, and other incentives that encourage repeat purchases and build long-term relationships with customers.
6. Offer personalisation.
When it comes to winning Gen X’s loyalty, personalisation matters. An Oracle (2020) survey found that 62% of Gen X want personalised recommendations while browsing in-store, yet only 41% have purchased something recommended to them by a brand in the past six months. What’s the best way to earn their loyalty? Providing personalised recommendations based on metrics and data. Let them know you know them and can help.
How to build a rewards program for Generation X
If you’re looking to build a rewards program that resonates with this audience, there are a few key elements to consider. Firstly, it’s essential to offer rewards that cater to their preferences, such as discounts on high-end products, access to exclusive events or experiences, and personalised customer service. Secondly, it’s crucial to provide a seamless and user-friendly rewards platform that makes it easy for Gen Xers to track their rewards and redeem them. Their preferred engagement activities are surveys, visiting company websites, and playing games, and they’re more likely than any other generation to check into restaurants or stores to earn points.
The main reason Gen Xers join loyalty programs is to save money. As they tend to be busy people, the simpler you make your program the better. If your target demographic is Gen X, consider making the registration process fast and easy. Your rewards should be simple and easy to obtain – for example, buy two and get the third free. They’re less likely to scour social media, so stick to signage – and the simpler the better!
Born 1946 – 1964
A large proportion of baby boomers are retired or are soon to be. In addition to valuing relationships, this generation is resourceful, goal-orientated, and self-assured. Baby Boomers are less likely to switch brands, despite persuasive incentives, which makes gaining their loyalty harder but all the more worthwhile.
How to build brand loyalty for a Baby Boomer
1. Build trust.
Baby Boomers tend to be more brand loyal than younger generations, but they also value trust and authenticity. To build trust, emphasise transparency, honesty, and consistency in your marketing and communication efforts.
2. Offer quality products and services.
Baby Boomers tend to be more discerning and willing to pay for quality products and services. Make sure your products and services are of high quality and meet their expectations.
3. Provide excellent customer service.
Baby Boomers value good customer service, so make sure your customer service is top-notch. Be responsive and helpful in addressing their needs and concerns.
4. Up your in-store experience.
The Baby Boomer generation prefers online shopping, like all generations, but prefers in-store shopping more than any other. In order to win their loyalty, you should provide a flexible shopping experience across all channels and touchpoints, such as allowing customers to check in-store inventory online and providing payless in-store shopping experiences.
5. Offer loyalty programs.
Baby Boomers are the most likely to participate in loyalty programs. Oracle (2020) found that 79% of respondents are involved in at least one loyalty program. You can reach this generation by offering discounts, free products, and charitable donations. They prefer programs with members-only perks, like special membership pricing or VIP treatment, over experiential or partnership rewards.
How to build a rewards program for a Baby Boomer
If you’re creating a rewards program for a Baby Boomer, you need to keep in mind that this generation values practical rewards and personal connections. Determine the types of rewards that will most appeal to them, such as discounts or free shipping on their favorite products or services. Think about offering rewards that are aligned with their interests or hobbies to make the program more personal.
They appreciate clear communication and straightforward instructions. Make sure you clearly explain the rewards program, how points are earned, and how rewards can be redeemed. Develop an easy-to-use digital platform for tracking points and redeeming rewards, but also provide offline options for those who prefer them.
If you want your rewards program to succeed, be sure to communicate regularly with Baby Boomers via their preferred channels, such as email or phone. Whenever there are new rewards, special promotions, or point balance updates, let them know. By creating a rewards program that is personalised, practical, and easy to use, you can build strong loyalty with Baby Boomers and drive repeat business.
Generation Y (Millennials)
Born 1977 – 1995
Building brand loyalty for Generation Y, also known as millennials, can be challenging because they are a diverse group with varying interests and preferences. However, here are some strategies that can help you build brand loyalty among Gen Y, let’s take a look.
How to build brand loyalty for Generation Y
1. Be authentic.
Gen Y values authenticity and transparency, so be honest about your brand’s values, mission, and products. They are more likely to be loyal to a brand that is genuine and aligns with their values.
2. Offer engagement.
Gen Y wants to engage with brands on social media and other digital platforms. They want to feel like they are part of a community and have a voice in the brand’s development. Encourage them to share their opinions and feedback and respond to them in a timely and meaningful manner.
3. Provide convenience.
Gen Y wants convenience and ease of use. Ensure that your brand’s products and services are user-friendly and easily accessible. Make it easy for them to purchase your products online, on their mobile devices, or through other convenient channels.
Gen Y is interested in new and innovative products and experiences. Be creative and innovative in your product development and marketing strategies to capture their attention and keep them interested.
5. Be socially responsible.
Gen Y values social responsibility and sustainability. Show that your brand is committed to making a positive impact on society and the environment. This can include initiatives such as reducing waste, supporting charitable causes, or sourcing materials ethically.
How to build a rewards program for Generation Y
Creating a rewards program for Generation Y requires a focus on personalised experiences, digital channels, and sustainability. A whopping 55% said they would share personal information with a brand in exchange for personalised experiences, so consider personalising your rewards program for the best results.
This tech-savvy and socially conscious group of consumers prefers to engage with brands through digital platforms, so it’s crucial to offer a mobile-friendly program. Additionally, sustainability initiatives, such as points for recycling or using eco-friendly products, can appeal to this environmentally aware demographic. Lastly, customisation options, such as experiential rewards or charitable donations, can create a sense of personalisation and build brand loyalty. By incorporating these elements, companies can create a successful rewards program that resonates with Generation Y and drives sales.
Born 1996 – Early 2010s
As a generation that has grown up with technology, the internet, and social media, Gen Z is often referred to as a generation of ‘digital natives.’ They are known for their resourcefulness, independence, value of diversity, and pride for inclusive cultures. A major priority for them is maintaining well-being and mental health at work, and they are fiscally conservative with a strong focus on investing and maximising their income in the long run.
How to build brand loyalty for Generation Z
1. Be authentic.
Generation Z values authenticity and transparency. They are sceptical of traditional marketing tactics and can spot insincerity easily. Brands that can authentically and genuinely connect with Gen Z and their values will more likely gain their loyalty.
2. Personalise your offering.
Generation Z is accustomed to personalised experiences, and they expect the same from the brands they interact with. Brands that can tailor their products, services, and marketing messages to the individual preferences of their customers will be more successful in building brand loyalty among Gen Z.
3. Have a strong social media presence.
Gen Z is a digitally native generation, and social media is a crucial part of their lives. Brands that have a strong and engaging social media presence, especially on platforms like TikTok and Instagram, will be able to connect with Gen Z and build their loyalty.
4. Be purpose-driven.
Gen Z values social responsibility and is more likely to support brands that align with their values. Brands that can demonstrate a clear purpose, such as sustainability or social justice, and act on it will be more likely to build brand loyalty among Gen Z.
5. Offer user-generated content.
Gen Z wants to feel like they are part of the brand, and user-generated content is a great way to achieve this. Encouraging customers to create and share their own content featuring the brand, such as through a branded hashtag or influencer campaign, can help build brand loyalty among Gen Z.
How to build a rewards program for Generation Z
The key to building a successful rewards program for Generation Z is to focus on mobile accessibility and gamification. As Generation Z is a mobile-first generation, you must design your rewards program with a mobile-first approach to ensure that it can be easily used on smartphones.
The Gen Z generation abandons loyalty programs when they can’t earn points fast enough, and it redeems rewards less than any other generation, according to research (Oracle, 2020). To keep members engaged, programs targeting this consumer group must offer compelling and achievable rewards.
A gamification element, such as points, levels, and badges, can also enhance the engagement and excitement of a rewards program for Gen Z. This age group loves competition and gaming, so tying rewards to challenges or contests can also help increase engagement. Last but not least, offer rewards and experiences that align with the interests and values of Gen Z, such as exclusive access to events or sustainable products.
Need a hand building brand loyalty?
Building brand loyalty takes time and effort, but it is essential for long-term business success. By focusing on creating a strong brand identity, providing excellent customer service, delivering high-quality products or services, creating a loyalty program, and engaging with your customers, you can create a loyal customer base that will help your business thrive.
As branding experts, we can help you build, implement or refresh a brand loyalty strategy that turns customers into life-long fans.
This guide should help you earn the trust of your customers while building your brand, but if you have any questions, please don’t hesitate to contact us.
Our team has helped countless brands grow, prosper, and connect, and we would love the chance to help you as well.