Understanding Brand Loyalty in Marketing
Brand loyalty is something an organization earns by providing excellent products and services, along with outstanding customer care and an image that make customers want to purchase.
Brand loyal customers are those who continue or repeat purchasing a particular brand of product or service over time. To continue receiving the benefits offered by the brand, they are less price sensitive and may even actively promote the brand within their social or business circles.
Understanding how brand loyalty works and how it can be leveraged is important for building an effective marketing and advertising program.
Building Brand Loyalty
Brand loyalty is built by addressing several marketing and management aspects of the organization. These aspects include:
- Customer relationship management (CRM) systems which assist an organization's front line sales personnel in serving customers and provide management with analytical data. While most of these systems involve software, it can be as simple an index cards with notes.
- Customer service standards and procedures.
- Strong and consistent brand image that customers can easily identify, relate to and are even willing to display or wear (and may even pay for the privilege!).
- Maintaining a media and public relations presence that helps assure customers and stakeholders that an organization is an active player in the market and community. These days, this presence also includes activity on social media networks.
- Special promotions, discounts, events and rewards for continuing customers.
- Quality control which ensures a consistent level of product or service. This helps build trust in the brand.
While organizations need to address all of these aspects, how they are addressed will vary widely based on the needs, attitudes and preferences of the market served.
Example: Customers who shop at Wal-Mart would not receive the same level or type of customer service that customers of designer boutiques in Beverly Hills receive. Wal-Mart has a primarily self-service system, whereas designer boutiques would be more apt to offer personalized shopping attention. Yet both business models are perfect for their respective brands... and fans!
Note in the example that Wal-Mart or the designer boutiques are not "products." The temptation in branding is to only think about physical products. But service businesses and retailers are heavily branded, more than most people realize. All the same brand building aspects listed above apply to service and retail businesses, too.
How Brand Loyal are You?
Think of a brand (product, service or business) that you have bought from or patronized most frequently throughout your life. How long have you been buying from them?
Challenges to Building Brand Loyalty in Today's Marketplace
When economic hard times hit, even the most brand loyal customers can resort to using less expensive, store brand or even unbranded generic products. Since many consumers are aware that store brand products are often manufactured by major national brands, their resistance to trying these less expensive alternatives is lowered (Time).
Even if consumers purchase store brands that are actually national brands under the label, thereby preserving total market share for the manufacturer, the future of the national brand is in jeopardy when the economy improves. Once consumers ratchet their purchase patterns downward and have an acceptable level of satisfaction with the lower priced choice, it may be difficult to convince them to switch back to the national brand. Ironically, they can become brand loyal to a store brand or generic product!
Plus, customers who walk away from a brand in the face of economic pressure are not truly brand loyal. The brand name offering may have just been the most convenient and logical choice while funds would allow. Once purchasing momentum is lost, future sales of the brand are questionable.
Competing with Everything
Another challenge to brand loyalty in difficult economies is not just within the same product category. When consumers juggle their budgets in response to economic hardship, they also can readjust their consumption of goods and services to free up funds for other expenses.
Everything and anything can be a company's competition. For example, the money that a family may have spent on purchasing a new brand name appliance may be actually spent on a family vacation or kids' braces or, worse, nothing at all. In this scenario, the brand loyalty issue is a moot point. No matter how good the brand is, it cannot compete with consumers' emotional re-prioritizing of purchases (or lack thereof).
As with switching to store brand or no-name products, once the "I can do without it" attitude sets in, it is extremely difficult to get customers to add the product back into their budgets.
What Should Brands Do to Compete?
When tough economic times hit, the knee jerk marketing reaction is to scramble to reduce costs by cutting various aspects of the branding aspect mix noted earlier. While cost review of all these aspects should be ongoing to optimize budgets, wholesale cost or service cutting can damage the brand to the point of no recovery when the overall economy recovers.
Some or all of the following measures could be employed to maintain brand loyalty in challenging economies:
- Offer Scaled-Down Products or Services. This is a strategy seen in some "dollar" type stores. Brand name products and services will be packaged in smaller, more affordable units. In reality, of course, the products may be just as expensive in the long run as if the customers purchased the regular sizes and services. But it's the perception that counts. And getting customers to maintain the momentum of purchasing a particular brand, regardless of size, can help keep them in the buying habit.
- Reward Loyalty More. Another common response to decreasing sales is to pump up discounts to new customers. But new buyers can be big question marks for the future since many may be "bargain shoppers" and quickly leave after the discounts disappear. Rather, it may be a better, and less expensive, strategy to reward continuing customers for staying brand loyal.
Example: Discount retailer Kohl's has a strong brand loyalty rewards program for their charge card customers, offering discounts on even sale prices several times through the year and on days that customers choose.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
© 2013 Heidi Thorne