The Benefits of Brand Loyalty: 6 Factors that Affect Brand Loyalty
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Brand loyalty is the dedication a customer feels toward a brand that pushes them to consistently buy their products or services.
It describes a consumer’s positive feelings towards a brand and their dedication to purchasing the brand’s products repeatedly regardless of deficiencies, a competitor’s products or changes in the environment.
What is Brand Loyalty?
Brand loyalty is when a customer continues to purchase from your company not because you’re the only option but because they trust your company.
Brand loyalty can also be defined as the degree to which a consumer will insist on having a particular brand.
It comes from trust, leads to repeat purchase and may allow for a price increase on the brand’s side.
Brands become part of the identity that we aspire to and identification with a brand seems to increase things like trust and word of mouth recommendation.
Brand loyalty takes many years to cultivate and it exists thanks to loyal customers. It exists when customers have a feeling of commitment to the brand.
It is like habit buying except that habit buying the customer buys the same thing repeatedly due to lack of dissatisfaction. The customer does not think about the other brand much.
Brand loyalty is different from customer loyalty in that customer loyalty is much more about price and special offer.
Successful business owners say that building brand loyalty is about making a promise to people and delivering on it.
If you make a promise and stick to it you’re more likely to get brand loyalty. You must make sure that the customer has a fantastic experience and that you connect continuously with the customer. An example of a company with fantastic brand loyalty is Apple. They have a strategic edge over the competition because of brand loyalty and this is the reason why they’re the most valuable brand in the world.
Another example is how some people will always consistently buy coke while some people will consistently buy Pepsi.
A consumer will consistently purchase the same product because she perceives it as being the superior product among the choices available.
Brand loyalty usually relates to a product not a company for example while you may be loyal to your Honda Fit but when it comes to motorcycles you might believe that a BMW bike leaves a Honda bike in the dust.
Increased Profits
Building and increasing brand loyalty results in continuous profits due to long term repeat customers, less reliance on marketing to boost client base and premium pricing.
Increased Repeat Purchasing
Brand loyalty results in repeat purchasing and positive word of mouth. It is the bottom line for companies because repeat purchasing leads to higher sales value which helps the company grow.
When a product is deemed to have value, consumer’s are less price sensitive regarding the brand. When consumers are brand loyal, the cost of an item is not important. Companies tend to lose 13 percent of their consumers every five years(Giddens, 2010).
It costs about 5-10 times more to find a new customer than to keep your existing one. Loyal customers know exactly what they want when purchasing from your brand and tend to spend more as well.
Current customers tend to spend 67 percent more than new customers (Penefit 2015). In a retail study, loyal customers reflect about 12-15 percent of the total number of purchasers which still accounts for 55-70 percent of total sales.
This means that over half of your current business is likely coming from a small percentage of your total customers and those customers are making loyal purchases on a regular basis.
Starbucks
To grow and keep customers, brands have to come up with differential ways to entice their customers. Starbucks for example faces a lot of competition in the coffee space from Dunkin donuts and McDonald’s McCafe, but Starbucks offers a better experience than the competition hence they stand out.
They do this by establishing an environment where consumers feel like it is a place away from home and work, a relaxing atmosphere, having convenient locations and it’s a place for everyone.
Because Starbucks takes good care of its customers, consumer’s are price insensitive and will pay premium prices because the prices are worth it.
Starbucks figured out what the consumer’s emotions and needs are and with that they were able to figure out ways to attract them.
They understand the target market and know what they will look for, all this through studying purchase data as well as speaking to the customer.
The Starbucks Loyalty Card
A smart tactic they use is the reward loyalty card.
Consumers can buy a regular gift card and keep using that gift card and with that can earn points and finally receive a personalised rewards card.
The more the card is used the more benefits and drinks can be earned.
The Starbucks Treat Receipt
Another promotion they came up with is the treat receipt.
Consumers can take the receipt from earlier that morning and come back later that day to redeem the coupon to receive another iced drink. This resulted in increased repeat purchasing over the same day.
The company now uses purchase data so it can send personalised offers to consumers. They collect the data on items the customer purchases and they record the preferences when consumers frequent the store .
This information is used to send notifications through the mobile app or through email. They have created a mobile app which encompasses a payment program to purchase drinks and food and earn points through the loyalty program as well.
Both give Starbucks a direct, real time, personalised, 2 way digital relationship with its customers (David, 2014).
Factors That Affect Brand Loyalty
1. Perceived service quality
This is your customer’s view of the quality of the product/service in terms of what is expected and how they perceive the quality of competing brands. Perceived quality focuses on cognitive behaviour and is linked to satisfaction which is an effective response.
The service experience quality can be controlled by the service provider which will result in the consumer coming back for more of that experience whether be it online or in person.
When consumer’s have higher expectations and expect perceived quality, repurchase intentions will be higher. Consumers are likely to want to associate with a brand if it can be related to a status symbol.
2. Switching costs
Switching costs relate to the costs of moving from one service provider to the next. Due to the cost that is incurred when switching, this can make it harder for the consumer when wanting to change from one product brand to another.
3. Perceived value
If customers feel the product/service provides a high value, repeat purchases are more likely. Perceived value refers to the customer’s subjective assessment of the worth or benefits they believe they receive from a product or service in relation to its cost. It is the customer’s perception of what they are getting in exchange for what they are paying. Perceived value is influenced by various factors, including product features, quality, price, convenience, customer service, and the overall experience associated with the brand.
4. Satisfaction
When customers are satisfied with the service provider they are more likely to repurchase. Customer satisfaction refers to the extent to which customers’ expectations are met or exceeded by a product, service, or overall brand experience. It is a measure of how well a brand fulfills its promises and delivers value to its customers.
5. Trust
When there’s no doubt or risk in the relationship then there is the development of a solid relationship and brand loyalty will follow.
6. Commitment
Brand commitment is an enduring desire to maintain a valued relationship. Consumers that are highly committed will work harder to keep the relationship going versus a consumer who is less committed.
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