What is Brand Loyalty and How Can Companies Build it?

What is brand loyalty? 

By definition, 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.

Take a second to think of some of the brands you favor. What drives that preference? Is it good service? Is it about price point? Is it the experience? Maybe it’s a combination of all three?

People like to shop with brands they can trust, and that preference for familiarity is why every brand needs to be in the loyalty race. It’s worth the fight.

Consider these statistics from a Yotpo survey of 2,000 consumers in the US:

• 36.5% of shoppers said they will spend more on products if they’re loyal to a brand.
• Nearly 60% of brand loyalists will also refer their friends and family to brands they love.

Brand loyalty will not just fall into your lap – businesses of all sizes need to keep pushing to ensure they don’t lose their preferred position in the hearts and minds of consumers. 

Why is brand loyalty important?

It’s no small feat to elicit loyalty from a consumer. You must gain their trust, maintain their attention, and understand their needs (sometimes before even they do). 

It’s a lot of effort to compete in a saturated market, but businesses don’t compete unless there is something to be won. Brand loyalty is a coveted prize because it improves customer retention, increases word-of-mouth referrals, and ultimately boosts profits. 

Again, we turn to the data. Did you know that 90% of American customers share their customer service experiences with others? Or that 81% of customers trust recommendations from family and friends over those from companies?

When a customer falls in love with your brand, they’re going to shout it from the rooftops. This is free marketing. It travels from consumer to consumer, adding a level of trust to the recommendation. It’s an entry point for new customers and a source of pride for old ones. 

Of course, it’s hard to track word-of-mouth. It’s not hard, however, to track the money. Hubspot reports that 93% of consumers say that they’re willing to make repeat purchases with a brand that they are loyal to. Another study by Motista found that emotionally-connected customers will spend over 2x more with a brand versus regular, satisfied customers.

We can throw data around all day, but at its core brand loyalty is a great indicator that your company is doing good things. Customers aren’t just being served, they are being delighted with wonderful experiences. It’s affirmation. It’s validation. It’s a big win. 

Why are consumers loyal to brands? 

We know brand loyalty is important but what drives customers to stick around? 

There’s actually a lot of nuance in advocacy conversations – some brand attributes or behaviors are more likely to prompt a positive online promotion than others. Consumers today expect more from their brands. Here are just a few areas that contribute to winning your audiences over. 

The product is high-quality

It’s hard to build brand loyalty when the product isn’t up to par. Consumers may be tightening their spending a bit but research shows us people are still willing to pay for quality.

In fact, our recent Customer Loyalty Report found that approximately 40% of consumer brand advocacy discussions mentioned staying loyal to a brand because they offer quality products amd fair prices.

During our research, we asked: What would motivate you to promote your favorite brand online? Quality was consistently the most popular reason for promotion with nearly 70% of respondents selecting it.

They’ve engaged with the brand before

In an otherwise virtual world, people are constantly searching for a sense of human interaction and emotion. Making the effort to engage your customers can go a long way. It’s about the stories we tell before we sell – those are the moments that spark connection.

When you interact with your customers directly – whether on social media or from behind a counter – you create a memorable impression for your brand. A great way to do this is by asking for feedback. Not only will you show them you care about what matters to them, you’ll also have some great points for improvement to consider straight from the customer's mouth.

Gain their trust by making good on your promises and watch your base of loyal customers grow.

The customer service is exceptional

Did you know that 65% of US customers find a positive experience with a brand to be more influential than great advertising? Research from PwC found that 73% of consumers point to experience as an important factor in their purchasing decisions.

You could have the best product ever invented but without good customer service you won’t get far. Your customers want to feel valued and respected when they do business with you.

Treat each interaction as a loyalty-earning moment. Frustrated customers aren’t looking to ruin your day, they’re just people with a problem to solve. Listen, learn, adjust, repeat.