Two types of loyalty are fundamental to businesses: customer loyalty and brand loyalty. While theyre two separate concepts, the common denominator is that theyre both indispensable to customer retention. Lets go over customer loyalty vs. brand loyalty — the difference between the two, and why they have to be addressed in distinct ways.
Customer loyalty is born from excellent customer satisfaction — it’s when a customer has such a positive experience with your brand and products, that they’re willing to buy or work with you time and time again.
Brand loyalty happens when a customer identifies with your brand on a personal level. They either consciously or unconsciously purchase from your brand repeatedly because they know your products or service will meet their expectations.
Building loyalty whether it’s customer loyalty or brand loyalty, is crucial for the success of any business. But what exactly is the difference between customer loyalty and brand loyalty? In this comprehensive guide, we’ll examine the nuances between these two types of loyalty why they both matter, and how to build each one.
Defining Customer Loyalty
Customer loyalty refers to how likely a customer is to continue purchasing products or services from your business. It develops over time through repeated positive interactions and experiences with your brand.
Some key factors that influence customer loyalty include
- Price and discounts
- Rewards programs
- Quality of products/services
- Customer service experiences
Customers who are loyal to a company will choose to shop there over competitors consistently. However, they may not feel an emotional connection to the brand itself. Their loyalty stems from getting their needs met through logical factors like pricing and service quality.
Examples of Customer Loyalty
Many large companies have built strong customer loyalty through tactics like rewards programs and competitive pricing. Here are a few examples:
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Starbucks Rewards– Starbucks was one of the first brands to create a large-scale loyalty program. Members earn Stars with each purchase, which can be redeemed for free drinks and snacks. With over 21 million members, it’s been hugely successful at driving repeat business.
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Walmart– Walmart’s loyalty program offers cash back on purchases and special earning offers on select products. The ability to redeem points for actual cash gives customers a practical incentive to choose Walmart.
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Amazon Prime– Paying an annual fee for free shipping and other benefits compels Prime members to make the most of the perks by shopping on Amazon frequently. The subscriptions model has created stickiness despite pricing competition.
The key takeaway is that these companies have shaped buying habits through providing ongoing value to the customer. Their loyalty derives from satisfying logical customer needs on a consistent basis.
What is Brand Loyalty?
Brand loyalty refers to the emotional connection and trust a customer feels toward a brand. It stems from intangible factors like reputation, values, and positive sentiment
Someone who is brand loyal will stick with their preferred brand even when competitors offer lower prices or mimic product features. The brand itself holds an inherent value to the customer that can’t easily be replaced.
Brand loyalty tends to be more lasting once established because it’s tied to emotions rather than transactional factors. But it also usually takes longer to build through consistent delivery of not just functional value, but aspirational value as well.
Examples of Brand Loyalty
Some examples of companies that have built immense brand loyalty include:
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Apple– The tech giant enjoys unrivaled brand loyalty, with fans queuing up for hours whenever a new iPhone model drops. Apple sells premium products but also connects powerfully on an emotional level with its brand image.
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Nike– With its iconic slogan “Just Do It” and partnerships with elite athletes, Nike has cemented itself as a leading sportswear brand. Customers remain loyal to its products despite cheaper alternatives.
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Coca-Cola– According to surveys, Coke beats out other soda brands in terms of loyalty. The company has built an emotional connection with its classic, all-American branding.
The takeaway is that these brands have fostered strong identification between themselves and their customers. Loyalty stems not just from product satisfaction but overall affinity for the brand.
3 Key Differences Between Customer Loyalty and Brand Loyalty
While both customer loyalty and brand loyalty are valuable, there are some important distinctions between the two:
1. Emotional Connection
Customer loyalty is driven by logical, transactional factors. Brand loyalty is driven by emotional connection and identification with the brand’s values.
2. Marketing Approach
Customer loyalty marketing focuses on promotions, deals, and highlighting functional value. Brand loyalty marketing aims to build aspirational associations and nurture fondness for the brand itself.
3. Profit Margins
Customer loyalty often relies on discounted pricing, lowering profit margins. But the high volumes make up for it. Brand loyalty allows for premium pricing and higher margins. But volume may be lower.
Why Customer Loyalty and Brand Loyalty Both Matter
Focusing on just customer loyalty or just brand loyalty alone would be short-sighted. Most successful businesses cultivate both in tandem through a strategic combination of logical and emotional value.
Here are some reasons you need both:
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Maximize retention– Loyal customers that connect with your brand buy more and have higher lifetime value. Building both types of loyalty improves the chances of retaining customers.
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Support premium pricing– Brand loyalty justifies charging higher prices that boost margins. Customer loyalty brings in volume even at lower price points.
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Enhance marketing effectiveness– Customer loyalty tactics like promotions work well to attract deal-seekers. Brand loyalty campaigns create buzz and referrals among enthusiastic brand fans.
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Demographic nuances– Certain demographics may prioritize discounts, while others make decisions more on emotional factors. Dual loyalty strategies cover all bases.
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Optimal profitability– Economically, the most profitable situation is to have a clearly differentiated brand that also competitively prices products. This combination allows for healthy margins and volumes.
The more loyalty buckets you can fit your customers into, the better retention you’ll achieve. Aim for the sweet spot of building loyalty through both logical and emotional channels.
How to Build Customer Loyalty
Now that we’ve compared customer loyalty vs brand loyalty, let’s discuss some proven tactics for building each type:
Offer Discounts and Promotions
- Limited time sales, seasonal promotions, and coupon codes provide transactional incentives to choose your business.
Develop a Rewards Program
- Programs that offer points, credits, or cash back on purchases drive repeat business. Include tiered benefits for VIP members.
Gather Customer Feedback
- Surveys, interviews, and reviews identify weak points in the customer journey to improve.
Prioritize Customer Service
- Responsive issue resolution and exceeding expectations during support interactions increases satisfaction.
Personalize the Experience
- Leverage data to provide customized recommendations and offers matched to each customer’s preferences.
Highlight Convenience
- Whether through easy ordering, fast shipping, or saving time, showcase how you make customers’ lives easier.
Send Appreciation
- Thank you emails, surprise coupons, and loyalty gifts make customers feel valued.
With a strategic combination of these tactics, you can build durable customer loyalty over time.
How to Build Brand Loyalty
Transitioning transactional customers into true brand advocates requires tapping into their emotions. Here are some tips:
Define Your Purpose
- Having a meaningful mission that resonates builds affinity among those who share your ideals.
Convey Your Origin Story
- Share your genesis in an authentic way that customers can relate to on a human level.
Spotlight Your Values
- From sustainability to inclusivity, brand values align customers that care about the same causes.
Invest in Excellent Design
- Aesthetics, user experience, and premium touches distinguish your brand.
Cultivate Your Brand Identity
- Unique branding assets like visuals, packaging, and messaging convey what your brand represents.
Encourage Social Sharing
- User generated content and social buzz helps fuel organic advocacy among fans.
Prioritize Customer Relationships
- VIP treatment and acknowledgement of long-time loyal customers strengthens bonds.
Innovate Consistently
- Releasing improvements and new products keeps core customers engaged and excited.
Brand loyalty comes down to building shared ideals between your business and your customers. Aligning values and cultivating fondness creates lasting emotional bonds.
Wrapping Up: Strike a Balance of Logic and Emotion
Customer loyalty and brand loyalty both play integral roles in increasing customer lifetime value. Savvy businesses don’t choose one over the other but rather combine strategies from both camps.
The goal is to provide ongoing functional value that makes customers’ lives easier while also resonating on an emotional, human level. Logical incentives encourage purchases in the moment, while emotional connections secure long-term relationships.
With the right balance of transactional customer loyalty tactics and aspirational brand-building, you can maximize the impact on profitability and achieve enduring competitive advantage. Recognize what makes each customer tick and meet their needs through a blended loyalty approach.
Customer Loyalty vs. Brand Loyalty
The main difference between these two loyalty types is that customer loyalty revolves around customer spending, and brand loyalty is all about customer perception. Customer loyalty can be formed by having lower prices than competitors or better discounts and rewards programs.
With brand loyalty, pricing isnt as big of a factor — customers feel that your brand is trustworthy and high-quality compared to all others. Customers with brand loyalty are more likely to try out other products from the same brand, regardless if theyre more expensive or not.
While these distinctions are subtle, they can help provide a higher return on investment (ROI) if they’re both consistently built over time.
Maintaining Customer Loyalty and Brand Loyalty
Brand loyalty requires less effort to maintain once established. If your product and service quality remains the same throughout time, customers wont be motivated to scope out your competitors. While brand-loyal customers dont usually purchase as many items, the profit margins on the things they do buy are generally larger.
Customer loyalty requires more work, in that you’d have to put more effort into establishing promotions, rewards programs, and more.
In the grand scheme of things, its not a matter of customer vs. brand loyalty because theyre equally crucial to your business. Acquiring new customers can cost five to seven times more than retaining existing customers.
Below are some tips on how to target both so that you can combine the two concepts.
Customer Loyalty vs. Brand Loyalty (In About A Minute)
Is customer loyalty more important than brand loyalty?
In the grand scheme of things, it’s not a matter of customer vs. brand loyalty because they’re equally crucial to your business. Acquiring new customers can cost five to seven times more than retaining existing customers. Below are some tips on how to target both so that you can combine the two concepts. Build a simple rewards program.
What is the difference between brand loyalty and loyalty?
Also, loyalty programs reward repeat customers with additional — often personalized — offers, which helps consumers feel as though organizations value their commitments. Brand loyalty, on the other hand, is less transactional and more emotional. It stems from trust between customers and brands, rather than price.
What are the different types of customer loyalty?
There are two types of loyalty — customer and brand. While the former focuses on spending, the latter is about how a customer views or feels about the brand. You can build customer loyalty by offering lower prices or better deals than your competitors. Brand loyalty isn’t as simple as it comes down to customer perception.
Does brand loyalty increase customer lifetime value?
Brand loyalty contributes to a 25% increase in customer lifetime value (CLV), as reported by Statista. Businesses that prioritize customer experience (CX) witness a 20% increase in brand loyalty, according to Moz. Understanding the differences between customer and brand loyalty is crucial for long-term business success.
