For consumer brands, the answer to customer retention lies in brand loyalty, which spans every aspect of your business — from materials sourcing to product packaging and email marketing.
With brand loyalty on your side, you can turn customers into repeat buyers. The average customer acquisition cost (CAC) in ecommerce hovers at around $45. That’s why the ability to inspire repeat purchases can make or break the success of your company.
What is brand loyalty?
Brand loyalty refers to consumers’ desire and even insistence to purchase certain types of products from their preferred brands. This loyalty is inspired by trust in the quality of the product, as well as psychological influences, such as a connection to the mission of the brand or its perception as the category leader.
Why is brand loyalty important?
Brand loyalty is important for any company, but particularly for consumer brands that sell products, which tend to have lower profit margins than service-based businesses. This means that loyalty can drastically affect long-term success.
These are key benefits of brand loyalty:
- Increased customer lifetime value (CLV): When your customers buy from you again, their CLV increases. For example, a $30-first-time buyer might spend $350 with you later in the year. If your CAC is higher than $30, then you’ve turned a profit on this customer.
- Higher-order values: Loyal consumers are likely to purchase more items from you. They trust your brand, so when you roll out a new product line, your most loyal customers will give it a try.
- Lower CAC: The cost of acquiring new customers can fall lower, as loyal customers will join your referral program and also spread the word about your brand via word of mouth.
- Improved profitability: Because of these transactional and financial benefits, brand loyalty can improve the profitability of your company. Without brand loyalty, CAC stays high, while CLV and order values remain low.
Examples of brand loyalty programs
Decades-old consumer brands and new ecommerce companies all want to increase customer brand loyalty in order to grow revenue from repeat buyers.
If you want to know how to build brand loyalty, it’s always helpful to check out examples.
Nike is the top sports brand in the world, even managing to capture Gen Z’s loyalty, while so many other decades-old brands have failed to do so. In addition to churning out iconic but fresh products, the company also has a fine-tuned loyalty scheme with exclusive tiers.
Referral programs are also a great example of brand loyalty. With a referral program, companies often reward the sharer and the person who the sharer sent their unique link to.
But how can you have a brand loyalty program if you don’t have any customers?
One ecommerce store found the solution for that. Girlfriend, a brand of ethically made athleisure, encourages brand loyalty with its referral program, brand story, and cheeky copy. When they first launched in 2016, they weren’t sure how to get new customers to trust them, so they gave away 10,000 pairs of eco-friendly leggings for the cost of shipping. Although that initially caused them to go into debt, they now have a profitable business, with many of those initial customers having returned for full-price athleisure wear.
5 factors that influence brand loyalty
Before you can build brand loyalty, you first need to understand the factors that influence it. You need a strong foundation in how the human brain works. Here are 5 factors that influence brand loyalty:
1. Human psychology
Humans are a complicated bunch. So it’s no wonder that the psychology of brand loyalty is multi-faceted.
There are a few psychological elements that come into play:
- Reciprocity: If you do something nice for someone, they might feel obligated to do something nice for you. Brand loyalty programs that offer bonuses and rewards play on humans’ hardwiring towards reciprocity.
- Trust: Some consumers aren’t easily swayed by flashy marketing campaigns. They might simply buy from a brand because they trust that the product won’t break.
- Belonging: Many consumers want to belong to a certain club. Even brands without recognizable logos can inspire a desire for belonging. For example, many LGBTQ underwear brands have helped people find undergarments that truly fit who they are as a person (not just a body), while also inspiring a feeling of belonging to a special brand.
- Clout: Some consumers just want to show off. They want the best of the best, and they won’t settle for anything less than that.
- Personal connection: Customers make personal connections with brands when they hear the founder’s story, have a big problem solved by one of the brand’s products, or love that brand’s content.
2. Competitive landscape
Your brand is not the only option. The strength of your competitors has a big effect on your brand loyalty.
When there are lots of brands just like yours, it’s hard to stand out. On the other hand, you might find your brand at the top of your niche market, only to see everything crash with changing trends.
3. Product quality and relevance
No matter how great your branding and your marketing, your products still need to hit the mark, or customers won’t stay loyal to your brand.
All of these factors can come into play when it comes to maintaining loyalty:
- Materials quality
- Ethical sourcing
- Packaging expectations
- Product effectiveness
- Product longevity
4. Marketing prowess
How good is your marketing at utilizing psychology and emotion? Your marketing campaigns play a big part in brand loyalty. The messaging needs to be on brand, and you also need to be able to retain customers. We’re talking about email nurturing campaigns, retargeting, and remarketing.
“At Nori, we find the best way to inspire brand loyalty is to drive home the uniqueness of our product and the fact that it is a cut above its market competitors. Nori was created on the premise that other steamers on the market were faulty, leaky, and could not consistently perform to the standards we should expect of our home goods. We often communicate the messaging to our customers via email, social media, and other digital marketing channels so that it can reach the widest possible audience.” — Annabel Love, co-founder & COO of Nori
Check out how Nori communicates their product differentiators with potential customers on the home page of their website:
5. Customer and employee interactions
Your customer service affects brand loyalty too. 89% of companies say that great customer service plays a major part in customer retention. And consumers agree. 65% have switched to another brand because of a poor experience.
4 types of brand loyalty
Generally speaking, there are 4 different types of brand loyalty. In essence, these are levels on the path to the fanatical loyalty any brand builder would want.
1. Brand recognition
The 10 most recognizable brands in the world are:
However, that doesn’t mean that every consumer is loyal to these brands. In fact, we can all think of family and friends who wouldn’t buy from some of these brands.
However, recognition is an important first step in the journey towards loyalty.
For example, when consumers shop on Amazon, they may not pay attention to the third-party brand they are buying from. Unless you add enhanced brand content to your Amazon product listings and use branded product packaging, you won’t build recognition, and the consumer might think the product was created by Amazon. Without that recognition, you can’t build preference or loyalty.
With distinctive branding for your products and product imagery, you can build that recognition on any marketplace, distribution channel, or platform. Blooming Bath does this well. On their brand page and product listings, Amazon doesn’t swallow up their brand.
2. Loyalty to multiple brands in one category
Customers might be fiercely loyal to your brand — and other brands that sell the exact same thing. For example, you might stick to Shark or Dyson as your vacuum brand but purchase clothes and food from lots of different brands.
Some ecommerce stores don’t try to fight this, and instead offer multiple brands in one place. Asos is a great example of this. They sell their own product lines as well over 850 other brands, essentially becoming both a clothing brand and a clothing marketplace.
3. Brand preference over other brands
Next, there is brand preference. This means that a consumer prefers your brand over any other in that product category, but they might purchase other brands in a pinch.
For example, a customer might only buy SugarBearHair gummy vitamins from their own ecommerce store and from Target.com. But, when buying a dress from Target.com, she might throw a different brand of gummies into her cart in order to qualify for free shipping because SugarBearHair is currently unavailable.
4. Complete brand loyalty
At the highest level, there’s complete brand loyalty. A customer will not switch to another brand, even when your products are all sold out. Instead, they’ll sign up to be notified when the item comes back in stock, and they’ll wait to make their purchase until then. Apple, with its fans lined up for the newest release, is a prime example. But other brands can achieve this too, especially beauty and personal care products. Once people find what works best for their skin or hair type, they might not want to switch.
14 powerful brand loyalty strategies
Brand loyalty isn’t like winning the lottery. You can engineer it. By taking in customer feedback and connecting with your audience at every turn, you can build brand loyalty from the ground up. Try these 14 strategies to make this a reality.
1. Connecting with your target audience
Standing out amongst competitors and legacy brands is a must. Younger generations tend to want to do things differently. For example, Millennials flocked to Klean Kanteen water bottles (very unlike the plastic single-use bottles of their childhood), while Hydroflask grew in popularity among Gen Z, who wanted stainless steel water bottles but wouldn’t be caught dead with the same brand that Millennials love.
On another note, your product might connect with a specific niche of consumers as opposed to a demographic. For example, your audience might be hobbyists like disc golf players or quilters.
Money is also a factor. Middle-class shoppers might be more loyal to high-quality and reasonably priced brands, while wealthier shoppers are willing to pay a premium for a luxury brand.
2. Eliciting emotional responses
Emotion is a major part of branding. And psychological studies have proven that first impressions are hard to shake. That’s why every element of your brand, from marketing to product to delivery, needs to reinforce the emotions you want your customers to feel. The top emotions you should appeal to are belonging, happiness, fear, anger, sadness, and pride.
One brand can appeal to multiple emotions in different campaigns, so long as this connects with the overall promise of the brand. For example, the #LikeAGirl campaign by Always showed the difference between how young girls portray “run like a girl” and how older people and boys portray this phrase. The young girls ran quickly and confidently while everyone else play-acted what was essentially an insult. It created emotions of anger, sadness, and pride in female viewers while solidifying the brand’s promise to empower women through its products and content.
3. Consumer trend watching
You don’t want to be one of those brands that’s behind the trends, like J.C. Penney or Pier 1. To keep up, you need to be proactive and on top of consumer trends. Look to the media publications and platforms that are relevant to your brand for consumer insights.
4. Focus groups and product testing
Knowing consumer trends isn’t enough. You also need to know how your target consumers react to your specific product. You could send prototypes to customers that you have a relationship with to get their feedback.
Or, you could enlist the services of a company like Veylinx, a consultancy that runs auctions where consumers bid on product versions that they like better with their real money. Companies like Sephora and The Body Shop use Veylinx to run pricing tests and determine which test products should actually get launched.
5. Branded post-purchase experiences
A branded post-purchase experience is a must. So, consider creating a branded order tracking page that customers can view at any time to get the status of their order. You could automatically load this page upon order completion and also include it in the order confirmation email. This helps solidify brand recognition while also showcasing your company as one that is modern, transparent, and helpful.
Plus, you can add whatever you want to this page, such as recommended products or more information about how your company gives back.
6. Amazing customer service
As Jeff Bezos has said, “The best customer service is if the customer doesn't need to call you, doesn't need to talk to you. It just works.”
Your customer service should be:
- Multichannel: Help customers where they want to be helped, whether they reply to an email, submit a chat message, or ask a question on social media.
- Self-service: Create more self-service support experiences, like a branded order tracking page for checking order status and a customer returns portal for printing return labels within your company policy (meaning for old or clearance orders, labels can’t be printed.)
- Fast: Use help desk software with customer data variables and response templates to respond to customer issues quickly, accurately, and with on-brand messaging.
7. Customer-friendly policies
75% of US consumers expect free shipping. And 96% of shoppers are likely to shop at an online retailer again if they’re satisfied with the returns process. Aim to offer free shipping for orders over a certain amount, and if you can, offer free returns, or at least a low-cost flat-rate fee.
8. Community building
You don’t need to code a forum from scratch to build a community. Today, community building simply means solving problems for your customers beyond fulfilling orders, such as answering their questions, being helpful, and providing a space where customers can hang out together. Social media posts, especially live videos, can offer all of this. Just make sure to engage in the comments section. For example, Beardbrand runs regular Facebook lives to foster community.
9. Social monitoring and customer feedback reviewing
What are your followers, fans, and customers saying about you? Use a social listening platform like Brandwatch or Mediatoolkit to pay attention to social media mentions and review sites. Learn from the feedback to improve your products, customer service, and marketing.
“Anticipate customer's needs and possible frustrations, and provide easy and accessible channels of communication. By being available, listening, and repeating back what customers are explaining to you, you are showing them that you see their concerns. You have to make their problem your problem and take ownership of the customer’s question. Avoid any assumptions and make your customers a priority.” — Brandon Monaghan, co-founder of Miracle Brand
10. Highly personalized marketing campaigns
70% of Millennials are frustrated with brands that send emails that are irrelevant to them. And a whopping 47% of online shoppers will check Amazon if the site they’re on doesn’t provide relevant product suggestions. To increase customer loyalty, you can personalize emails, landing pages, pop-ups, banners with Automizely.
11. Incentivized referral programs
Loyal customers can be a source of new customers. In today’s world, word of mouth is still a powerful source. Incentivize customers to share your products, so you get even more word of mouth. With Automizely Loyalty, you can create different kinds of rewards, like discounts, free products, or other bonuses when customers share your business or earn you a sale.
12. Giving back to aligned causes
Today’s consumers demand ever-higher levels of corporate social responsibility (CSR). Giving back is a clear way to make good on CSR promises while inspiring brand loyalty. You could donate one-for-one like Toms and Warby Parker or use a platform like Givz to allow customers to donate to a charity of their choice.
13. Create your own brand loyalty program
As an ecommerce business, you can create your own loyalty program to inspire more repeat purchases.
For Internet Gardener, a client of ours who is a retailer of premium outdoor garden products, we implemented a loyalty points system. Similar to when you go to Starbucks, and they stamp your loyalty card, and after you buy 7 coffees, you get your 8th free. Taking inspiration from this, we were able to offer customers different incentives based on the amount of money they spent with the store. This, in turn, incentivizes the customer to come back to the store and to make their subsequent purchase from them as they'll benefit more in the long run by discount, store credit or free products. — Founder and Director of ecommerce digital marketing agency Contrast Digital
14. Regularly measure brand loyalty
Figuring out how to measure brand loyalty isn’t easy. However, as a digital brand, it’s certainly easier for you than a brick-and-mortar store. With tracking and cookies, as well as user accounts, you can collect data that paints a picture of your brand loyalty.
Here are some metrics you can track:
- Percentage of return traffic to your website
- Website user drop off
- Customer lifetime value (CLV)
- Order value for repeat customers versus new customers
- Customer retention in terms of what percentage of customers buy from you a second, third, fourth time, etc.
Essential brand loyalty statistics
Brand loyalty comes down to a few important factors. Consumers want to feel understood. They want to use products that people they know like. And they will buy more when emotion is involved. Aria’s research concluded that emotion is the biggest driver of loyalty in most industries.
Emotionally connected customers spend twice as much with a company they are loyal to versus a satisfied customer who is not emotionally motivated.
How brand loyalty has changed (and is still changing)
But Gen Z, like other generations before it, simply has a different set of ideals and expectations that some brands have failed to meet. “If a brand does not authentically live the values it portrays, it won’t just connect to this audience – the audience could turn on it,” Marcy Campbell, PayPal Vice President and General Manager of North America and Australia, told RetailDive. Baby boomers, on the other hand, have prioritized convenience, members-only benefits, and VIP experiences.
Brand loyalty is changing because it always changes. In fact, 56% of consumers tried a new retailer during the pandemic.
Each generation, demographic, niche, and world event will have its unique set of emotions and demands to unlock. The secret is making sure your brand knows how to find the keys.
Summary: Brand Loyalty Strategy 101
Brand loyalty might be difficult to build, but it is always worth the pursuit. Loyal customers help you recover your customer acquisition costs and create a highly profitable business.
In summary, you can increase brand loyalty by:
- Connecting with your target audience
- Eliciting emotional responses
- Keeping up with consumer trends
- Running focus groups and product testing
- Optimizing branded post-purchase experiences
- Offering amazing customer service
- Creating customer-friendly policies
- Building community
- Social listening and reviewing customer feedback
- Running highly personalized marketing campaigns
- Creating incentivized referral programs
- Giving back to aligned causes
- Creating your own brand loyalty program
- Tracking brand loyalty
With an effective brand loyalty strategy, you can create momentum that will drive your business to success.