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Brand Loyalty vs Customer Loyalty - What are the Differences?
In any business or industry, there are 2 types of loyalty that you should consider focusing on – which are customer loyalty and brand loyalty.
To put it simply, customer loyalty is when you build a loyal customer base that purchases your product or service repeatedly. In this category, your customer loyalty is directly proportional to the value of your product in the eyes of consumers.
Brand loyalty, on the other hand, boils down to how people perceive your brand and whether or not they’re likely to support you and perceive you in a positive light in the long run, regardless of the changes you make to your product.
Many argue that customer loyalty is a part of brand loyalty, which we agree with.
Both are incredibly important in the long run. However, depending on the company’s objectives and size – it’ll depend on which one is prioritized.
A loyalty program is great for rewarding customers for both their customer and brand loyalty and making you stand out from your competitors.
What Exactly is Customer Loyalty?
Customer loyalty is when customers consistently prefer a certain product and make repeat purchases, mainly because of the quality, price point, and overall value proposition the product brings.
The overall goal of customer loyalty strategies is to increase overall customer lifetime value (CLV) and rely less on acquiring new customers, as it can cost you much more to acquire new customers than to retain existing ones.
Customer experience plays a massive part in customer loyalty. Every single touch-point of the customer journey directly impacts the level of customer loyalty.
Everything from your product’s packaging to their experience with your customer service representative will affect whether customers will return.
Other value-added services and benefits can affect customer loyalty as well, such as airlines giving access to private lounges in airports, a bottle of champagne for VIPs staying at a hotel, or even something as simple as free delivery on products all compound into customer loyalty and retention.
A Practical Example of Customer Loyalty
Chow Sang Sang
Let’s look at one of our clients, Chow Sang Sang as an example. Chow Sang Sang is one of the biggest jewelry retailers in Hong Kong and parts of China, and they were suffering from a lack of customer engagement, which means a lack of overall customer retention.
Customers weren’t coming back because there was no reason to, mainly because their competitors were giving rewards and providing a better customer experience overall.
To fix this, we created a robust tiered loyalty program and implemented a mission-based reward system for customers.
The loyalty program brought the most value to customers, as they got discounts on gold products, access to limited edition pieces, as well as rewards that grew depending on the tiers the customers were at.
On top of that, we also managed to increase engagement through interactive experiences and gamification!
At the end of all this, they recorded an increase of 40% in sales from their members, and most of the members are still loyal to this day because of Chow Sang Sang’s value-added services.
What Exactly is Brand Loyalty?
Brand loyalty is the relationship between your brand and consumers, and how loyal they are to your brand, as opposed to any particular product that you offer.
A consumer who is loyal to your brand will prioritize your brand as a whole when thinking of certain products or services.
However, brand-loyal individuals can align with your brand and core values, but not necessarily buy your products – depending on the context.
Some individuals might align with certain brands but are not necessarily consumers. Examples include luxury fashion houses or sports car makes, as the majority of the population are not the ideal consumers.
On the flip side, certain brand-loyal customers might also buy secondary products that a company offers and switch over from competitors whenever it’s time to make a purchase.
A Practical Example of Brand Loyalty
As we mentioned earlier, brand loyalty can encompass non-consumers and also consumers. It’s a little confusing, but let’s break it down using a few practical examples.
Ferrari
We’re sure you’ve heard of Ferrari since they’re incredibly good at branding. People can talk for hours on end talking about Ferrari and comparing them to other car manufacturers, however, it doesn’t mean that they own one.
Most people cannot afford one, at least not yet – but they might still be loyal to the brand when talking about sports cars.
The same people might go on to purchase a Ferrari when they can afford it, but as of now, they’re just brand-loyal, but not consumers.
Apple
Now, let’s talk about brand-loyal consumers. Apple is by far the best example to give in this category since they’re widely considered by many to be the best smartphone and computer manufacturer out there.
Aside from smartphones, tablets, and computers; Apple has one thing going for it that its competitors do not – which is their proprietary ecosystem.
This means that every single device and gadget from Apple works seamlessly with each other, creating the perfect user experience. As a result, they managed to foster brand loyalty to consumers on a large scale.
Ultimately, this leads to consumers continuously purchasing from Apple, whether it be their laptops, tablets, smartwatches, earbuds, etc. This coupled with their brand positioning proves that Apple is at the forefront of brand loyalty.
Steps to Enhance Customer Loyalty and Customer Retention
Focus and Continuously Improve on Your Core Offering (Products)
Customer loyalty is directly proportional to the value you provide to customers, through your product and offerings.
For example, if you’re a restaurant, your core product is your food. You can have the best service and loyalty program in the world, but you’ll lose out on customer loyalty if your food quality isn’t up to par.
Here is the list of things that you should improve on for your product in order to enhance customer loyalty:
- Product Quality
- Perceived Value (Price point, quantity per dollar, etc.)
- Customer Service & Interactions
Slowly Include Value-Added Services
As we’ve mentioned before, value-added services are a great way to support a business’s products and provide more perceived value to customers.
Even if you’re selling the same product as your competitors, customers will return if you provide additional value-added services/perks that let you stand out. Value-added services are essentially nice-to-haves that improve your overall value proposition without making changes to your product.
Examples that we gave earlier are airport lounge access and complimentary champagne from hotels, which might be a little unrealistic for everyday business owners, so here’s a list to provide that you can take a look at to see whether they fit your industry:
- Free Delivery on Online Orders
- Complimentary Extended Warranties
- Robust Refund and Return Process
- Free Trials
- Carry-Out Services (Grocery Stores, etc.)
- Inclusive Setup and Installations
- Free Consultations
Reward Customers for Their Loyalty
Rewarding customers for their loyalty using a loyalty program can encourage them to return and make repeat purchases. This is especially important if you sell commodities (like petrol, gas, gold, silver, etc.) because they’re essentially the same wherever you go.
That’s why for big oil and gas companies, a loyalty program is their bread and butter because there are few ways for them to differentiate themselves from competitors, aside from price (some countries have laws that govern the price of petrol).
Therefore, having a robust loyalty program is key. This can come in the form of loyalty cards that can be scanned during checkout or a points system based on a customer’s phone number.
However, nowadays, it’s a lot more common for companies to use loyalty apps to streamline the whole thing connected directly to their CRM.
This is also something that we at KlikNGo specialize in. We pride ourselves on being one of the top customer loyalty solutions globally, providing a huge list of solutions that can fit any business.
Click the button below to check out our loyalty program solution and get started ASAP if you’re interested!
Steps to Enhance Brand Loyalty
Stick to Branding Fundamentals
As we’ve mentioned before, brand loyalty is at a completely different scale than customer loyalty. The most important to do is to stick to branding fundamentals. So things like using:
- A consistent tone of voice across all marketing channels.
- The same branding elements on all marketing material (including font, color, vectors, etc.)
Focus on Content Marketing to Scale Retention
For many businesses, one of the ways to affect brand loyalty feasibly is through content marketing, whether it be social media, YouTube videos, or other platforms.
The company called ‘Nothing’ is a prime example of content marketing done right by any company. If you haven’t heard of ‘Nothing’, they’re a lifestyle technology company that manufactures smartphones, earbuds, etc. Their founder, Carl Pei, was the founder and ex-CEO of the renowned smartphone brand, OnePlus.
Instead of being too ‘corporate’, they have a more down-to-earth style to their videos, where they show behind-the-scenes content, fun skits, comparisons, and community updates.
As a result, they’ve developed a cult-like following around their brand and products. They’re so good in fact that they’ve teased that they might release a clothing line in the future, with very good reactions from their followers!
Create and Invest in Your Own Ecosystem
Another great way to build a brand following is to create your own ecosystem. No, not like Apple’s software ecosystem. This is something different, let us explain.
The ecosystem that we’re talking about has to do with platforms that you can communicate with your followers and foster their brand loyalty.
These platforms will be different based on the stage of the funnel they’re at. The lower someone is at the end of this funnel, the more engaged and loyal they usually are.
At the top of the funnel, you might have social media followers who are just getting to know your brand. As they move down the funnel, becoming middle funnel users, their engagement and loyalty grow. They might subscribe to your newsletters and read email content.
The most dedicated followers are at the bottom of the funnel. They’re the ones who are most engaged and loyal to your brand. For them, you can consider launching a branded podcast.
Podcasts are not only trendy but also show pretty decent conversion rates, making them a pretty good asset for deepening customer relationships.
Through ecosystems like these, you’re able to increase brand loyalty of users of all levels of the funnel, at scale!
Which Should You Focus On? Brand or Customer Loyalty?
For any business, it’s important to focus on both brand and customer loyalty concurrently. However, you’ll have to prioritize one over the other depending on your business goals, industry, and objectives.
Businesses that are at the early stages, should ideally prioritize customer loyalty via improving their products to provide better value to consumers.
The objective is to build a loyal customer base and pivot away from relying on perpetually trying to gain more new customers. This not only reduces your overall cost but it’s an important step to grow.
More mature businesses can include brand loyalty into the mix, as they might have more resources to invest in it. Branding and brand loyalty usually require more resources to convince the masses on a bigger scale and are a lot harder to track.
Think about it, Apple spent billions and countless amounts of time developing its ecosystem, while competitors opted for less resource-intensive solutions by using Google’s Android.
Simply put, branding is costly in terms of resources, and businesses at their early stages should focus on customer loyalty to grow.
