Customer Loyalty vs. Brand Loyalty: Differences and Tips

 

Businesses rely on loyal consumers to operate and expand. Two key types of loyalty are customer loyalty and brand loyalty, which are concepts that sound similar but differ in their motivations and impact on companies. Learning about different relationships that companies build with potential and current customers can help you create strategies that generate revenue.

In this article, we define both customer and brand loyalty, describe some key differences between these two concepts and share tips for building loyalty.

What is customer loyalty?

Customer loyalty refers to the commitment customers make to support businesses and make repeat purchases. A company that sustains customer loyalty applies strategies to motivate customers to do business with it regularly, usually through positive, helpful experiences and quality offerings. Businesses often encourage customer loyalty by building strong relationships within the market and by creating unique benefits that urge customers to make repeat purchases.

What is brand loyalty?

Brand loyalty is a customer’s commitment to supporting a particular brand’s mission, ideas or values. Customers practice brand loyalty when they identify with a certain brand and trust in the quality and benefits of the brand’s products.

Building brand loyalty involves motivating an idea, perception or belief about your organization’s mission or values, fostering trust within your customer markets. While customer loyalty focuses on motivating a customer’s purchasing behaviors or actions, brand loyalty focuses on establishing trust with customers and creating a positive perception of your company’s brand.

Customer loyalty vs. brand loyalty

While both customer and brand loyalty are equally important for a business’s customer retention rate, they differ in these key ways:

Types of companies

Customer loyalty is vital for companies that rely on local commerce and foot traffic, like local grocery stores, restaurants and service providers such as dry cleaners and car repair shops. Small businesses also focus on building customer loyalty because it can help them build a stronger bond with the people who live around the business.

Brand loyalty often applies to larger companies or companies that sell products online and through third-party retailers. Because customers can choose between their products and others, often at the same price, these companies build brand loyalty to gain an advantage.

Some companies develop both customer and brand loyalty. For example, a chain of grocery stores might build customer loyalty within each individual location, where store managers greet customers and ensure a high level of service. At the corporate level, marketers for the grocery chain might create advertising that focuses on the quality of the store-brand goods.

Scope

Customer loyalty can encompass many brands and products since it relates to a specific retailer. Brand loyalty focuses on a single manufacturer of goods or services. For example, a grocery store might build customer loyalty in the community by offering low prices, long hours and excellent service.

Customers who are loyal to the store might buy products from the store’s brand, but they might also choose products from third-party brands because they prefer those brands’ quality or features. In this scenario, customers express both customer loyalty to the store and brand loyalty to their chosen manufacturers.

Customer motivation

Often, customers become loyal to a retailer or service provider because the business offers low prices and convenience. If another store offers lower prices or expanded hours, customers might change loyalties. For example, a local coffee shop might encounter competition if another store opens earlier and has lower prices, since its convenience and price point are its key attractors.

Brand loyalty usually focuses on a brand’s perceived quality or ethical stance. Customers might be willing to pay higher prices or spend more time to get products from their chosen brand. For example, if a local coffee shop sources its beans ethically and has a wide range of custom drinks, customers might drive farther or pay higher prices for the coffee.

Goals

Businesses may use customer loyalty and brand loyalty to achieve different goals. The goal of building customer loyalty is to motivate customers to make a purchase. Businesses can do this by offering low prices or specials, which encourage customers to spend more when they visit the store.

While companies that focus on customer loyalty often have low price margins, they can make up for the low margin by selling lots of products to a large number of customers. Grocery stores often focus on customer loyalty to encourage bulk buying.

In contrast, businesses build brand loyalty to create an image of the brand that has certain emotions or ideas associated with it. Businesses might express special values of the brand, like ethics and sustainability, so customers feel deliberate about purchasing their products.

For example, if a customer cares about protecting the environment and knows that a makeup company uses strictly environmentally friendly ingredients for their products, they may be more likely to buy products only from that brand. Brand loyalty can lead to more referrals and repeat customers.

Marketing strategies

One key difference between building customer loyalty versus brand loyalty is the marketing strategy businesses implement to promote products and services. For instance, marketing strategies for building customer loyalty can include incentives, like sales and discounts, seasonal trends and bundled pricing, that motivate customers to visit a business often. A neighborhood restaurant might boost customer loyalty in the immediate area by having different specials every night, which can encourage people to visit multiple times a week.

Conversely, promoting brand loyalty involves spreading awareness of a brand’s purpose, mission or values by creating unique offerings that support these goals. A company that makes electric vehicles might focus on brand loyalty since people don’t typically buy cars often. To encourage customers to choose the company when they decide to buy a new vehicle, the car company’s marketing might focus on environmental sustainability, high performance or the idea of luxury.

Emotional advertising strategies

When developing customer loyalty, businesses can appeal to customers’ emotions by making them feel welcome and expressing a sense of community. For example, when a regular customer returns to the business, managers and employees can address them by name and ask about their life. This can make a customer feel comfortable and valued in a business setting and encourage them to come back.

Businesses can appeal to customers’ emotions to establish brand loyalty, but their emotional appeal focuses on the product itself. For example, a company that makes baby food might create advertising campaigns that focus on a parent’s desire to care for their infant and emphasize emotions like happiness, love and peace. When customers visit a store that has multiple brands for sale, they might choose the brand whose advertising resonates with their own emotions.

Customer retention strategies

Customer retention is the ability of a company to keep its customers over a period of time, which is important for a business, as increasing customer retention can reduce marketing and advertising costs. When a business implements retention strategies to build customer loyalty, it usually incorporates incentives like competitive prices, discounts, promotions and rewards programs. In contrast, retention strategies that foster brand loyalty focus more on a business’s values or mission and its product quality, rather than sales, promotions or customer rewards.

Advertising visuals

Customer loyalty and brand loyalty can differ in terms of what visuals businesses use to advertise their products. In order to foster customer loyalty, businesses attempt to capture the attention of customers by emphasizing special deals and discounts. This can mean using bright, bold letters and enticing images on signs and online website ads. These businesses might also use advertising visuals that persuade customers to walk into the business location, which increases foot traffic.

To inspire brand loyalty, businesses use iconic symbols and slogans to ensure customers remember the brand’s values and benefits. While local businesses and chains might also use logos and slogans, these tools are particularly important for brands that sell products in different retail locations or online.

A brand logo can distinguish a product from others on a store shelf, increasing the odds that a customer chooses it, especially if the customer has already had positive experiences with the brand. Companies might also sell branded merchandise, allowing customers to identify themselves with the brand’s perceived values.

Market needs

In order to gain customer loyalty, a business studies its markets to find the spending powers of its potential customers. This means discovering the average income level of their target customers and how much money they can afford to spend. That way, the business can sell goods and services at prices that meet their market’s financial needs and budgets.

To increase brand loyalty, a company can study its markets to find the features its potential customers want to see in products. They can research their industry and competitors to see the basic components of products and try to make their products even better. Customers might be willing to spend more if they find a brand whose products fit their needs.

Tips for building customer and brand loyalty

Here are some ways a business can develop customer and brand loyalty:

Tips to increase customer loyalty

Businesses that rely on foot traffic from local customers might follow these strategies to increase customer loyalty:

• Offer price specials. Coupons and sales allow customers to save money by visiting the business often, which can increase the amount of foot traffic a business gets. For example, if a grocery store offers a weekly special on meat, customers might visit the store several times during the week to take advantage of lower prices.

• Focus on service. Businesses that rely on foot traffic and local customers can encourage repeat visits by making the shopping experience as pleasant as possible. Training cashiers, sales associates and other employees to resolve customer issues can make the business a welcoming environment for customers.

• Offer a rewards program. Loyalty programs that reward customers for frequent visits can incentivize customer loyalty. For example, a local coffee shop might have a loyalty program that offers customers a free drink for every four visits.

Tips to increase brand loyalty

Here are some ways a company can boost brand loyalty among consumers:

• Focus on a few key brand values. Emphasizing two or three important qualities can help customers identify with a brand. For example, a car company might focus on luxury and performance in all its marketing and sales messaging.

• Use visuals. Logos and visible slogans make it easy for customers to associate certain values with a brand’s products and services. A company can use the same set of visuals on advertising and product packaging.

• Build an online presence. Companies that sell products and services online or through various third-party retailers can use social media and web traffic to spread information about the brand. Branded online content allows marketers to state the brand’s values and connect with potential customers.

 

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