Customer Loyalty vs Brand Loyalty: What’s the Difference?
With rising customer acquisition costs, growing competition and the death of the 3rd-party cookie, making the most of the customers you have is more important to e-commerce and DTC brands than ever before.
The key to invaluable repeat business is loyalty. However, there’s a difference between customer and brand loyalty — and knowing it could be the difference between scaling your store and struggling to keep up.
In this article, we dive into the differences between customer and brand loyalty, and present actionable advice on how you can start building both.
What is customer loyalty?
Customer loyalty describes a consumer’s commitment to your brand, often stemming from a positive experience that keeps them buying the same product from your business over and over. These customers will naturally recommend your products to their friends and family and are imperative to your brand’s success.
However, since your customers are only engaging with your brand based solely on the benefits of a single product, they don’t have any tangible connection to your brand.
As a result, they’re easily influenced by competing brands who are willing to offer similar products at a lower RRP, meaning the market landscape can quickly turn to a race to the lowest price. It’s for this reason that some brands focused purely on customer loyalty end up seeing lower profit margins.
What is brand loyalty?
Brand loyalty is built on stronger foundations than customer loyalty. It represents the end-to-end experience, reputation, and trust your brand provides.
For a brand-loyal customer, price is much less of a concern, as they buy into your brand experience and value the quality of your products, even if there are cheaper market alternatives.
For this reason, businesses with brand loyalty often see significantly higher profit margins, as their sales strategy relies less on discounting products to drive volume.
Varying marketing strategies
Although closely intertwined, customer loyalty and brand loyalty are built using different marketing methods:
Brands looking to increase customer loyalty should play to their audience’s biggest determining factor: price. Customers are won and lost on RRP, so sales and loyalty discounts can be a great way of retaining loyal customers. Multi-purchase offers and post-checkout upsells can be an effective means of improving Average Order Value (AOV) and widening tight profit margins.
E-commerce businesses looking to build brand loyalty, however, need to focus less on sales, and more on their product quality. Building superior products and effectively communicating their unique benefits across your marketing is the key to distinguishing yourself from lower-priced competitors, positioning yourself as a premium option and avoiding the fight on price.
Customers are also more likely to accept higher price points if the brand they’re engaging with shares the same ethics and values as them. So, if you produce products locally or pride yourself on sustainability and a low carbon footprint, use brand transparency in your favor and feature it front-and-center in your marketing.
Maintaining Customer Loyalty and Brand Loyalty: Why it Matters
If you want to build an effective, coherent marketing strategy, you can’t pick and choose between customer and brand loyalty — you need to tackle both, because both are closely tied to each other.
Build customer loyalty, and you’ll keep customers coming back to the same product time and time again, helping you tap into profitable repeat business revenue.
Infuse brand loyalty into the mix, and your customer will go beyond shopping for the same product, and expand their purchases to other items in your range, significantly increasing both AOV and Customer Lifetime Value (CLTV).
3 Actionable Tactics to Drive Customer Loyalty
Implement these 3 strategies and start fleshing out your customer loyalty strategy.
- Foster a community for customers
You engage your customers on a daily basis with your content, but do your customers have a space to engage with each other? If the answer is no, you’re missing an opportunity that, if ignored, could result in losing customers to your competition
Customer communities are more than just a place to distribute marketing messaging and product offers. They’re a powerful echo chamber for the key features and benefits of your products that can tempt single-product buyers into exploring more of your range.
The benefits stem beyond customer retention, too. By building a community such as a Facebook group or members-only area on your site, you’ll build a collection of social proof that will be invaluable not only for converting customers within that group, but also for acquiring new customers from paid advertising.
Lounge Underwear used this tactic successfully when they created their ‘Female Family’, a tactic that has greatly contributed to the brand being able to scale to a $69M (£55M) business in 5 years.
No loyalty program? It’s never too late to start, and the results can pay dividends for your customer loyalty.
Loyalty programs play an essential role in building a customer’s relationship with your brand. By offering rewards in exchange for purchases, you incentivize loyal customers to stick with your products and reduce the risk of customer churn.
Once customers are in your loyalty program, you can build their relationship with your brand by using targeted content to push them up loyalty tiers, increasing the benefits they receive and their value to you as a customer.
- Personalize the experience
If you want to win customer loyalty in a competitive market, one-size-fits-all engagements sent out to your entire customer database are likely to do more harm than good. Your customers demand personalized marketing, and you need to deliver it.
From personalized product recommendations to automations that trigger based on engagement, from browsing behavior and product affinity, personalizing the offers you deliver to customers will skyrocket your engagement. This added trust won’t just make them more likely to stick around – it will also increase their average order values as they start to become brand-loyal.
Creating personalized content doesn’t have to be difficult, either. Many customer engagement platforms offer the ability to unify customer, product and sales data.
This enables the creation of dynamic customer segments that determine which personalized offers to send to which customers based on their individual profiles.
3 Actionable Tips to Enhance Brand Loyalty
Bolster your brand loyalty with these 3 tips:
To generate brand loyalty, you need to set yourself apart from the crowd on more than just price. And while the quality of your products will keep customers coming back, it’s your content that’s going to reel them in.
Focus on creating high-quality content across your key channels that’s relevant to your audience, engages them, and educates them on the benefits of your products. You don’t have to handle the heavy lifting on content creation, either — you can recruit your customers to do it for you.
User-Generated Content (UGC) is like gold dust. Not only is it excellent social proof that builds brand trust, it’s also an excellent way of engaging with your customers and showing them that you care about how they experience your products.
Relationship-building with your customers is the key to brand loyalty, and one of the best ways to do it is with targeted, exclusive offers that they can’t get anywhere else.
If it’s relevant to your business, this is a great place to give back by introducing partnerships with other brands that your customers care about. And if you want to keep things closer to home, you can reward customers for their brand loyalty by creating exclusive product offers that only they have access to.
From early-bird sales to sneak-peaks at exciting new product releases, this exclusivity will build connections that bring you closer to your customer.
- Maintain brand consistency across all channels
Clunky, disconnected customer experiences are a fast way to lose trust. If you want to become the brand of choice and strengthen your relationship with your customers, you need to deliver a brand experience that’s consistent — no matter where they decide to engage with you.
Find out where your customers are spending their time online, and work on a cross-channel marketing strategy that targets them with engaging content that’s true to your brand voice and relevant to their individual interests.
If you want to improve your customer retention, CLTV and overall ROI, building customer and brand loyalty should sit firmly on your priorities list.
Therefore, it’s critical to leverage the right tools to quickly execute 1:1 personalized cross-channel automations that drive engagement, foster loyalty, and win repeat sales.