Decoding Brand Loyalty in three answers

Whenever I think of loyalty, two sentiments play out -  ‘Devotion’ & ‘Faithfulness’.

Loyalty transcends life and manifests in various forms - loyalty to the nation, to the causes one supports, to a philosophy and to various relations. It has shaped the evolution of humankind over years, our history and the future that we want to craft.

For me, Brand loyalty too symbolises ‘Devotion’ and ‘Faithfulness’ towards the particular Brand.

So, how does it manifest in real life?

In various ways, starting with one’s commitment to repurchase, continual usage and advocacy of the to friends & near ones.  The higher the Brand Loyalty amongst consumers, the more the chances that customers will repurchase the brand. They will keep coming back and buy the same product again and again.

And, why is it important for a brand?

Consider a brand which is able to retain 70% of its customers year on year (YoY). After five years they would retain only 17% of the customers from the first year. Similarly, if a brand is able to retain 90% of its customers YoY, it will be able to retain 59% of its customers from the first year. Thus a 20% higher retention rate per year would increase the overall retention 3.5 times in 5 years. This also means there would be that much lower pressure on the brand to acquire new customers to fill in the void of lapsing customers. Now, we all know that adding new customers is an expensive affair compared to retaining existing ones. Therefore, investment and increasing Brand loyalty amongst customers is imperative.

A customer is six times (6X) more likely to give the product or service the benefit of the doubt if she is loyal to the brand.

So, how should one increase Brand Loyalty?

The first step is to measure the Brand Loyalty for your ‘Brand’ and then take active steps to increase the same. This can be achieved through direct as well as indirect metrics. 

The direct metrics involve measuring customer Satisfaction through Surveys, NPS (Net promoter score), Brand Trust, Brand Affinity & Advocacy. The indirect metrics include Customer Repeat Rate, Frequency, Ticket Size & Gap between two consecutive purchases.  Once the base rate is established for all metrics, effort must be taken to improve each of them to first match the industry and geography benchmark and then to exceed them. 

To increase Brand Loyalty, you must focus on different initiatives to engage with customers and elevate their experience on each step of their journey with the brand right from awareness till post purchase. You need to elevate the experience of customers on each touch point and make their journey as frictionless as possible. 

The time they require to come to your Brand store or Brand website, their journey during purchase in finding what they are looking for, understanding their stated and unstated needs through behaviour mapping. The time they take to complete the transaction including ease of payment, exchange, return, refund, or query. Awareness of new products, their benefits, offers & discounts as well as their feedback on service are some of the touch-points which come to mind. Consistency in the experience and responding to any input from the customers helps the Brand to build Trust. 

Building Brand Loyalty and sustaining it requires a long term game plan. Regular measurement and periodic initiatives to keep the engagement with customers relevant based on their profile and interests are imperative. 

One simple rule that you can use to compare Brand health is to measure the business that is given by repeat customers vs new customers. The recommended health rate is 80:20 where 80% revenue is coming through 'Repeat & Loyal customers' and 20% through 'New customers'.

Curious to know where you are on your journey for building and sustaining ‘Brand Loyalty'.