Is Brand Loyalty Dying?

It’s easy to feel like brand loyalty is dying. Consumers have so many ways to shop and with loads of brands competing for their attention, why not shop around?

The numbers would seem to bear out that theory. Last year, research from McKinsey found that 73 percent of American shoppers have altered their brand preference amid the rapid changes brought on by the pandemic, forcing retail marketers to reimagine how they nurture customer relationships.

At the same time, it’s safe to say all of us still have a brand (or maybe several) that we're loyal to. Brand loyalty isn’t going away; it’s just getting more personal. It’s now up to marketers to be matchmakers and offer their brand as the perfect partner for each customer. Loyalty is a two-sided relationship now: Brands can inspire and maintain loyalty one customer at a time, at scale.

The Degrees of Brand Loyalty

Brand loyalty falls into one of two camps: functional or emotional. Functional brand loyalty is based on how convenient, effective and well-priced a product is. This has its benefits, such as customer recommendations and good reviews, but customers are only one purchase away from moving to a competitor.

Emotional brand loyalty is where the magic happens. Emotional loyalty is about loving the brand as a whole, not just a particular product. It’s harder to break an emotional bond than it is to lose a functionally loyal customer. Emotional loyalty is also more likely to lead to positive reviews and organic brand advocacy on social media or through word-of-mouth. Consumers rely on product reviews, and passionate brand ambassadors help build credibility for the brand. In today’s hybrid and quickly evolving marketplace, an emotional connection with current and potential customers will be key to stand out amongst the noise. Brands can drive this emotional connection through personalization, relevance and authenticity.

4 Steps to Make Customers Fall in Love With Your Brand

Loyalty Builder No. 1: Transparency and Privacy

Transparency and consumer choice in personal data use are key to customer loyalty. Opt-in practices reassure customers that their data won’t be sold or shared without their consent. Opting in also avoids irritating your customers with unwanted contact. Those who want personalized, omnichannel experiences are often willing to share personal data if the reward seems worth the ask. Accordingly, opt-in choices should show customers what they can gain from sharing their data. Privacy disclosures can then be used as a sort of advertisement for the specialized CX your brand can offer.

Disclosures about data use should include:

• how customer data is collected;
• where data is stored;
• how it's used by the brand;
• how it's kept secure; and
• how and where it's shared when applicable.

Keep the language short and easy to understand. Allow customers to choose privacy settings that are modular, not all or nothing. If you give your customers more control over their personal data, you build trust and help them feel comfortable sticking with your brand.

Loyalty Builder No. 2: Adding Value in Real Time

Loyalty programs are one of the best ways to keep on top of customer needs, track behavior, and use that data to deliver a stellar customer experience. Research from Harvard Business Review found that companies with strong loyalty programs grow their revenue 2.5 times faster than their competitors. This customer loyalty also plays a critical role in brands’ ability to rebound from the pandemic and navigate the new era of shopping. Omnichannel loyalty and engagement programs will be what deepens relationships, rewards customers, and personalizes experiences across all touchpoints and channels.

Muji, a global retailer known for sustainable products and packaging, is a great example of the power of personalization. The company found that its customers often browsed online for products they would later buy in-store, even doing so while in a physical retail location. Muji turned to a customer data platform (CDP) for dynamic and scalable aggregation of these different data streams. As a result, Muji was able to retrieve detailed and current customer profiles and tie them to targeted push notifications and personalized coupons. The retailer subsequently saw a 100 percent increase in coupon redemption, higher volumes of in-store traffic, and saved millions on campaigns that previously relied on printing fliers.

Loyalty Builder No. 3: Next-Level Customer Experiences

Brand apps are a popular platform to engage with customers and deliver data-driven experiences. Retailers have been expanding the features of loyalty programs to include CX such as augmented reality (AR) games, dynamic website content, and comprehensive, omnichannel experiences.

Next-level CX starts with personalization. While some retail trends are widespread, such as increased online sales and decreasing in-person sales, others vary among individuals. Customers can also change their minds about the CX they want, such as how, or if, they prefer to be contacted about promotions and product recommendations. Keeping up with individual shifts can only happen with martech tools like CDPs. Analysis of individual customers allows your brand to pivot as individual customer needs and preferences change.

Loyalty Builder No. 4: Seamless Customer Support

Omnichannel experiences aren’t just based around sales; they include post-sale customer support like product questions, troubleshooting, and offer or product suggestions. Centralized, accurate and current customer profiles allow your brand to make this a relevant and seamless experience.

Seamless customer support requires three key elements:

1. A central “source of truth” that consolidates customer data
2. Empowered employees who have access to the data they need
3. A customer service mindset based on ongoing customer conversations rather than individual encounters

Loyalty Isn’t Dead, It’s Just Different

Brand loyalty isn’t dead. In fact, it’s just evolving, but more relevant than ever. The biggest change is that messaging about brand loyalty is increasingly customer generated. Social media, reviews and word-of-mouth can dramatically support or hurt your brand. Understanding customers as individuals and delivering the CX they want at any given time inspires loyalty. Loyalty is a powerful and long-term relationship — it depends on giving your customers ongoing reasons to stay with the brand.

Tom Treanor is chief marketing officer at Treasure Data, an enterprise customer data platform.