I recently came across a new research study from Cheetah Digital (via MarketingCharts) that uncovers the reasons why customers have a ‘favorite’ brand. The study surveyed over 5,000 customers worldwide to determine the factors that drove brand loyalty. I wanted to cover the top seven drivers of customer loyalty:
The Top Seven Drivers of Customer Loyalty
Provides a Consistent Customer Experience (80%) I think an important caveat is that the brand provides a consistently GOOD customer experience. The experience is part of the brand, and according to this study, it’s the top driver of brand loyalty.
If a brand makes the effort to create a good experience for the customer, that communicates to the customer that they are valued and appreciated. You will see that valuing and appreciating the customer are common themes on this list of drivers of brand loyalty.
Rewards Customers For Their Loyalty (78%) This is the where most brands make their biggest mistake in attempting to cultivate brand loyalty. Most brands confuse rewards and incentives in the context of brand loyalty. A reward comes after the purchase. An incentive is given before the purchase in an attempt to change customer behavior.
A reward creates loyalty to the brand, an incentive creates loyalty to the incentive itself. For example, look at the classic punch card, designed to ‘reward’ the customer with a free purchase afer a set number of purchases are made. Maybe Pizza Hut has a deal where if you purchase the lunch buffet 10 times, you get a free purchase. This is an incentive to change behavior, and it builds loyalty to the OFFER, not to the brand. You will be more likely to continue to purchase the lunch buffet at Pizza Hut UNTIL your punch card is filled. When you claim the free lunch buffet, then you have to start again at zero. And your loyalty to the incentive resets to zero as well.
As I explain in this post; If you want to build loyalty among your customers always remember: Loyalty is built by saying ‘Thank you!’ for existing behavior, not by offering coupons as incentives for new behavior.
Uses Customer Data In a Way That Makes Them Feel Comfortable (74%) Data privacy is top of mind for all customers. Most customers are very concerned over how their data can be used, or misused by brands. Transparency is imperative to building trust with consumers, and that’s especially true when it comes to customer data. Brands that are clear and forthright with how they collect and use a customer’s data are more likely to build trust with customers, which is the prerequisite for building loyalty.
Treats the Customer as an Individual (74%) This speaks to the desire that customers have for a personalized experience. Every customer has different wants and desires, and when a brand can give us a personalized customer experience, the brand is communicating to us that we are worth communicating to as an individual. It shows us that the brand appreciates us enough to put forth an effort to customize its communications with us. That communicates respect and appreciation, and it makes it easier for us to adopt those same traits back to the brand.
Strives to Develop a Relationship (71%) This is one of the biggest misconceptions that brands have when communicating with customers. Most brands attempt to develop relationships with NEW customers, but ignore CURRENT customers. This thinking is completely out of phase, new customers typically have no interest in building a relationship with a brand. On the other hand, repeat customers are more likely to be loyal to the brand and more likely to be open to developing a relationship with the brand. Additionally, repeat customers can better serve the brand as they have a better understanding of its products/services and can better promote the brand to new customers.
Surprises Them With Rewards They Don’t Expect (64%) Unexpected rewards communicate appreciation. But remember, an unexpected reward is a ‘thank you’, not an incentive to make a future purchase. Sending a customer an email with discount codes for a ‘secret sale’ isn’t an unexpected reward. It’s an incentive to make a purchase, and your customers will see it as such. But a handwritten note from the manager thanking the customer for their business and delivered with a small box of gourmet cookies, that’s an unexpected reward and the customer will love and appreciate the gesture.
Treats Them Like a VIP (58%) This ties in with the previous point. The brands that do the best job of cultivating advocates understand the importance of their current customers and treat them as the special customers that they are. A good way to treat current customers as VIPs is to appreciate and reward them for what they are doing to help build and promote your brand. Say ‘Thank you’ with no expectation of future purchases, but as appreciation for past behavior. Communicate to your customers what impact they have on your brand and thank them for it. You will find that by doing so, your loyal customers will work even harder for your brand.
Want to learn more about how to build a brand that cultivates customer loyalty? Here’s every article I’ve written on brand loyalty. Have questions about how to implement these strategies for your own brand? Feel free to email me and I’ll be happy to answer any questions you have.