How to build brand loyalty in customers

It is widely believed that advertising is the key to nurturing brand loyalty. It not only tempts people to try out a new product, it reinforces brand loyalty. Study after study demonstrates that the reinforcement effect of advertising that follows the sale is at least as important as the effect of advertising that led to the sale.

Cultivating loyalty saves the company money. Studies reveal that it costs four to six times as much to attract a new customer as it does to retain an old one. That's what's behind the welter of frequent flier programs, money-back guarantees, etc.

Companies can boost their sales almost 100% by retaining just 5% more of their customers. One very simple reason is that loyalists buy more. An extraordinary share of sales can be traced to a tiny share of loyal heavy users. Campbell Soup Co. discovered that not all sales were equally valuable after it analyzed one brand. The soup giant found that only 4% of its customers accounting for 15% of sales volume were highly profitable and that all the brand's profits came from a mere 10% of its customers.

In fact, Kathleen McDonnell, group president of Campbell's frozen foods group said that the most profitable group of brand loyalists tend to pay more for your product, buy less frequently on price-off deals and are very positively disposed toward your brand.

Brand loyalty is a necessary component to brand domination and thereafter brand leadership. And that obviously is the right place to be. It has been observed that the No. 1 brand enjoys a price premium of 10% over the No. 2 brand and a 40% premium over store brands. Top brands not only sell more; they also sell at higher prices.

Today there is a wave where marketers are evolving from a transaction mentality to a relationship mentality.

First was the mass marketing wave where what you got made got sold; build awareness and they will come.

Then came target marketing where customers assumed more respect but still didn't call the shots. Instead of being addressed en masse, they were corralled into demographic or psychographic segments like women 18-34 or strugglers.

Next came global marketing and now we are moving to the fourth wave, brand-loyalty marketing. Here, enduring, profitable growth is the goal, and the sale is just the beginning of an opportunity to turn the purchaser into a loyalist.

The question that is uppermost in the minds of most marketers today is "is brand a reality or is it just a myth"?

Today's customers are questioning whether there is value in firm loyalty to any company. This clearly indicates that something is missing in what business deliver compared to what they promise and what customers expect. Today, too many companies aim no higher than meeting customer satisfaction, instead of addressing the deeper issue of loyalty.

Every company strives for a high level of brand loyalty, which ultimately guarantees a high level of profitability. But, ultimately, the brand loyalty they aim for, that is a consumer so loyally devoted to the brand that they buy it again and again, can never be achieved because they place the emphasis of brand loyalty in the wrong place. They assume that brand loyalty is something the company and the brand do for the customer.

Influencing the customer to buy is not the same thing as somehow transforming the consumer into a customer that always buys that brand.

At its most basic, consumers can develop a brand "habit" meaning that out of habit they reach for a specific branded product without thinking. A brand habit makes shopping easier and the eventual outcome of the purchase predictable.

A higher, more refined connection of consumer with brand is through a special brand affinity. That is where some recognizable, inherent attribute of the brand touches an emotional chord with the consumer. They feel connected to the brand on a personal level. Many consumers feel an affinity to Coke as the soft drink linked with their youth. Other consumers feel an affinity to branded products that they display and others see. The Polo logo, the Mercedes hood ornament, the Rolex watch label all say something about the consumer, who they are and who they aspire to be.

Brand loyalty, therefore, is essentially all about how effectively and completely the company's brand satisfies the consumers' needs, desires, and dreams. A brand is loyal to the consumer when it connects with the consumers' emotional desires. When that emotional connection occurs, the company may then be rewarded with some special affinity the consumer feels for the brand, which may influence them to buy again. A brand's loyalty to its customers therefore yields consumers having an affinity for the brand. Truly connecting with the customer on an emotional level is the key to brand loyalty and customer affinity.

In other words, brands are made for customers; not customers made for brands. Peter Drucker said, “Marketing is the whole business seen from the point of view of its final result, that is, from the customer's point of view." If we are to achieve consumer affinity with our brands, we need to understand the consumer, what their drives and desires are and how our brands fulfill consumer fantasies.

Ultimately, the challenge for brand marketers is all about connecting why the consumer buys with how to reach them and where to reach them. There is dire need to effectively connect with the consumer. Connecting is about talking less and listening more. It is about giving more value, rather than taking more money. It is being involved and passionate about the customer rather than waiting for the customer to get involved. It's about connecting with the community and the things that matter to the consumer. It's about creating your business to satisfy the needs of your customer.

The more a company shows they care, the more loyal customers appear to be. Just as in friendships, constant demonstrations of caring encourage a feeling of comfort and build stronger relationships. Even in the most advanced businesses, studies reveal that the key to loyalty marketing is 5% technology and 95% psychology.