10 Days of Christmas…Consumerism: Day 9

Screen Shot 2014-12-24 at 12.58.04 PM

Image from Venture Beat

It may not be surprising, given yesterday’s topic, that brand loyalty is related to brand relationships. Brand loyalty is exactly what it sounds like; it is forming a long-term and largely exclusive relationship with a brand. Companies love brand loyalists because most of a company’s sales tend to come from a small portion of their customers. This is something known as the Pareto principle (or the 80/20 rule), where 80% of revenue is generated by only 20% of customers.1 Because repeat customers are so vital to the success of a business, marketers continually try to build and maintain this kind of loyalty.

You can see how loyalty may be involved in many of the topics we’ve discussed. Brand loyalists are more likely to engage in brand communities, they’re less likely to be influenced by the choices of others in product categories in which they are brand loyal and they tend to generate word of mouth about those brands. Some researchers contend that brand loyalty is part and parcel of brand relationships, and it certainly appears to impact many aspects of a consumer’s marketplace experience.2 In fact, there are many parallels between brand loyalty and the concept of loyalty between two people. For instance, people need to trust brands before they can develop brand loyalty.3 We also come to trust brands by getting to know them over time, often through their brand characteristics and corporate behavior. But other factors like brand performance can also contribute to brand loyalty, which can be positive or negative.4 If a product always performs well, there is little reason for a loyal customer to seek other services, while the opposite is true if it performs inconsistently.4

One of the ways that marketers attempt to harness the power of brand loyalty is through loyalty programs. Loyalty programs are rather infamous for costing companies a lot of money for little return. And this makes some logical sense, as customers that are already purchasing a lot may have no need to purchase more often, or the program itself may not be motivating sales. Research has found that successful loyalty programs generally have 3 main characteristics: 1) They relate to high involvement products, 2) They increase the value of the service, and 3) They maximize motivation for the next purchase.5 Companies whose loyalty programs don’t reflect these values are far less successful than those whose programs are more motivating for the customer.

Brand relationships, and the loyalty that may exist within these relationships, are a part of our lives as consumers. When we become brand loyal, we may be champions for a product, building a company’s customer base by spreading the word to friends and family. We may even feel like amateur guerilla marketers. But we should always be aware that loyalty programs are not rewards for consumers, they’re marketing tactics for companies.

  1. Koch, R. (2011). The 80/20 principle: the secret to achieving more with less. Random House LLC.
  2. Fournier, S., & Yao, J. L. (1997). Reviving brand loyalty: a reconceptualization within the framework of consumer-brand relationships. International Journal of Research in Marketing, 14(5), 451-472.
  3. Lau, G. T., & Lee, S. H. (1999). Consumers’ trust in a brand and the link to brand loyalty. Journal of Market-Focused Management, 4(4), 341-370.
  4. Chaudhuri, A., & Holbrook, M. B. (2001). The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty. Journal of Marketing, 65(2), 81-93.
  5. Dowling, G. R., & Uncles, M. (1997). Do customer loyalty programs really work?. Research Brief, 1.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s