Brand Loyalty Vs. Customer Loyalty- Which One to Focus More?

loyalty management customers solution

May 5, 2022

Reading time about 6 minutes

Customer retention is what every business look for to succeed in their market. When we talk about brand loyalty and customer loyalty, both may sound similar but they are different concepts contributing equally toward retention and repurchase rates.

In this blog, we will learn about the difference between brand loyalty and customer loyalty and how you can build a robust retail customer loyalty program points & reward that can help you win customers’ hearts with ease.

Brand Loyalty & Its Importance

Brand loyalty can be defined as the customers’ preference towards your brand over competitive alternative product offerings of other companies. Brand loyal customers are the ones who wish to buy from your brand repeatedly irrespective of the prices or money.

For instance, some people only prefer pizza from Pizza Hut not from Dominos no matter how many attractive deals Dominos may come up with.

Though the market is fully equipped with many established brands offering old and new products, brand loyal customers are the ones who will stick to your brand and purchase the product from you irrespective of the price.

Customer Loyalty & Its Importance

Customer loyalty refers to the overall spending power of consumers, which is the consistent positive impression of the consumer towards a company’s product or service depending on the features, satisfaction, and perceived value of the experience.

It’s about what the company can offer in terms of regular prices and money-saving offers. The satisfaction of your customers is directly proportional to customer loyalty. In both cases, customers are happy with the provided service or product features and are not willing to switch to a competitor.

If you plan to make use of the loyalty management customers solution, ensure that you offer rewards and exclusive experience to retain the existing ones as it is less costly than to acquire new ones. Additionally, existing customers are the ones that contribute to the revenue growth of your company.

 

Read More: How to Create a Small Business Loyalty Plan?

 

How Brand Loyalty and Customer Loyalty are related?

Customer loyalty can be formed and maintained by offering the best services at lower rates and regular discounts, special offers, etc. This helps in convincing customers that you offer affordable services with great savings and thereby prevents them to switch to your competitors.

On the other hand, brand loyalty is the customer’s perception (positive image) of the brand regardless of the price. Once brand loyalty is built, it is easier to maintain as long your product quality and service level you provide remain unchanged.

However, brand loyal customers tend to make fewer purchases but boost profit margins on bigger spending.

As we can see both customer loyalty and brand loyalty are closely connected and both play an important role in retaining customers for the long run. If you are a business owner, your motive should be to achieve both these concepts.

Ensure that you combine both these concepts in your marketing strategy to increase your revenue like never before.

 

Factors that Differentiate Brand Loyalty and Customer Loyalty

  • Meaning

As discussed earlier, brand loyalty is defined as the tendency of consumers that keep buying from the same brand of goods when they have choices of competing alternatives.

Customer loyalty refers to the commitment of a customer towards a company or brand that offers better rewards, discounts, or special benefits.

  • Pricing

Another factor that differentiates brand loyalty and customer loyalty is pricing. Brand loyal customers will buy from you regardless of the price. However, with customer loyalty, customers can switch to other competitors if the prices of your product go beyond their budget.

  • Nature

Brand loyalty involves the perception of customers towards the brand, whereas customer loyalty defines the products & services that fit their needs & budgets.

  • Marketing

To build brand loyalty, the company should offer high-quality products & services, which can be expensive. However, to build customer loyalty, the business should offer products at low prices, discounts, and deals.

  • Customer Retention

Though both are essential for customer retention, the retention rate is high with brand loyalty but low with customer loyalty.

  • Profit Margin

Brand loyal customers may buy fewer goods and leading to a high-profit margin. On the other hand, loyal customers will buy more goods comparatively but at lower prices, leading to a lower profit margin.

 

Read More: The Right Approach for Building Customer Loyalty in Digital Banking

 

Top Metrics to Help You Measure Customer Loyalty

Knowing your customers is very important to building customer loyalty but it can be tough to measure. That is why; we can rely on experience and operation data metrics to track customers’ behaviors and turn them into actionable insights for better & personalized experiences.

Here are some of the metrics that can help businesses to measure customer loyalty-

Net Promoter Score

NPS is a commonly used metric that helps in monitoring customer service and satisfaction. Keeping track of NPS score may involve a simple question- how likely are you to recommend our brand to friends, and family?

This gives a positive, negative and neutral response, which helps in giving an idea of whether your customer will stay loyal to your brand or not.

Engagement

The second metric is the one that helps brands to check how often existing customers visit the brand website, leave reviews after purchasing a product or interact with a social media channel. Showing engagement can indicate customers’ interest in your brand, and also shows that their engagement is valued.

Repeat Purchase

Ensure that you keep track of several new customers and the ones that are making repeat purchases. This will help in giving you an idea about the retention rate that rises and falls, from time to time. Measure them as a whole not as absolute numbers as it can be confusing sometimes.

Customer Loyalty Index (CLI)

CLI is a standardized metric that is usually derived from customer surveys to help in measuring the strength of a customer’s loyalty towards a brand, similar to NPS.

However, it has more questions than NPS and also covers information about repeat and multiple product purchases.

 

Final Thoughts

Both customer loyalty and brand loyalty have their advantages and disadvantages. Both contribute toward customer retention of a brand.

Your main motive should always be to keep the customer coming back to purchase and choose your brand over and over without considering switching to other brands.

However, brand loyalty usually works on the product aspect, while customer loyalty works for the value provision, which leads to repeat purchases.

For any queries related to brand & customer loyalty, connect with the experts of Novus and build a customized loyalty management customers solution for your specific business needs.

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