Brand Loyalty: Definition, Functions, and How to Build It

Did you know that making consumers aware of your brand is not enough? Building brand loyalty is key to encouraging repeat purchases.

Brand loyalty is a strategy to make consumers consistently choose your product or service without being influenced by competitor marketing campaigns. When consumers reach this stage, it means that your brand has succeeded in building a strong emotional connection with them.

That's why improving brand loyalty is important. Read the following article to learn about the definition of brand loyalty, how it works, and the factors that influence it.

What Is Brand Loyalty?

According to John C. Mowen and Michael Minor (2002, in Jayanti, 2012), brand loyalty is a positive relationship or attitude of consumers towards a brand. This positive relationship encourages consumers to continue making transactions and being emotionally involved with the brand.

At a certain level, a loyal consumer is not going to be easily swayed by changes that are made by the brand. For example, if there is an increase in the price of the product to which they subscribe, consumers will not immediately switch to a different brand.

The Importance of Brand Loyalty for Business

Brand loyalty is a very important strategy for long-term business continuity. By increasing loyalty, companies can achieve stable profits, reduce promotional costs, increase sales volume, and repeat purchase frequency.

In addition, this strategy has a positive impact on sustainable sales. Brand loyalty tends to be long-lasting because it is based on a strong emotional connection between the customer and the company. 

Loyal consumers are likely to recommend the brand to others, which is an effective word-of-mouth marketing strategy for increasing the customer base and driving sales.

Levels of Brand Loyalty

To build brand loyalty, you need to understand the levels of loyalty. According to Durianto et al. (2001, in Jayanti, 2012), there are several levels of brand loyalty, including:

1. Switchers

The first level is consumers who like to move around. Consumers at this level are not loyal and often switch brands when purchasing products or services. This is because they tend to choose low-price products. 

2. Habitual Buyer

The next level of brand loyalty is the habitual buyer. Consumers at this level are satisfied with the brand they are using and do not have a disruptive experience. They tend not to switch brands because of the effort, cost, or habit.

3. Satisfied Buyer

The next level of brand loyalty is the Satisfied Buyer. These consumers are satisfied with the brand but may switch if the switching cost is acceptable. To attract these consumers, you must offer better deals or benefits than your competitors.

4. Brand Lover

The next level is consumers who have an emotional attachment to the brand. Previous positive experiences or high-quality products and services can create this preference.

5. Committed buyer

The final level of brand loyalty is the committed buyer. These consumers are very loyal and take pride in using the brand. They often recommend and promote the brand to others.

Brand Loyalty Indicators

Brand loyalty indicators are a measurement of how satisfied customers are with a particular product or service. Here are some key indicators for measuring brand loyalty.

1. Customer Churn Rate (CCR)

Customer Churn Rate (CCR) is an indicator that calculates the percentage of customers who stop buying a product or service within a certain time. To calculate CCR, the number of customers lost during the period is divided by the total number of customers at the beginning of the period.

CCR gives data on how many customers are discontinuing purchases due to dissatisfaction or other factors, such as customers moving out of the product's distribution area. Calculating CCR helps assess the company's ability to retain customers and predict future revenue from existing products or services.

2. Net Promoter Score (NPS)

Net Promoter Score (NPS) measures customers' willingness to recommend a product or service to others. It is calculated by asking customers to rate how likely they are to recommend the product or service on a scale of 1 to 10. Customers who give scores of 9-10 are called promoters, scores of 7-8 are called passives, and scores of 0-6 are called detractors.

NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. A high NPS score indicates a company's number of loyal customers.

3. Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is the total number generated by customers during their relationship with a company. CLV takes into account initial purchases, repeat purchases, and the average length of the customer's relationship with the company. The higher the CLV, the more valuable the customer means to the company.

Measuring CLV is important for increasing the value of each customer throughout the customer journey, increasing customer loyalty, reducing churn, and making strategic business decisions.

4. Customer Retention Rate (CRR)

Customer Retention Rate (CRR) measures the percentage of customers who continue to make repeat purchases because they are satisfied with the product or service. Calculating CRR helps companies understand how effective their customer retention strategy is. A high retention rate indicates good business potential in the future.

5. Purchase Frequency (PF)

Purchase Frequency (PF) measures how often customers purchase from a company within a given period. PF helps companies understand customer retention, buying patterns, and level of satisfaction.

How to Build Brand Loyalty

In addition to levels and metrics, you must also understand how to build it. Here are the details you should pay attention to while building brand loyalty:

• Brand Experience: Consumer responses related to product appearance, promotion methods, and experiences when interacting with your brand.

• Perceived Quality: The consumer's view of the quality of the product or service compared to their expectations.

• Brand Trust: Consumer trust in the promises made by your brand.

• Brand Image: A positive image can increase loyalty because it affects consumer perceptions and beliefs.

• Price: Competitive prices that match the quality of the product can increase loyalty because customers feel that the price is worth the value they get.

In conclusion, building brand loyalty is an important strategy for attracting consumers who are loyal to your business. Loyal consumers can also promote your product positively, such as by writing positive reviews of it.

One of the factors that can increase brand loyalty is brand image. Brand image is an important ongoing strategy that you must always consistently do.

To build a consistent brand image, you need a structured creative campaign that attracts customers' attention. VISUWISU is ready to help improve branding and creative marketing through research and visual production needed for your business.

Contact VISWUWISU now to consult your business visual needs to make it more unique and attractive!