What is customer loyalty? Definition and example

Customer Loyalty is the likelihood that existing and previous customers continue purchasing from a specific company. Marketing and customer service departments of many companies spend significant resources on customer loyalty. In other words, they give great attention to retaining existing customers.

Loyalty programs that reward customers for additional purchases, for example, aim to boost loyalty.

The Cambridge Dictionary has the following definition of customer loyalty:

“The fact of a customer buying products or services from the same company over a long period of time.”

Customer Loyalty
Customer loyalty is all about customers coming back for more again and again.

Customer loyalty vs. brand loyalty

Although the two terms are closely linked, they are actually two different concepts.

Customer loyalty mainly relates to consumers’ overall purchasing power. It is about what the seller can offer customers in terms of money-saving deals and regular price discounts.

On the other hand, brand loyalty does not have much to do with money or prices. Brand loyalty is all about how consumers perceive the company’s brand. This may be through reputation, previous experience with the company, or promotional activities.

Additionally, a strong emotional connection between the customer and the brand can further cement brand loyalty, often leading to word-of-mouth referrals and social media advocacy.

Furthermore, the alignment of a brand’s values with those of its customers can significantly enhance loyalty, as consumers increasingly prefer to support companies that reflect their personal ethics and beliefs.

  • Boosting customer loyalty

Companies can boost customer loyalty by maintaining overall low prices. They can also offer multi-purchase deals, special offers, and regular loyalty discounts.

These strategies will help prevent customers from buying goods and services from competitors.

  • Maintaining brand loyalty

ReSci, a company that brings artificial intelligence to marketing technology, says the following regarding brand loyalty:

“Brand loyalty, on the other hand, is much easier to maintain once established. As long as your product quality and the level of service you provide remains the same, brand-loyal customers will feel little need to check out the competition.”

“In that sense, brand loyalty is less risky than customer loyalty and requires little effort to keep.”

Retaining customers

Customer retention refers to a company’s ability to retain its customers over a specific period. In other words, ‘to keep them.’

Getting new customers is much more expensive than retaining existing ones. Some studies have shown that it costs six to seven times more to acquire a new customer than to keep an existing one.

Not only do loyal customers help sales, but they are also more likely to buy high-margin supplemental goods and services.

According to BeyondPhilosophy.com:

Loyal customers reduce costs associated with consumer education and marketing, especially when they become Net Promoters for your organization.”

Drivers of customer loyalty

Marketing Land says that these are the biggest trends that are driving customer loyalty today:

  • Omnichannel and multichannel programs

Traditional programs are making way for multichannel or omnichannel-based loyalty programs. Omnichannel loyalty connects consumers to a brand across every touch point seamlessly.

It also allows members to receive rewards for spending and engaging across all channels.

  • Personalization

Studies have found a correlation between customer satisfaction and personalization. According to the Bond Loyalty Report, 79% of customers in a survey indicated that they were very satisfied with high personalization loyalty programs.

The study also found that loyalty programs where customers felt recognized and special had 2.7 times more satisfied members.

  • Partnerships

Over the last couple of years, more brands have been seeking out strategic partners to stay ahead of their rivals.

Partnerships help extend additional value to brands, which enhances both customer and brand loyalty.

  • Social responsibility

A growing number of consumers want businesses to be active in their communities. If a company serves as a driver of change, customer loyalty benefits considerably.

  • Other drivers of customer loyalty

Marketing Land also listed Premium Loyalty Programs, Emotional Loyalty, AI, and Chatbots as drivers of customer loyalty.

AI stands for artificial intelligence. In other words, software technologies that make computers, robots, and other hi-tech devices think and behave like humans. A chatbot is a software program that simulates conversation with human users. Chatbots are common on the Internet.

2 Videos

These two interesting video presentations, from our sister YouTube channel – Marketing Business Network, explain what ‘Customer Loyalty’ and ‘Retention’ are using simple, straightforward, and easy-to-understand language and examples.

  • What is Customer Loyalty?

  • What is Retention?