20 May 3 reasons to seek brand loyalty
The recent battle between M&S’s Colin caterpillar cake, and its Aldi rival, Cuthbert, spurred many people to show support for their brand. Twitter was set alight and both cakes sold like…well…hot cakes.
We all know about brand loyalty. Most of us are loyal to brands in some way – perhaps not to the same extent as the #FreeCuthbert campaign, but maybe on a smaller scale.
Do you have a favourite coffee shop? Have you ever not bought a newspaper because the one you prefer wasn’t there? Are there some companies who you forgive more easily for occasional slips in service?
Behind the emotions of brand loyalty, there are some very strong business reasons to seek it among your customer base.
1. Loyal customers are unwilling to switch
Buyers who are loyal have made an emotional connection with that brand, often because its traits resonate with their own personalities. Their purchase decision has become less objective.
If you have a loyal customer base your customers will probably be happy to pay a bit more to stick with you, so your competitors will be less likely to start a price war. Plus, it creates a barrier to new entrants in your market.
2. You have more opportunities to up-sell and cross-sell
When you have loyal customers they will be much more open to buying other products or services from you, or upgrading their purchase.
For example, it’s easier for a beauty salon to sell a manicure to one of their regular pedicure clients, than to someone who’s never visited the salon before.
3. You will make more money
We’ve saved the best reason for last: If you can increase brand loyalty, you will increase the lifetime value of each customer you have.
Let’s say each customer is worth £1,000 a year to you. And each one has a lifespan of 4 years. This gives you a Customer Lifetime Value (CLV) of £4,000.
Now, what if we improve brand loyalty so that each customer sticks around for 5 years instead? Suddenly each customer’s CLV is £5,000.
And brand loyalty means you might be able to increase your prices, so that CLV could go up by 10% to £5,500.
Plus, because customer retention is 20% improved, you need to acquire 20% fewer customers each year to maintain your status quo.
How to achieve brand loyalty
If your cogs are already whirring working out how much extra profit this could make for you, and you want to know how to build it into your business, head over to our blog for a longer read about brand loyalty and tips on how businesses of any size can get more of it: https://www.tomango.co.uk/blog/what-is-brand-loyalty/
(Image courtesy of www.marksandspencer.com)