What does it mean to actually have customers and clients who are loyal to your brand?
While there are many triggers to making a customer loyal to your brand – quality, service, personality – it’s also important to understand that brand loyalty is a spectrum. Some customers may already be shopping around, while others would need an incredible incentive to switch.
In a competitive market, the value that you provide might be similar to that of your competitors. This is where having the trust and preference of your customers is most valuable.
Brand Loyalty in Action
There’s no better place to watch brand loyalty in action than at the grocery store.
Most grocery stores have entire aisles filled with competitors of a single product type – tomato sauce, coffee, cereal. As groceries are a consumable product, brands at the store rely on a combination of promotions and brand loyalty to keep their sales up, while their competitors are actively trying to steal their buying power away. What’s motivating the customer is generally a tension between perceived value and quality. Basically, they want the best product at a great price. Sometimes value is the top priority. Other times, quality (real or perceived) will win out.
How many brands of potato chips have you bought over the years?
If you’re anything like me, you probably have a few brands that you really enjoy (quality) but you make a big part of your buying decision based on the deal of the week (price).
See, the brands I think are the best quality are around $4-5 per bag. While I like the product, I don’t believe there is enough value to justify that price. The store brand chips are usually $1-2, and sometimes I’ll buy those. Competitors usually in the $4-5 range sometimes go on sale, and depending on whether I think the quality of the product is that much better than the store brand, sometimes I’ll buy those in the $2-3 range.
What’s really interesting though, is paying attention to your tipping point – when the brand you prefer is priced in a way that coincides with your perceived value of it.
At what price do you decide to buy your preferred brand, even when it’s more than the competitors? If you’re extremely loyal to a single brand, you’ll not only buy it at the higher price point – you’ll recommend it to the other people standing in the aisle with you. If your loyalty is not very strong, your preferred brand will need to be the same price as the cheapest alternative before you pick it up off the shelf – even if you think the product quality is better.
The truth is, we know the higher price point is not always aligned with a higher quality.
A big part of that $5 price tag is the cost of advertising, packaging, and sometimes even literally paying for (shelf) positioning in the marketplace. There is probably a little wiggle room for higher quality ingredients, but not always. More often, that price tag is based on the fact that by positioning themselves as a higher quality based on their price (perceived quality) they are able to sell fewer bags and still make more money.
Values vs. Value
What does this mean for your business? If your market is competitive – if there is another alternative for your customers or clients – you need to pay attention to communicating your values as much as your value.
What do you stand for? What is the story behind why you do what you do? Brand loyalty is all about how well a customer knows you, how much they like or identify with you, and how much they trust you to provide them with great quality product or service at a price that is aligned with the value you provide.
A big part of our buying decisions actually come down to the script we tell ourselves. When your customer is making a decision, they are likely running the script of “I’m the type of person who…”
Don’t overlook this. Understanding the values of your target market and catering to those values is one of the most fundamental pieces to the marketing puzzle. It’s one of the key ways that you can differentiate yourself from your competitors.