What is customer loyalty?

Customer loyalty is the long-term commitment of customers to continually purchase from, and stay loyal to, a specific brand. It involves creating an emotional connection between customers and businesses by offering personalized experiences, excellent customer service, value, quality products and services, and rewards for customers in exchange for their loyalty.

For marketers, understanding customer loyalty helps in developing effective strategies that focus on retaining and maximizing value from existing customers rather than just focusing on acquiring new ones.

The potential ROI from marketing campaigns that focus on increasing customer loyalty and retention is typically higher than campaigns that focus solely on customer acquisition.

Why is customer loyalty important?

Customer loyalty is an invaluable pursuit for businesses of all sizes. It results in better relationships with customers and creates repeat buyers, which leads to increased customer lifetime value and a more stable source of revenue.

Additionally, loyal customers often serve as valuable ambassadors who can help promote the business via word of mouth and positive reviews on online platforms. This can go a long way in building trust with a brand and increasing sales.

Furthermore, having a loyal customer base allows businesses to make use of customer feedback to update products/services or enhance marketing strategies that attract more customers.

What are the five types of customer loyalty?

Incentivized loyalty

This type of loyalty comes from offering your customer cost-saving incentives like discounts and rewards.

  • Pros: Easiest type of loyalty to create and foster.
  • Cons: Typically fleeting, hurts margins.

Inherited loyalty

Inherited loyalty is based on tradition. In this instance, a customer will be loyal to a brand because of its long-standing and trusted heritage.

  • Pros: Less need for incentive.
  • Cons: Lasts only as long as your brand’s heritage is relevant.

Ethical loyalty

Some customers will offer their loyalty to a brand that aligns with their individual values. These shoppers stay loyal due to the brand’s stance on issues that have a strong social impact — i.e. sustainability, diversity, and equality.

  • Pros: Loyalty is earned immediately.
  • Cons: Tied to business decisions beyond the control of your marketing team.

Silent loyalty

Silent loyalty occurs when a customer regularly and consistently buys from a brand that they would not endorse publicly. The reasons why they remain silent are myriad and perhaps have nothing to do with your brand’s values.

  • Pros: Less susceptible to corporate, industry, or social changes.
  • Cons: No benefit from brand advocates, difficult to foster.

True loyalty

When you’ve earned a customer’s absolute love and devotion, their true loyalty, rest assured they’ll never switch from your brand. This type of loyalty is hard to foster, and without data it can be difficult to measure, but once you’ve built it, it can last a lifetime.

  • Pros: Longest lasting loyalty, leads to greatest revenue and best business outcome.
  • Cons: Requires the right technology to build the relationships.

What is a good example of customer loyalty?

A great example of customer loyalty can be seen with the popular coffee chain, Starbucks. Customers from all over the world remain loyal to Starbucks despite the fact that there are numerous competitors in the market. This is largely due to the quality of product and excellent service they offer.

Additionally, Starbucks has a highly successful rewards program which further encourages people to remain loyal to their brand. People also appreciate their efforts towards sustainability, which keeps them coming back for more.

Improving customer loyalty with Emarsys

Emarsys works with leading brands like PUMA, Pizza Hut, and Nike to increase acquisition, purchase frequency, average order value, and retention by unifying customer, sales, and product data to enable personalized omnichannel marketing campaigns and automations that drive customer loyalty and increase revenue.