5 Benefits of Brand Loyalty in Modern Retail Marketing

Years ago, brand loyalty was built on the quality of goods or services. Retailers could focus their attention inward and rely almost exclusively on offering the “best of the best” — or “the best of the best for the price.” Changes in consumer preferences have made this model nearly obsolete. Of course, quality and price are still important, but the majority of consumers (88 percent, in fact) really want brands to meet their expectations in new ways.

Although those expectations might range, they’re often a mix of good customer service and personalized, relevant consumer experiences. People want to feel as though brands care for and understand them as individuals.

Just consider the popularity of Netflix, for example. With the sheer amount of content available, choice paralysis would be a logical outcome for subscribers, prompting them to abandon the platform. But that’s not usually the case. The company’s personalized recommendations keep users engaged. When streaming services released original content in 2021, Netflix garnered 35 percent of audience engagement, while Disney+ was at 29 percent, and HBO Max sat at 22 percent.

Unsurprisingly, personalization in digital marketing is becoming one of the top drivers of consumer retention and brand loyalty. Consumers want to have relationships with the retailers they buy from; they want to connect, making brand loyalty contingent on your ability to build and maintain relationships with consumers on a one-to-one level.

You’ll find yourself ahead of the curve if you can accomplish this, as almost half of consumers report that brands fail to meet their expectations for good experiences.

Personalization in Digital Marketing Creates Relevant Consumer Experiences and Brand Loyalty

With online shopping on the rise, personalization in digital marketing has become a priority for all retail brands. If you’re unable to offer a positive, individualized experience, consumers are quick to find alternatives — at least 65 percent of consumers have reported doing so. More importantly, 78 percent of consumers have actually abandoned purchases due to poor experiences. With the amount of consumer data available, there’s no excuse for not giving consumers what they want.

That’s why predictive personalization is becoming the norm in retail marketing. Data allows you to predict changes in consumer behavior and then tailor your messaging to reflect consumers’ interests. For example, you can offer personalized product recommendations based on weather, past purchases, real-time web interactions, location, etc. Data can also help you plot out the far-from-linear consumer journey so that you can deliver the right messages in the right channels at the right times. For example, you can send an email alert when an item that a consumer previously had in their cart but didn’t buy is back in stock.

When you offer relevant consumer experiences and provide highly valuable content, you increase the chances of a purchase. Think about it: you’re giving consumers the information they need to make informed decisions. Even if those decisions don’t lead to purchases initially, you’re establishing a sense of trust with consumers. Trust will bring consumers back and eventually lead to a level of loyalty that will drive sales.

The ROI of Creating Brand Loyalty

Though it can feel as if consumer expectations are a moving target, meeting consumers where they are and creating consumer experiences that are relevant can serve as the foundation for brand loyalty. Once that loyalty is established, it’s all about upkeep, which can impact your bottom line. Here are five benefits of brand loyalty in retail marketing:

1. It builds consumer retention.

In the eyes of consumers, marketing personalization is generally seen as a better value transaction. Even in a competitive marketplace, relevant consumer experiences can keep people coming back to your brand. In fact, 93 percent of consumers are more likely to return for additional purchases when brands provide excellent service.

2. It reduces customer acquisition costs.

It’s no secret that acquiring new customers is more expensive than retaining existing ones — five times more, to be exact. One of the main benefits of brand loyalty is that it reduces acquisition costs. Loyal customers are worth 10 times more than the value of their first purchase, according to Invesp. And with 93 percent of consumers trusting recommendations from family and friends, your existing customers could help bring in new business.

3. It boosts sales.

There’s a direct relationship between customer loyalty and profitability. For one, customer lifetime value grows with each passing year. Between the 31st and 36th month of using a brand, spending increases by an average of 67 percent. Invesp estimates that increasing customer loyalty by just 5 percent can lead to profit gains anywhere from 25 percent to 100 percent.

4. It improves marketing ROI.

In the early years of business, the focus is on customer acquisition. As time goes on, however, your marketing initiatives should shift to increasing sales with current customers to drive return on investment. If you focus your marketing on loyal customers, you can expect a success rate of 60 percent to 70 percent — a vast improvement from the 5 percent to 20 percent rate from new buyers.

5. It nurtures brand engagement.

Brand loyalty and engagement are much like the chicken or the egg dilemma. Which came first? Some might argue engagement leads to loyalty. But it’s hard to deny that loyal customers are far more engaged in what’s going on with their favorite brands and 50 percent more likely to try new products.

Brand loyalty is synonymous with relevancy and credibility. If you’re intentionally using data to deliver meaningful and relevant experiences, you’ll reap the benefits of brand loyalty and remain relevant. It’s a win-win no matter how you cut it.

Diane Keng is the CEO and co-founder of Breinify, an AI and predictive personalization engine that helps brands curate dynamic, meaningful experiences for their customers at scale.