Posted on : 2023-04-16 21:54:03
Article : Good morning, Monday management solution for the TASK 237 - Brand loyalty is said to have started in the 18th century when an American merchant would hand out copper coins to repeat customers.
In continuation to our TASK note on Brand loyalty we extend to express that Brand loyalty is deeply tied to psychology disposition, as a consumer may intentionally forego a logical choice in favour of supporting their preferred brand. One might ask if the connection between profitability and customer metrics like brand loyalty is so well-established why do businesses often neglect their most valuable customers? So Brand loyalty is perception-based (image and experience); customer loyalty is money-based (prices and discounts). Brand-loyal customers believe that a certain brand represents higher quality and better service than any competitor and price does not matter. Customer loyalty requires offering low prices and regular discounts to maintain best-deal-on-the-market status.
Current adherents of the “customer capitalism” approach argue that companies that put customers not shareholders first, can create even greater value for shareholders. For example, in 2019, the New York Times reported that CEOs from the Business Roundtable including power players like Tim Cook of Apple, Jeff Bezos of Amazon, Mary Barra of General Motors, Robert F. Smith of Vista Equity Partners, and Larry Fink of BlackRock, broke with decades of corporate orthodoxy by issuing a statement that “the purpose of a corporation” is no longer to advance only the interests of shareholders. Instead, companies must now deliver value on several new fronts: both directly to customers and indirectly by supporting customer values on issues like protecting the environment and dealing ethically with suppliers.
The primary reason that brand loyalty is important is that it is a major driver of profitability: 65% of revenue in most companies comes from repeat business with existing clients and existing customers loyal to brands purchase 90% more frequently than new customers.
Here are two examples of companies who have made highly profitable investments in brand loyalty by prioritizing quality and customer service. Not only can these brand-loyalty leaders charge more for their products, but they also save on marketing costs, social media and email marketing to existing customers is a fraction of the cost of attracting new customers.
Apple: In 2021, Apple had an outstanding brand loyalty score of 92%, the tech giant retained a higher percentage of existing clients than any other company in any industry. Apple’s status as the world’s most valuable brand is based not only on revolutionary technology and state-of-the-art design but also on unparalleled brand power and stellar customer service.
Anyone who has ever seen a line of customers wrapping around an Apple store in anticipation of the latest release understands that brand power impacts the true value of a product as much as—or more than any other driver of market performance. As Apple rolls out fee-based services, including Apple TV and gaming, the company is likely to add to even more share of wallet (SOW)—the dollar amount a customer spends on one company's brand at the expense of competitors.
Nike: One of the most important reasons that Nike is the most valuable sports brand in the world is an industry-leading membership program that delivers four drivers of brand loyalty:
• exclusivity (access to exclusive perks: tickets and product launches)
• community (free workout classes, training support);
• personalization (birthday and anniversary gifts, personalized product recommendations)
• omnichannel experience (in-store, on-site, mobile app)
End point - Brand loyalty is the marketing success that occurs when companies are able to retain customers across product lines. By increasing retention, customer lifetime value, and customer satisfaction, companies are more likely to earn more money. Instead of investing capital in trying to land new clients, companies that have high brand loyalty have the advantage of deploying that capital to improve its product or enhance its customer service to repeat consumers.
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