Does brand loyalty mean what you think it means? Do your customers agree?

Achieving brand loyalty is a high-value objective for growth-focused businesses. Loyal customers can keep your customer acquisition and revenue pipelines flowing even during turbulent times. But what does it mean to be a loyal customer? Do businesses and customers agree about what it means to be loyal? What’s the ROI of brand loyalty? We looked at the latest data from X reports to find answers and discover what brand loyalty means to your customers today.

Key takeaways:

• Brand loyalty is a priority investment for businesses seeking to withstand economic pressures and foster long-term growth. 
• Brand loyalty means more than buying from the same company all or most of the time. The type and depth of loyalty customers feel toward your brand is variable and so is its ROI.
• Performance metrics may be key indicators of brand loyalty but they don’t tell the full story. Businesses need to take a holistic view of loyalty to understand and maximize its value. 
• Customers’ first purchase and first post-purchase experiences are a pivotal touchpoint. First to second purchase conversions are a leading indicator of customer lifetime value and loyalty. 
• Loyalty programs are a vehicle to build loyalty but loyalty program participation isn’t proof of brand loyalty. 
• Many executives responsible for shepherding their company’s loyalty-building efforts don’t understand how today’s consumers perceive (and act on) loyalty. 

Did you have to learn Newton’s Laws of Motion when you were in school? I’ll admit, I don’t remember them all. The first one sticks with me, though. A body at rest will remain at rest unless an outside force acts on it. This principle further acknowledges that it takes a bit of push to get a body at rest to start moving. 

If you want to avoid having to repeat this extra effort, you need to keep the body moving. Don’t let it return to rest. 

Okay, okay. I’m no physics teacher. But you get the point, right? 

If you don’t want to have to do all the hard work over again, don’t lose your momentum.  

As a marketer, you can apply this principle to your revenue pipeline. 

Getting customers into your pipeline and achieving that first critical action takes a lot of effort. Good customer retention practices that reduce churn help you maximize the benefits of that effort. 

Really good customer retention practices can maximize your benefits by delivering customer or brand loyalty that can not only boost sales to the individual but generate new leads through their advocacy. 

Brand loyalty isn’t a perpetual motion machine. But it’s sure nice to have. 

How nice! 

The value of customer or brand loyalty to your business will depend on several factors, including how much it costs to build and maintain that loyalty. 

What kind of returns you reap from your efforts also depends on the type of loyalty you’ve built and how your customers behave toward the brands they favor. Loyalty doesn’t always mean the customer buys more from your brand, and buying from your brand isn’t the only benefit you gain from customer loyalty. 

Oof, was that too cryptic? 

I put together some definitions and data in this article to clear things up. 

Want to jump ahead? What is brand loyalty? Have our ideas of loyalty changed? Transactional vs emotional loyalty The intention-action gap: Consumers’ loyalties don’t always match their actions How do brands define and measure customer loyalty? How marketers measure customer value and loyalty Are marketers missing part of the picture when measuring loyalty? Using repeat purchases as a loyalty indicator Are loyalty and rewards program participation rates a good measure of brand loyalty? What consumers think it means to be brand loyal Do companies and consumers agree about what it means to be loyal? Reports indicate that businesses are investing in customer loyalty and retention for survival and growth What’s the ROI of customer loyalty?

What is brand loyalty? Have our ideas of loyalty changed? 

Reports, loyalty metrics, and marketing professionals often use customer and brand loyalty interchangeably. However, these terms may also distinguish between different degrees of loyalty or the types of bonds upon which that loyalty is built.

Traditionally, businesses have defined brand loyalty as the extent to which customers continue buying the same products or from the same companies and choose those products or brands over competitors. 

Many consumers name these same attributes when asked to define what it means to be loyal (more on that later). 

However, repeat purchases and selection preferences doesn’t mean your customers are brand loyal or even consider themselves loyal at all. 

The State of Brand Loyalty in the U.S. in 2023 report reveals that 70% of shoppers surveyed in Q4 2022 don’t feel loyal to a company solely because they buy from it frequently.  

Not all bonds are built from the same materials and neither is all consumer loyalty. Marketers who want to nurture lasting customer relationships have to look beyond the surface to uncover the story their data tells. 

A consumer who purchases from a brand because of inertia or an opposing force, such as price or switching costs, isn’t deeply committed to that brand. They just haven’t found a better alternative. 

That doesn’t mean purchase frequency and favoritism never indicate loyalty, though. 

Purchase and preference behaviors signal that customers on the loyalty spectrum are moving toward brand loyalty (or at least not away from it).

These movements are where you’ll get your insights about the strength of your brand loyalty. 

Just a small percentage of customers will remain loyal to a single brand, regardless of changes in the world around them. A similarly small cohort just doesn’t do brand loyalty at all. 

Now, here’s another marketing lesson we can take from science: The more and stronger the bonds between your brand and your customers, the longer you can expect them to withstand breaking. 

The distinctive, tangible characteristics of your product or service can create strong bonds. But loyalty to even the best products or services can be strengthened by adding emotional ties.

Transactional vs emotional loyalty

Many companies learned hard lessons about the fleeting nature of loyalty when supply chain issues hampered product availability during the pandemic. 

Businesses that relied on transactional or tangible factors to ensure loyalty were hit hardest. 

Transactional loyalty is driven by need or practical considerations such as convenience, availability, or price. A change in circumstances can cause this loyalty to disappear quickly. 

As other intangible factors begin to affect their decision to choose to purchase from your business, emotional loyalty to your brand (brand loyalty) develops. 

Emotional loyalty is built on psychological connections such as shared values, a feeling of community, or the positive emotions that purchasing a particular product or from a specific brand elicits and tends to have more staying power. 

When we did the research for our article about marketing to conscious consumers, we found that 44% of global consumers were purpose-driven. These consumers actively choose to purchase from (and are loyal to) brands that share their values. Their attachment to specific companies is emotional. 

Another 37% of “value-driven” consumers will choose brands that deliver transactional benefits such as convenience and savings. 

Bonding at a deeper, relational level doesn’t guarantee that your customers’ loyalty won’t fade if not tended to, however. 

Changes in how your customers perceive your brand or external factors can shift their affections, sometimes rapidly. 

A PR crisis or your brand’s failure to keep up with changes in your audience’s attitudes or beliefs can trigger changes in sentiment and shopping behaviors. 

The intention-action gap: Consumers’ loyalties don’t always match their actions

Sometimes, what your consumers feel about your brand isn’t reflected in their behaviors. You may have their loyalty to your brand, but they aren’t loyal customers. 

An intention-action gap can happen when economic insecurity, cost-of-living increases, or immediate demands force consumers to make tough choices between what they want and what they need. 

The 2023 back-to-school shopping season was a loyalty win for some brands but a loss for others. Consumers were willing to cut spending in some areas to invest in items they believed were essential for their children’s success at school. 

In other cases, a person may be a fierce brand advocate but only as a fan, not a purchaser. 

The reverse of this gap is a brand insistence when your customers accept no substitutions. These customers will pay for what it costs and wait however long it takes to get your products. 

However, achieving BAE status is rare for brands. 

Loyalty does not mean exclusivity for most of your customers. 

According to The 2023 Global Consumer Survey Report, 74% of consumers are loyal to five or more brands (another 12% are loyal to between one and five brands).

Is investing in loyalty-building worth it for your brand? 

Before you can answer that question, you’ll need to define what it means to your organization and customers. 

Here is how other businesses and consumers are looking at brand loyalty. 

How do brands define and measure customer loyalty?

Do your customers like and interact with your brand? 

Are you seeing revenue and growth through interactions with existing customers? 

Metrics that answer these questions are your loyalty indicators. Use a combination of performance and perception data to evaluate your status with customers. 

Net Promoter Score (NPS), sentiment and social mood analysis, customer satisfaction scores, non-transactional engagement rates, and other voice of consumer (VOC) insights tell you how your customers feel about your brand and what they are telling others about your business. 

Performance metrics, such as repeat purchases, a.k.a. repurchase rates, returning customer rates, customer lifetime value, referral rates, and customer churn or attrition rates, tell you if your customers are transactionally loyal and like your brand enough to recommend it to others. 

Using both lifetime and time-limited measurements and monitoring your results by segment can give you a more detailed view of just where you stand. 

Analyzing these different information sets together can also help you distinguish degrees of loyalty and identify your customer retention weaknesses and opportunities. 

But I promised numbers. So here they are. 

How marketers measure customer value and loyalty 

Transactional data demonstrating low churn and high returns is among the top information sources ecommerce executives and digital marketers turn to when evaluating customer loyalty, according to the results of the 2023 Retailer Data Collection and Satisfaction Survey. 

Asked what information they use to measure customer value

• 72% of executives look at historical purchases
• 69% track purchase frequency
• 64% track customer lifetime value as a loyalty signal
• 58% monitor repeat buyer rates and  
• 54% examine shopper lifecycle stages. 

Similar metrics emerged among the top KPIs for loyalty programs. 

Repeat purchases ranked in third place behind redemption and adoption rates as a measure of loyalty program effectiveness, according to a September 2022 survey of marketers and loyalty program professionals from around the world. ROI, incremental sales, and customer lifetime value were also top performance metrics, according to survey respondents. 

As the above chart illustrates, revenue-related metrics were tops among loyalty program monitors. 

Your loyalty programs can do more than generate sales from participants. Just under two-thirds of marketers are keeping an eye on their referral rates as a sign of their loyalty program’s strength. 

Marketers use loyalty-related metrics to assess the success of their general marketing campaign performances, too. Customer lifetime value ranked in third place behind customer acquisition costs and social engagement as a campaign KPI in the Reuters Events: State of Marketing Survey 2023. 

Cost per impression or view, customer retention rates (another loyalty metric), and cost per click rounded out marketers’ lists. 

Are marketers missing part of the picture when measuring loyalty? 

These and other survey results show that marketers were heavily focused on demonstrating ROI and revenue generation in 2023, even when evaluating the success of loyalty campaigns.

Few marketers listed sentiment metrics among their top KPIs.

But, as Peter Drucker famously said, “if you can’t measure it, you can’t manage it.” 

Customer loyalty, built through surprise and delight at every touchpoint, is the path to survival for businesses of all types and sizes. 

Brands need to assess loyalty in terms of sales and sentiment to fully understand where they stand with consumers. 

Combining sentiment and transactional data will give you a fuller picture of where you stand with your subscribers and how to increase their loyalty to your brand. 

Besides, while they are important indicators, transactional metrics aren’t always a direct measure of someone’s commitment to your brand. 

Using repeat purchases as a loyalty indicator 

Even though not every repeat purchaser acts out of loyalty, repeat purchase rates are an important metric for understanding the effectiveness of your brand’s loyalty efforts. 

Getting retail and ecommerce consumers from the first purchase to the second is particularly critical for building long-term relationships. 

The 2022 Retail Ecommerce Benchmark Report found a strong correlation between second purchases and loyalty.

Across every vertical presented in the report, the likelihood of a customer making a repeat purchase is at its lowest following their first purchase. Once the second purchase milestone is achieved, the customer becomes yours to lose. Each subsequent purchase increases the likelihood that your customer will remain a customer. 

According to the report, repeat buyer conversion rates in 2022 were highest among brands in the beauty and cosmetics category at 8.52%. Apparel had repeat buyer conversion rates of 7.33%. 

Gifts and floral buyers were the least likely to return, with a conversion rate of just 1.59%. 

If your brand sells gift and special occasion items, you can boost your repeat purchase rate by adding purchase reminder emails to your automated email campaign collection.

I’m grateful to the brand that sends me a reminder when it’s time to order flowers for a certain relative’s birthday each year. ☺️

Creating email flows that anticipate your subscribers’ needs boosts sales and loyalty. 

So does ensuring that your customers benefit from their purchases after the sale. 

👀 Successful onboarding and adoption are essential for building loyalty among purchasers of digital products and services, such as consumer and business software. We put together a complete guide to creating onboarding emails for products or services to help you nail this step. 

Are loyalty and rewards program participation rates a good measure of brand loyalty?

Loyalty programs are important for customer acquisition, retention, and revenue generation for many businesses. Your loyalty program can be a tool to capture market share during highly competitive shopping seasons, move inventory, gather valuable zero- and first-party data, and gain referrals.

Loyalty programs are also an expected part of the brand experience for many verticals, such as travel and leisure, hospitality, and finance. 

What does the data say about the pros of loyalty programs? 

• 81% of consumers are more likely to do business with a brand that has a good loyalty program, and 76% are more likely to recommend brands with good programs, according to The Loyalty Report published by The Bond. 
• 80% of companies that measured their loyalty program’s ROI saw positive benefits, with the average being gains of 4.9x over expenses, the Global Customer Loyalty Report 2023 reveals.
• 70% of US consumers surveyed for the US Consumer Trends Index 2023 said a brand’s loyalty program is important or critically important to their choice, and 66% of global consumers feel the same. 

One out of five US consumers said they had switched brands because of a loyalty program. 

However, participation isn’t always the best indicator of brand loyalty. 

A study of six retail brands conducted by Morning Consult casts doubt on the value of loyalty programs as a loyalty driver. 

Morning Consult’s review found that loyalty program participation rates among customers who identified themselves as loyal topped out at 64% and hit a low of 23% for some of the brands. 

So if your goal is to confirm consumers’ commitment to your brand, participation in your formal loyalty or rewards program might not be enough information.

Moving away from rewards programs that are purely transactional to incorporate more exclusives and emotional elements can increase the relationship-building returns of your loyalty program and more closely align participation with sentiment. 

Quantified performance metrics and sentiment analysis using structured and unstructured data can help you understand how consumers really feel about your brand. 

But what do they think it means to be loyal? 

Consumer researchers asked people that very question. 

What consumers think it means to be brand loyal

Understanding how consumers view loyalty prepares you to project the value of nurturing loyalty for your brand. What can you expect from consumers in return for your efforts? Their ideas of what it means to be loyal can answer that question. 

Consumers view loyalty from transactional and personal perspectives. Usually, but not always, their ideas of what it means to be loyal match their loyalty behaviors. 

Take a look at these numbers to see what I mean. ⬇️

Retail data science company 84.51° surveyed consumers about CPG brand and retailer loyalty for its report, The loyalty shift decoded: Key insights for winning shopper devotion in uncertain times, and found that loyalty doesn’t mean there’s no room for competition for most shoppers. 

More than three-quarters of respondents said loyalty meant purchasing from a brand or retailer most of the time or including it among their top choices for making purchases. 

Consumers said they signaled loyalty to a brand by 

• Purchasing from the brand most often (27%)
• Preferring the brand but still willing to try others (26%) 
• Including the brand on their list of favorites (24%)
• Wanting to buy the brand more than others (17%) 

Just one in twenty survey respondents reported being brand-insistent, purchasing exclusively from the CPG brands or retailers they were loyal to.

Consumers surveyed for Yotpo’s The State of Customer Loyalty and Retention 2023 report were  allowed to pick more than one answer to the question, “What does being “loyal” to a brand mean to you?”

In response, they told the ecommerce retention marketing platform that being loyal meant they bought from the brand and considered it one of their favorites. 

Here’s the complete list of results:

• 65.6% of people said being brand loyal meant they tend to buy from the same brand
• 48.5% consider themselves loyal if the brand is one of their favorites
• 40.9% believe loyalty means they’ll recommend the brand to others
• 35.2% put a brand in the loyal category if they’ll buy it despite a higher price
• 23.4% say engaging with a brand’s content is a sign of their devotion
• 22.3% would call a brand a favorite if they looked forward to its product launches
• 22.1% said that purchasing directly from a brand’s website was a loyalty indicator and 
• 18.3% said that they were loyal to a brand if they subscribed to the brand’s products or would like to become a subscriber. 

Asked what they would do for the brands they were loyal to, survey respondents said they’d join its loyalty program and go to the brand’s website to shop. 

Here’s the breakdown of actions loyal customers say they’d take: 

• 43.5% said they would sign up for the brand’s loyalty program
• 37.9% would buy directly from the brand’s website instead of Amazon
• 37.9% would refer the brand to others
• 36.1% of this survey group would wait for their favorite brand to be back in stock instead of shopping elsewhere
• 35.6% were frequent purchasers of their favorite brands
• 26% were willing to pay more for the brands they were loyal to
• 21.8% said they’d try new products the brand released 
• 20.8% would sign up for the brand’s texts
• 19% would sign up for the brand’s purchase subscription program and
• 16.5% would engage with the brand on social media or in a branded community.  

What do these stats tell us about the value of customer loyalty? 

Loyal customers are more than just repeat purchasers and brand advocates. They are also more likely to engage with your brand, spend more throughout their customer lifetimes, and give you a break with regard to price increases and supply chain snafus. 

Your loyal customers are also a growth engine for your brand; two out of five loyal customers will refer your brand to others! 

Do companies and consumers agree about what it means to be loyal? 

If after reading the previous section, you realized that your idea of loyalty doesn’t align with consumers’ ideas or behaviors, you aren’t alone. 

In 2023, PwC asked more than 400 executives about their customer loyalty and retention strategies. The firm then compared that data to the results of its 2022 survey of more than 4,000 US consumers to see if the two groups shared similar ideas about the meaning and methods of nurturing loyalty. 

As part of the 2023 survey, executives were asked to choose all the applicable actions a loyal customer would take (customers who are loyal). Consumers in the 2022 survey were asked to select all of the ways in which they showed loyalty to a company. PwC published a comparison of the responses in its Customer Loyalty Executive Survey 2023.

Here’s how the two groups’ responses compare with those from the other loyalty reports I’ve mentioned: 

🗪 Both consumers and executives recommending the brand to family or friends first rank as a sign of loyalty, with 52% of each group selecting this option. 

In comparison, 40.9% of consumers in the Yotpo survey chose referrals as a loyalty indicator, and 37.9% chose it as a loyalty action. 

🗪 Forty-seven percent of executives and 48% of consumers agree that participation in a loyalty program is a sign of brand loyalty, making this the third most selected option for both groups. 

Loyalty program membership was the top loyalty action in the Yotpo survey, with 43.5% of participants’ votes. 

The remaining data from the PwC comparison reveals the fissure from the perspectives of executives and consumers. 
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🗪 Fifty percent of business leaders believe subscribing to a brand’s products or services is a loyalty indicator. This is over half the number of consumers who say they subscribe to show loyalty (22%). 

Yotpo’s survey respondents were also lukewarm toward subscription programs. Just 19% would sign up for their favorite brands’ programs. 

🗪 Privacy might be more precious than businesses believe. Two out of five (44%) executives believe loyal customers will share their personal information with a brand. But just 19% of consumers say they share personal information with brands as a show of their loyalty.

🗪 Executives also placed more significance on feedback as a sign of loyalty than consumers. Forty-three percent of corporate respondents said loyal customers provided feedback, compared to 25% of consumers who said they left feedback for their favorite brands. 

🗪 Fifty-one percent of consumers said they “mostly buy from or use that brand, but will use other brands”” if they are loyal to it. Forty-one percent of executives had this behavior on their list of loyalty indicators. 

In the other reports I’ve mentioned, around two-thirds of those surveyed purchase “most often” or “mostly, but” from their favored brands. 

🗪 Subscribing to the brand’s marketing communications was an act of loyalty in the minds of 41% of executives. Just 15% of consumers surveyed said this was one of their brand love languages. Ouch! 

👀 It doesn’t have to be this way. Check out our guide to successful signup forms to convert more of your web visitors and customers into subscribers. Then check out our collection of email best practices to deliver content your audience will want to receive. 

🗪 Executives were more than three times as likely as consumers to believe that social media interaction signified loyalty (38% vs 12%). 

The consumers responding to the Yotpo survey were slightly more willing to receive marketing communications and interact via social media than the PwC consumers. 

🗪 Exclusivity caught the eye of 36% of executives on the list of loyalty behaviors. An encouraging 16% of consumers said they only buy or use their favorite brands. 

This brand insistence level is 11 points higher than the 84.51° survey results, which may have been diluted by respondents’ inability to select more than one answer. 

Also, 36.1% of consumers in the Yotpo survey said they would wait for their faves to be back in stock rather than stray to another brand. I’m not sure if this qualifies as exclusive or just very patient. 🤷

🗪 Finally, 20% of executives believed that price was no object for loyal consumers, while 13% of consumers concurred. 

Other reports put the percentage of consumers willing to pay more for their favorite brands as high as 72%. 

The variance in results may be because of differences in how the question was phrased and presented. In the PwC, price was one of several options from which consumers had to choose, rather than a standalone “does it matter” question. 

Reports indicate that businesses are investing in customer loyalty and retention for survival and growth 

Purposefully investing in positive customer experiences at every touchpoint is how modern businesses are meeting rising customer expectations and surviving economic, social, and geopolitical instability.

A majority of businesses planned to invest in growing customer loyalty and operating loyalty programs to fuel growth and retain customers as economic pressures threatened to erode wallet share in 2023 and beyond. 

• 63% of professionals responding to the PwC Customer Loyalty Executive Survey 2023 said they had increased their loyalty program’s budget during the most recent planning cycle. 

These organizations spent an average of 5% of company revenue on loyalty efforts, which included formal loyalty programs, customer service activities, personalized customer experiences, such as dynamic product recommendations, customized drip campaigns or tailored cross-channel journeys, and other loyalty-building activities. 

• 67.7% of businesses contributing to Antavo’s Global Customer Loyalty Report 2023 said they plan to invest in customer retention to help them survive the current economic conditions. 

• CMOs, juggling shifting consumer behaviors, shrinking budgets, and the need to generate revenue, planned to dedicate 21.3% of their total budgets to loyalty and advocacy, according to Gartner’s The State of Budget and Strategy in 2023 report. 

What’s the ROI of customer loyalty? 

Is building brand loyalty worth the investment for your company? For most companies, the answer is yes. 

So far, in this article, we’ve discovered that:

• Nine out of ten consumers are loyal to at least one brand
• Three out of four consumers purchase most often from a single brand or a select group of favorite brands
• More than one-third of loyal customers will purchase from a brand’s website (leading to third-party cost savings)
• Up to 52% of consumers will recommend their favorite brands to others
• Loyal consumers may also act on their affections by engaging with a brand’s social and marketing content
• These customers may also pay more for their favorite brands’ products, wait for merchandise from these companies to be back in stock (instead of switching allegiances), and try new products sold by their preferred brands and
• Eight out of ten companies tracking their loyalty program performance see positive ROI. 

Add to this list the following data points:

• 72% of US consumers are willing to pay more to purchase from their preferred brands instead of buying an alternative, according to the US Consumer Trends Index 2023. 
• 58% of all European shoppers surveyed and 65% of Gen Z shoppers will pay more to buy from their preferred brands versus non-preferred brands, according to the 2023 European Brand Loyalty Report, which surveyed more than 7,000 people in 7 European countries. 

• 81% of loyalty and rewards program members are willing to share their data with brands in exchange for personalized recommendations, compared to 63% of all US adults, according to Morning Consult’s research about retail loyalty programs. 
• 60% of consumers say they have chosen one brand over another because they believe they’ll have a better experience, and two-thirds of “consumers who feel that a company cares about their emotional state” are more likely to buy from the brand again, notes the Zendesk CX Trends 2023 report. 

When your brand’s loyalty initiatives are successful, you experience forward momentum. Increased spending by loyal customers feeds your organization’s revenuee for growth. Lowered customer acquisition costs free budget to fuel product innovations and expansion into new markets. 

As your customer relationships deepen, you also gain critical data that you can use to enhance your lifecycle marketing programs and automations. 

But there are some exceptions. 

Every organization must assess the costs of building and maintaining brand loyalty against the rewards. 

When you do the math, you may find that it’s more beneficial to build loyalty among some customers than others. Or it may turn out that your product price or the length of your buying cycle makes customer acquisition a higher priority when distributing your marketing resources. 

For instance, if the majority of your customers are highly price-sensitive, ensuring that your organization can maintain competitively low prices may be more important than spending huge amounts on experiential events to win your customers’ affection. 

The real estate agent who helped me with my last home purchase sends me an automated email every quarter to stay in touch. They don’t invest the majority of their time and effort trying to sell me another house because most people don’t move that often.

Keep the 80:20 rule in mind when deciding whether to pursue loyalty as a key business objective. 

Consumer behavior has been especially unpredictable in 2023, and we can expect continued instability in 2024. Watch your metrics and listen to your customers to identify what it will take to win and keep their loyalty. 

Be on the lookout for more articles on this topic, as the Ongage Team isn’t done digging into the data and trawling our inboxes for the best customer loyalty strategies and tactics. 

In the meantime, get a jump on building stronger bonds with your customers with the best practices in these guides to attracting and keeping customers:

🚀 Attraction Marketing: How Brands Draw Consumers to Them With Irresistible Engagement Tactics

🚀 Post-purchase Email Strategies and Examples to Build Long-Lasting, Revenue-Boosting Customer Relationships