When businesses deliver exceptional experiences, it’s a win-win for the consumer, the company, and the industry as a whole. It minimizes friction, maximizes engagement, and leaves people feeling heard and appreciated.
Give customers a positive experience, and they’ll also be more likely to spread the word to their friends, family, and social media followers. In this article, we’ll examine the link between customer experience and brand loyalty.
Impact of Customer Experience on Brand Loyalty
Today’s consumers are always seeking the next best thing, even if they are happy with their current product or service of choice. Delivering a powerful customer experience is paramount in keeping an audience’s attention and can give them the confidence they need to avert their eyes and stick with your company.
The best customer experience creates emotional connections, builds trust, anticipates needs, and improves retention—all of which play a critical role in driving brand loyalty.
A 3Pillar Global expert, Saimul Hasnain, notes, “It costs far more to attract a new customer than retain a current one. The key to sustainable growth is investing in turning customers into true fans, meaning that you need to develop a deep understanding of why customers feel a certain way and what they need when specific feelings arise.”
It’s worth noting that these changes should be monitored on an ongoing basis as consumer behaviors and attitudes are constantly evolving. What customers like today, they may not necessarily like tomorrow.
3Pillar Global’s Charles Zujkowski says that it works both ways. According to him, “Poor customer experience erodes brand loyalty, which has become a lot more volatile as customer expectations in all industries have been rising due to digital transformation.”
In other words, their needs are constantly changing and brands need to work harder to meet expectations and keep people coming back for more. Having the right data—ideally behavioral data from users—can help ensure we are current in the way we solve their problems.
What the Numbers Say
The findings from a recent KPMG survey demonstrate the impact of customer experience on brand loyalty, revealing that 74% of consumers claimed product quality inspired loyalty, 66% value for money, 65% product consistency (size, taste, quality, etc.), 56% customer service, 55% shopping experience (shopping, checkout, returns, etc.), 55% selection/product assortment, and 54% pricing.
While these factors were vital in earning and keeping the respondents’ loyalty to a brand, there’s also the challenge of unearthing the hidden factors that drive loyalty.
Companies are dealing with more data than they can handle, making it harder than ever to extract the insights they need to identify what drives loyalty and why.
However, there is light at the end of the tunnel as one report points out that tackling unstructured or unusable data with the right tools can help organizations identify emerging issues before they become more prevalent.
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Exceptional customer experience (CX) is possibly the most important competitive advantage for businesses today. This guide sets out the fundamental principles to help you prioritize, analyze, and improve your organization’s customer experience.
How to Build Brand Loyalty by Improving Customer Experience
A lot is riding on existing customer relationships that you can’t afford to lose. Research shows that acquiring a new customer (Cost Per Acquisition) can cost 5x more than retaining an existing one. But the reality is that neither group can be ignored. For a business to grow successfully, they need to strike a delicate balance between new and existing customers.
Whenever a customer has a positive experience with a brand, they begin to trust them more. This trust builds over time, culminating in more interactions and more purchases. And with the right strategies in place, your company has the opportunity to upsell current customers and also turn them into evangelists for your business.
Here are three tactics to consider for creating the types of superior customer experiences that can lead to brand loyalty:
Focus on Relationships
Brand loyalty begins when a business has forged a genuine relationship with its customers.
Marketers who factor in their audience’s wants, needs, and emotions in their decision-making will also be in a better position to retain those customers for the long haul. In fact, more than 70% of consumers say that they will only buy brands that are aligned with their values. Millennials and Gen Z tend to prefer brands that support causes they care about. Companies like Warby Parker, for example, have taken note of this. As one of the only carbon-neutral eyewear brands in the world, Warby Parker has distributed more than eight million pairs of glasses through their Buy a Pair, Give a Pair program.
Offering empathetic, proactive customer service is a surefire way to stay on your customers’ good side. You’ll also want to show them you’re invested in their success by staying connected between purchases—engaging on social channels, running events, creating a customer loyalty program, sharing content recommendations, etc. Essentially, you want to prove to your customers that you’re not just in it for the transaction—it’s a symbiotic relationship.
Aim for a Seamless Experience Across all Channels
A seamless customer experience means that whether a customer is online or offline, they see the same branding, structure, values, and tone reflected across every channel. Seamless customer experience is also known as omnichannel customer experience.
With that in mind, think about what you can do to make things easier on your customers.
- Is the experience consistent across each touchpoint?
- Are there any areas of friction your customers are facing during the checkout process?
- Is it easy for them to get in touch with your customer service team?
- What platform do your customers spend most of their time on?
3Pillar Global’s Angel Almada explains how Apple’s unique approach to brand loyalty and customer experience has contributed to its success. “Look at Apple—it features a well-designed customer experience that is analyzed from every possible angle and friction point. It generates an expectation on new offerings, and it could even position flagship products as solutions to problems the industry didn’t know they had,” he adds.
In addition to addressing customer pain points, improving the omnichannel customer experience and interaction experience are also critical to building lasting customer loyalty, per Gartner. These areas encompass how a product is used, how it benefits the user, and how convenient it is.
Prioritize Personalization
With the right customer data, you can continue improving your customer experience and brand loyalty by personalizing every message.
Whenever a company incorporates personal elements to their email marketing alone—addressing your customer by their first name is the bare minimum—their emails end up with 27% higher click-through rates and 6x higher transactional rates.
It’s no wonder why 73% of customers feel some level of 1:1 recognition from their favorite brands. In order to have a shot at being included in that list of favorites, you need to aim for true 1:1 personalization.
This strategy works because it’s an effective method of showing customers they’re not just another face in the crowd but rather individuals who play a major role in the success of your business. As a result, they’ll return and continue to support your brand.
If you imagine going into a store and you have such a great sales experience, you come back to that store and look for that same salesperson because you felt taken care of. If a brand is personalizing the experience for you and treating you like you are in their store, the experience is better.
Final Thoughts
While earning repeat customers can often feel like an uphill battle, putting your customers first will help you win over your target audience and also keep them as long-term and loyal buyers.
As 3Pillar Global’s Mihnea Jeleriu points out, “If a customer has a specific experience with a company or product, it shapes the expectations they have for future interactions. If it goes well, the customer is confident the brand can meet their needs the next time around and increases their chances of returning. Whereas, if something goes wrong, they might take their chances on a competitor.”
Regardless of industry or niche, companies with a laser focus on customer experience and brand loyalty will put themselves ahead of the competition.
Providing software product outsourcing solutions to companies around the world, 3Pillar Global’s customer-first mindset helps clients turn customer experience investments into valuable revenue streams. Learn more about how we can help.
Special thanks to these members of FORCE, 3Pillar’s expert network, for their contributions to this article.
FORCE is 3Pillar Global’s Thought Leadership Team comprised of technologists and industry experts offering their knowledge on important trends and topics in digital product development.
FAQs
As 3Pillar Global's Mihnea Jeleriu points out, “If a customer has a specific experience with a company or product, it shapes the expectations they have for future interactions. If it goes well, the customer is confident the brand can meet their needs the next time around and increases their chances of returning.
How does customer experience affect customer loyalty? ›
In other words, a positive experience will initiate the customer's loyalty and satisfaction; and good experiences can enhance the customer's relationship with the company while bad experiences may ruin it.
What is the impact of brand experience on brand loyalty? ›
Brand experiences are vital in developing brand loyalty and achieving business sustainability. Business performance, in particular, is influenced by customer loyalty directly through purchase behavior, as well as indirectly through attitude towards a brand.
How does customer experience impact brand? ›
Customer experience (CX) is central to creating value, and it is even more important in times of crisis when brands need to fight harder for customers. Great customer experience should meet customer expectations across physical and digital touchpoints and deliver your brand's values in order to drive brand growth.
What has the biggest impact on customer brand loyalty? ›
While price is an important factor affecting customer loyalty, receiving a good value and ease in making purchases actually have greater impact for the majority of consumers.
Why customer experience is key for loyalty programs? ›
Research shows that monetary rewards are not the only driver for customer loyalty programs and that increasing experiential rewards provides greater long-term benefits. Loyalty programs are supposed to unlock great value for companies by driving higher sales and boosting brand affinity.
Why is customer experience considered important for developing customer loyalty? ›
New shoppers are more likely to turn into loyal customers
Creating an experience really impresses purchasers and ensures that they will keep doing business with you in the future. A superior experience becomes a valued and unique asset for any type of business.
How does CRM impact loyalty to brands? ›
CRM helps businesses build a relationship with their customers that, in turn, creates loyalty and customer retention. Since customer loyalty and revenue are both qualities that affect a company's revenue, CRM is a management strategy that results in increased profits for a business.
What are the factors affecting brand loyalty? ›
High-quality products, exceptional customer experience, satisfying customer service, and shared values are all factors that influence brand loyalty.
What is the relationship between brand and customer experience? ›
Likewise, a well-designed and considered brand is what drives the customer experience and forges that emotional connection you need to attract and retain customers. For this reason, customer experience and brand should always be treated together.
The difference between brand experience and the customer experience in the simplest possible way can be explained by “promise”. Brand experience is basically about making promises, but customer experience is about keeping the promises.
What are the benefits of a good customer experience? ›
8 reasons why customer service is important
- Retain your customers. Good customer service always helps retain your customers. ...
- Encourage customer loyalty. ...
- Build a strong culture and reputation. ...
- Get referrals. ...
- Boost sales. ...
- Upsell products. ...
- Improve employee happiness. ...
- Remain competitive in the marketplace.
Customer and brand loyalty can both encourage repeat business, but price can affect customer loyalty, whereas brand loyalty relies on trust. Organizations should devise strategies to retain their existing customers, as they typically generate most profits from long-term patrons.
How a negative customer experience can erode brand loyalty? ›
Negative reviews or complaints about poor customer experience can erode customer trust and result in potential customers being hesitant to engage with the brand. Statistical Support: A study by Trustpilot found that 80% of consumers say they would switch to a competitor after encountering a negative review online.
What factors increase customer loyalty? ›
5 Ways to Increase Customer Loyalty
- Make customer service a priority – even on social.
- Reward your customers.
- Ask for advice and listen to it.
- Offer conveniences.
- Consistently engage your customers.
A massive 96% of customers say that customer service is an essential factor in brand loyalty. This aligns with the fact that 89% of customers will switch brands following a poor experience and that CX drives over 60% of brand loyalty. 66% of consumers expect companies to understand their needs.
How do loyalty programs improve customer experience? ›
Customer loyalty programs give you insights into customers' behavior. With the insights you generate from a customer loyalty program, you can improve customer satisfaction. It encourages your existing customers to recommend your brand to their social circle. It yields increased sales for your business.
Do loyalty programs increase customer loyalty? ›
Loyalty programs drive customer retention and encourage repeat business, which in turn helps companies generate revenue, increase referrals, and achieve overall growth.
What is the value of customer experience? ›
Customers are likely to spend 140% more after a positive experience than customers who report negative experiences. 70% of Americans have spent more money to do business with a company that offers great service.
Why is customer loyalty so important to the success of a business? ›
Loyal customers spread the word about your company.
We also often trust both negative and positive customer reviews and other forms of user-generated content when making purchasing decisions. Loyal customers believe in your company and they're not shy about sharing their positive feedback with others.
The most important part of creating a great customer experience is understanding the entire journey a customer takes. You need to think about your customer journey map (or if you don't have one, create one). This will help you understand every touch point that you have with your customers.
How CRM can help in strengthening customer loyalty? ›
CRM is used by businesses to help manage their relationships and interactions with their clients. By using the data you gather on your customers' interests, purchase history, preferences and more, you can better tailor your products, marketing and services to your clients' needs.
How does customer service build brand loyalty? ›
Providing exceptional customer service promotes a positive brand image, which in turn builds brand loyalty. In addition, positive customer service interactions with customers let them know that they are valued. Developing brand loyalty lies within the framework of customer service.
What are the two biggest factors that determine customer loyalty? ›
5 Key Factors That Drive Customer Loyalty
- Consistently Great Products. This may seem obvious, but providing a quality product to your customer is the first step to earning their long-term business. ...
- The Little Extras. You've got the basics down, now what? ...
- Personalized Customer Service. ...
- Community. ...
- Listening to Feedback.
The three major factors that affect modern customer satisfaction can be categorized as customer perceived quality, value, and service. By harnessing these factors, you are able to provide positive, consistent customer experiences and create true customer loyalty.
What are the five characteristics of brand loyalty? ›
An empirical research study has determined five characteristics of brand loyalty. Those include customer perceived value, brand trust, customer satisfaction, repeat purchase behavior, and commitment.
What is the strongest form of brand loyalty? ›
Emotional loyalty
This is the strongest form of loyalty, and a customer will continue to choose you and your products even if it, for example, means driving longer to get to your store, waiting for a product to get delivered home, or if the price is higher than other competitors.
What is the difference between brand loyalty and customer loyalty? ›
Brand Loyalty. The main difference between these two loyalty types is that customer loyalty revolves around customer spending, and brand loyalty is all about customer perception. Customer loyalty can be formed by having lower prices than competitors or better discounts and rewards programs.
How can customer experience create a for a brand differentiation? ›
7 Ways to Create Brand Differentiation Through CX
- Capture customer feedback in Real-time.
- Personalization.
- Customer Journey Mapping.
- Connect with Customers on an Emotional Level.
- Omnichannel Customer Experience.
- Understand your Customer's Needs.
- Real-time Tracking of CX Strategies.
Focus the entire organization on priority brand and loyalty drivers. Engage employees across all levels to be accountable for what happens during customer interactions. Provide feedback, and reward employees who "live the brand." Create harmony across the brand and customer strategies.
Brand and customer experience are sometimes thought about interchangeably. They are not interchangeable concepts, but they are closely interrelated.
Why is user experience important to branding? ›
To put it simply, UX is important because it tries to fulfill the user's needs. It aims to provide positive experiences that keep users loyal to the product or brand. Additionally, a meaningful user experience allows you to define customer journeys on your website that are most conducive to business success.
What is a customer experience and why it is important for a company? ›
Customer experience is many things, but it can broadly be described as the perception a customer or a company has of a brand. It is embedded into every interaction, and each interaction is an opportunity to build a stronger bond between the company and the customer—or has the potential to weaken that bond.
What is brand experience and why is it important? ›
Brand experience refers to the overall perception that customers have when interacting with your business. It encompasses all touchpoints across the customer journey, including advertising, digital marketing, products, and customer service.
Why is customer experience CX important? ›
CX has become the leading competitive differentiator, so businesses must ensure that their CX strategies can deliver personalized, pleasing interactions at every customer touchpoint. These interactions have a cumulative effect on your customers' overall perception and impression of your brand.
Why is customer experience more important than customer service? ›
Customer experience refers to the complete journey a customer takes with your brand, from initial awareness to post-purchase care. Customer service refers to a single event when a customer reaches out for help and support during this journey. Both are equally important contributors to the success of your business.
What is customer care and loyalty? ›
Customer loyalty describes an ongoing emotional relationship between you and your customer, manifesting itself by how willing a customer is to engage with and repeatedly purchase from you versus your competitors. Loyalty is the byproduct of a customer's positive experience with you and works to create trust.
What are 3 ways that customer loyalty effects a business? ›
Customer loyalty offers several benefits that include and are not limited to the following:
- business referrals from happy and loyal clients;
- positive customer feedback on social media sites and other avenues;
- insights into customer purchasing behavior;
- more targeted marketing for existing customers; and.
A poor customer experience can also increase employee turnover. This is partly because people want to work for companies that reflect well on them. More importantly, a poor customer experience leads to more criticism, negative communications and general frustration from customers.
Why do consumers lose brand loyalty? ›
While having high-quality products attracts consumers to a brand, about two-thirds (65%) of the 2,500 US consumers surveyed say that they may lose their loyalty to a brand if its product quality declines.
Great customer service can improve customer retention and repeat business. Repeat customers are also more valuable, with them spending 67% more than new customers, a study finds. Customer service can also improve your acquisition of new customers through positive reviews and word-of mouth.
What are some current barriers to increasing customer loyalty? ›
Read on to find out more below.
- 1 – The Feeling Of Being Overlooked. Existing customers quickly get fed up with companies offering great deals to 'new' customers only. ...
- 2 – Biased Data. ...
- 3 – Using Customer Profitability As A KPI. ...
- 4 – Leaving It Up To Marketing. ...
- 5 – Opting For Loyalty Programs & Not A Loyalty Approach.
5 Key Factors That Drive Customer Loyalty
- Consistently Great Products. This may seem obvious, but providing a quality product to your customer is the first step to earning their long-term business. ...
- The Little Extras. You've got the basics down, now what? ...
- Personalized Customer Service. ...
- Community. ...
- Listening to Feedback.
Service Whether selling services or products, the level of service perceived by the customer is generally key to generating loyalty. It can be argued that some customers buy only on price, so all that is necessary to retain their loyalty is consistently low prices.
Does customer satisfaction increase customer loyalty? ›
Customer satisfaction is the happiness of customers with a company's products, services and capabilities. It's a prime indicator of repurchase intentions and customer loyalty. Thus, keeping a customer happy will increase the chances of them purchasing from the same brand again.
What are at least 3 factors that influence brand loyalty? ›
High-quality products, exceptional customer experience, satisfying customer service, and shared values are all factors that influence brand loyalty.
What drives brand loyalty? ›
5 Drivers of Brand Loyalty
These variables are: Dependable: described as “always deliver to expectations,” “I can depend on,” “I trust” and “consistent experiences” Better: described as “better than others,” and “only brand that does what it does” Social media: described as “has interesting and engaging content online”
What is consumer perception on brand loyalty? ›
The concept of brand loyalty refers to the preference of the customers to purchase a product or service of a company repeatedly instead of going in for the purchase of similar substitute for that product of the competitor.
What are the four effects of loyalty? ›
When loyalty programs work, they result in one or more of the four effects of loyalty: the blocker effect, the spreader effect, the accelerator effect, and the longevity effect. We'll start by describing the longevity effect.
Angel Almada