Ipsos Encyclopedia - Brand Loyalty

Definition: Loyalty is faithfulness and a devotion to a person, country, group, organization, or cause and is the recognition of the specialness of a relationship which results in differential and more favourable treatment towards this relationship, the creation of a bond as the result of this relationship, and the defence and reinforcement of this relationship.

Ipsos Encyclopedia - Brand Loyalty

Ipsos Point Of View

Loyalty is critical to our happiness as individuals and our health as a society. Loyalty improves the performance of our businesses and our happiness as humans. Customer and Employee Loyalty are primary sources of competitive differentiation and long-term financial success. Brand loyalty is where an individual continues to buy/use products and services from the same supplier repeatedly (rather than from other suppliers). True brand loyalty occurs when consumers are willing to pay higher prices for a certain brand, go out of their way for the brand, or think highly of it. A successful organisation is like a successful community. Both have loyal relationships at their heart. Both thrive on mutually beneficial relationships. Organisations must build loyal relationships which bring them financial success and which also give clear benefits and services to the customer. Loyal relationships can provide a safety net of positive emotions and experiences to help keep organisations bonded to customers when times get tough. Loyalty should be defined, understood, and managed in both attitudinal and behavioural terms. Actively measuring, modelling, and managing employee and customer loyalty, both attitudinally and behaviourally, is a fundamental and required practice of leaders in any organisation. Attitudinal loyalty is when a customer chooses to be loyal because of a positive brand preference (a brand fulfils key functional and/or emotional needs). Attitudinal loyalty does not necessarily equate to behavioural loyalty. Behavioural loyalty is when a customer continues to buy/use a particular product, service or brand at least as much as before. But there are a number of different reasons for this, including:

  • Attitudinal loyalty/active Loyalty: “I have a positive brand preference” i.e. a brand fulfils key functional and/or emotional need
  • Apathy/habitual loyalty: “I can’t be bothered, too much hassle, they’re all the same,” etc
  • Captive loyalty: “I’m stuck in something I don’t like but it’s difficult to switch” (cost, barriers, availability, and so on.)

Note that we have not referenced / defined customer satisfaction – this is intentional being that we believe that customer satisfaction is a component of loyalty rather than defining loyalty.  Just because a customer is satisfied does not automatically result in a loyal customer.  As a result our thought process focuses on attitudinal and behavioural loyalty

Related Ipsos Products

  • Loyalty Optimizer
  • Wallet Allocation Optimizer
  • Experience Optimizer

Best reading

 

Wallet Allocation Rule: Winning the Battle for Share by Alexander J. Buoye, Lerzan Aksoy, Luke Williams, and Timothy Keiningham (2015) NB Ipsos authored Putting the Service Profit Chain to Work by James L. Heskett, Thomas O. Jones, Gary W. Loveman,. W. Earl Sasser, Jr., and Leonard A. Schlesinger (1994, Harvard Business Review)

Customer Experience