There’s a growing sentiment in certain business sectors that brand loyalty is dead. These people believe that even the slightest pricing advantage or disparity can sway customers. They suggest that service or quality enhancements, loyalty programs, and even membership benefits only serve to slow down the inevitable commoditization of an industry, where price is king and profit margins disintegrate. But you need to ask: What have they done to earn that loyalty?
That’s not to say that price — especially in this economy — isn’t a strong determining factor in more purchase decisions, but don’t confuse "price-driven" with "price-conscious" consumers. Most markets will have some segment that solely purchases with price as their key determining factor, but that’s usually a smaller percentage than most companies realize. The almost-universal key driver across industries, for both products and services, is value.
Loyalty is more demanding.
It’s not just about a customer habitually repeating a purchase pattern. In today’s connected environment, loyalty is now a two-way relationship, whereby businesses can also demonstrate their loyalty to customers by listening to their needs and concerns, actively engaging and responding to client issues, and using that information to anticipate market trends. In this way, the new version of customer loyalty is more of a mutually beneficial relationship, rather than a one-way flow of products and information.
Clarify your brand message.
Start by making sure your brand promise and value proposition are clear to both your customers and your employees. A lack of alignment at this stage is sure to derail your efforts. A good test is to ask within your organization. If your own employees can’t easily convey your brand’s story, how can you expect your customers to know, and more importantly, to remember and appreciate?
Avoid the price-cutting game.
Create value to help offset price sensitivity. Consider a range of offerings at various price points that bundle added features or services that appeal to a range of customers. Once you start playing the discount game and lowering your price, you are in effect telling your customers that your product or service isn’t worth as much and subsequently raising the price becomes more difficult. Discounting, at any level, is a dangerous proposition, and if price is all you are competing on, you need to beware that there will almost always be a competitor willing to sell for less.
Embrace your brand’s uniqueness.
Differentiation in a competitive environment is critical to a brand’s success. Identify your market strengths and leverage assets that set your product or service apart from your competitors. Use market research and customer feedback to continually drive innovation that allows you to develop key components that other brands don’t have.
Earn your customers’ loyalty.
You can’t take your customers for granted. Brand loyalty is strong and healthy, but it needs to be earned. Price is important, and value is crucial for the initial purchase, but exceptional service and a commitment to quality will keep your customers coming back for more.