What is Brand Loyalty? & Why It Matters to Your Business

Published: Mar 03, 2020
Last Updated:
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Ever choose one brand over another even when the price of the other was lower? For example, that could be choosing Adidas's footwear over Nike even in the face of a major clearance sale from Nike.

This kind of move epitomizes brand loyalty—the positive feeling that customers associate with a particular brand, and what causes them to choose it over another. Brand loyalty is a big piece of customer-brand relationships. That's because companies with strong brand loyalty see consistent and continuous return of customers to their products or services over other brands.

Why is brand loyalty important?

According to Fundera, 65% of a company’s business comes from existing customers, 82% of which are loyal to the company’s brand.

Loyal customers are unaffected by competitors offering lower prices or a wider variety of products. They return to their favorite brand every time and put off purchases if that brand’s products or services aren’t available—despite offerings by other companies.

I’ll never get over the fact that we once got together as a family and asked my Mom what her favorite pizza was and she said Digiorno. We clarified that it didn’t have to be frozen pizza or even a chain pizza and she doubled down on Digiorno. It’s not delivery and she loves that.

— Mark McClafferty (@MostFamousMark) November 23, 2020

Brand loyalty signals that customers trust your offerings, despite competitors’ marketing efforts. Whether your brand fills a specific niche, has excellent customer service, boasts an appealing rewards program, or simply sparks a positive emotional response, customer loyalty increases profits and promotes business stability.

Brand loyalty also means customers recommend your products and services to friends and colleagues; when customers trust your brand, they spread the word.

What is brand equity?

Brand equity is the value a brand has in the customer's mind, plus the brand’s commercial value.

When you think of a particular brand of sneakers, what comes to mind? Have you heard of the brand? Does the brand seem “cool” to you? Have you seen a celebrity wearing them or posting about them?

This is the perception side of brand equity—how the customer feels about the brand. You can influence how customers perceive your brand’s value by maintaining a consistent brand image, interacting with customers using feedback or brand ambassadors, and adapting to industry changes.

Another aspect of brand equity comes from real experiences people have with a brand. To continue the sneakers example, how did the shoes hold up? If there was a problem, how did the company handle it? When a customer’s experience with a brand’s offerings matches the brand’s marketing promises, brand equity goes up. When a company fails to deliver, brand equity falls, and customer loyalty disappears.

Why is brand equity important?

If your company’s brand equity is low, your customers become more easily swayed by a competitor’s marketing efforts.

However, if you cultivate your business’s brand equity:

  • You can raise prices without losing the customer. Customers with a high perception of a company are confident that the higher price is worth it.
  • You can expand your brand. Customers are more likely to try something new when it comes from a trusted, known product line, not an unknown brand.
  • Customers tend to tune out other advertisers because your brand is a known quantity. Brand equity produces an emotional response that convinces customers to focus on what you’re selling.

The Relationship Between Brand Loyalty and Brand Equity

When customers have a positive experience with your product, they tend to come back.

Did they love that new protein bar? They’re likely to try it again—and maybe branch out to new flavors. They might even go to a different store when their usual vendor doesn’t have it in stock. If they love it, they won’t be lured away by a competitor’s lower-priced bar. Is the brand now offering protein shakes? The bars were delicious, why not try the shakes?

When their friend mentions buying a protein bar, the customer recommends the brand. That friend might buy the same one and then tell their friends. Brand loyalty builds brand equity; if your customers come back to your product and spread the word, brand equity will go up.

There are other ways to build brand equity, such as advertising and social media posts with celebrities. But in the end, the customer experience is what really keeps people coming back to your products. If one of the protein bars wasn’t up to usual standards, how did customer service handle the situation? If the company responds properly, the customer is much more likely to return.

Another way to build brand equity is through a loyalty program. For instance, if your favorite brand gives you a free protein bar for every 10 bars that you purchase, you’re going to skip the competitor’s products—even if it means going to another store.


Loyal customers stick around and spread the word. They always come back for more and become the biggest fans—even advocates—of your products and services. When you invest in building brand loyalty and brand equity, you effectively cultivate customers who swear by your brand, who trust in it enough to recommend it to others, and who associate such positivity with it that they refuse to leave for another offering.

This article was written by Compose.ly writer Jennifer Busch.

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