# What Is Brand Loyalty?

![Brand Loyalty: When customers continually purchase the same brand and shun alternatives.](https://www.investopedia.com/thmb/NSwuyMYGVWCHVIi1AEoaPkdmMD0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Brand-loyalty_final-8ad57b86183e42348e18bc306c87778e.png)

*— Investopedia / Michela Buttignol*

> **Definition**
>
> Companies rely on a brand-loyal consumer base and repeat purchases to grow revenue.

## What Is Brand Loyalty?

According to Harvard Business Review (HBR), companies with high scores on brand loyalty and customer loyalty [market research](https://www.investopedia.com/terms/m/market-research.asp) metrics grow [revenues](https://www.investopedia.com/terms/r/revenue.asp) 2.5 times faster than industry peers and deliver two to five times the [returns](https://www.investopedia.com/terms/r/return.asp) to [shareholders](https://www.investopedia.com/terms/s/shareholder.asp).

Brand loyalty is a consumer's commitment to repeat purchases of a particular brand regardless of price. Company [profitability](https://www.investopedia.com/ask/answers/012715/what-difference-between-profitability-and-profit.asp) relies on repeat business with existing clients and proves less expensive than marketing to attract new customers.

### Key Takeaways

*   Brand loyalty includes repeat purchases regardless of price.
*   Brand-loyalty leaders commonly post revenue higher than their competitors.
*   Brand loyalty is measured through consumer retention and customer satisfaction surveys.

## Building Loyalty

Brand-loyal customers believe a certain brand represents higher quality and better service than competitors. Once established, brand loyalty is retained if the product quality and service level remain high. Brand loyalty differs from [customer loyalty programs](https://www.investopedia.com/terms/l/loyalty-program.asp), which require offering low prices and regular discounts to maintain best-deal-on-the-market status.

Most established brand-name products operate in highly competitive markets, jockeying for [market share](https://www.investopedia.com/terms/m/marketshare.asp) with new and old rival products. Marketing departments employ various tactics to create and maintain brand loyalty, including monitoring buying trends, analyzing spending data, and designing advertising campaigns targeting customer segments.

> **Important**
>
> Existing brand-loyal customers purchase 67% more than new customers so maintaining the brand-loyal segment is less expensive than marketing to new customers.

## Company Strategies

*   **Best-in-Class Quality:** Companies that consistently deliver best-in-class quality will convert customers into brand-loyal advocates who spread positive [word-of-mouth](https://www.investopedia.com/terms/w/word-of-mouth-marketing.asp) and never feel the need to shop elsewhere.
*   **Customer Service:** Exceptional customer service includes 24/7 chat reps, social-media managers, phone operators, and support-ticket staff. First-rate service that makes customers feel valued might be the only thing that sets a brand apart from its competitors.
*   **Brand Ambassadors:** Companies hire spokespersons for their products. A successful brand ambassador should have an authentic, professional presence, in-depth knowledge of products and services, and highly developed expertise in building loyal customer relationships.
*   **Loyalty Programs:** Establishing a program to reward existing customers for their business is one of the most direct ways to build brand loyalty. This is especially true for premium-priced brands because an exclusive discount for loyalty program members can be the right incentive to choose the pricey brand over a less expensive option.
*   **Online Community:** In 2024, U.S. online spending was $1.37 trillion with 2030 projections of over $2.5 trillion. Unlike static advertisements, social media has a range of tools to forge deeper, more personal connections with customers, from hosting Q&As and live streams with employees to taking customers on behind-the-scenes tours of the business. A digital community is an easy access point for customers who spend hours online.

> **Fast Fact**
>
> Brand loyalty is said to have started in the 18th century when an American merchant would hand out copper coins to repeat customers.

## Brand-Loyalty Leaders

According to data compiled by Brand Keys for 2024, brand loyalty leaders and the products for which they hold the highest consumer favor include:

*   Apple: Smartphones
*   Amazon: Online Retail
*   TikTok: Social Networking
*   Domino's: Pizza
*   Netflix: Video Streaming
*   Levi Strauss: Apparel Retailers
*   Dunkin': Coffee
*   Mattel: Toys

## Measuring Customer Loyalty

Companies rely on the following metrics to measure brand loyalty:

*   **Customer Retention:** Percentage of customers a company retains during a specific time frame.
*   **Customer Lifetime Value (CLV):** Profit a customer has generated for the company.
*   **Customer Satisfaction:** Companies often look to customer surveys to ask customers how satisfied they are with product interaction.
*   **Net Promoter Score:** Companies may rely on a [Net Promoter Score (NPS)](https://www.investopedia.com/articles/fundamental-analysis/10/qualitative-analysis-intangibles-affect-stock-price.asp), a customer experience metric that measures the likelihood of customers recommending a product or service to others.

## Customer vs. Shareholder

The Harvard Business Review (HBR) has intimated that financial accounting and [shareholder primacy](https://www.investopedia.com/stakeholder-capitalism-4774323) affect how companies treat loyal customers. HBR argues that quarterly earnings and reporting undermine how loyalty affects profitability. Two profitability strategies—shareholder primacy vs. customer capitalism—have affected how customer metrics like brand loyalty are ranked as profit drivers.

In the 1950s, Peter Drucker referred to as “the father of business consulting” by Forbes and “the greatest management thinker of the last century" by GE Chair [Jack Welch](https://www.investopedia.com/terms/j/jack-welch.asp), said that “the true purpose of a business is to create and keep customers." Conversely, in the 1970s, [Milton Friedman](https://www.investopedia.com/terms/m/milton-friedman.asp) said that companies exist to maximize shareholder value, the argument HBR said introduced "the age of shareholder primacy."

In 2019, CEOs from the Business Roundtable, including [Tim Cook](https://www.investopedia.com/tim-cook-5224249) of Apple, [Jeff Bezos](https://www.investopedia.com/investing/how-jeff-bezos-got-be-worlds-richest-man/) of Amazon, [Mary Barra](https://www.investopedia.com/news/top-women-ceos/) of General Motors, [Robert F. Smith](https://www.investopedia.com/robert-f-smith-is-a-billionarie-investor-and-philanthropist-4687551) of Vista Equity Partners, and Larry Fink of BlackRock, broke with decades of corporate orthodoxy by stating that “the purpose of a corporation” is no longer to advance only the interests of shareholders. Instead, companies must deliver value to customers indirectly by supporting customer values on issues like protecting the environment and dealing ethically with suppliers.  

## What Is the Difference Between Brand Loyalty and Customer Loyalty?

Brand loyalty is commonly based on image and experience while customer loyalty is money-based, relying on prices and discounts. Brand-loyal customers believe that a certain brand represents higher quality and better service than any competitor regardless of pricing. Customer loyalty requires companies to maintain low prices and offer regular discounts.

## What Are Brand Ambassadors?

Brand ambassadors are professional marketers that companies hire to serve as spokespersons for their products.

## What Is the Role of Corporate Social Responsibility in Brand Loyalty?

[Corporate social responsibility (CSR)](https://www.investopedia.com/terms/c/corp-social-responsibility.asp) is a business model that helps a company be socially accountable to itself, its stakeholders, and the public. According to the Journal of Consumer Psychology, customers act favorably toward a company that engages in CSR.

## The Bottom Line

Brand loyalty occurs when companies can retain customers across product lines. Instead of investing capital to land new clients, companies with high brand loyalty have the advantage of deploying resources to improve their products or enhance their customer service to repeat consumers.

> **Article Sources**
>
> 1.  Harvard Business Review. “[Are You Undervaluing Your Customers?](https://hbr.org/2020/01/are-you-undervaluing-your-customers)”
>     
> 2.  Capital One Shopping Research. "[Brand Loyalty Statistics](https://capitaloneshopping.com/research/brand-loyalty-statistics/)."
>     
> 3.  Capital One Shopping Research. "[eCommerce Statistics](https://capitaloneshopping.com/research/ecommerce-statistics)."
>     
> 4.  The New York Times. "[Trading Stamps: A Long History](https://www.nytimes.com/1971/12/26/archives/trading-stamps-a-long-history-premiums-said-to-date-back-in-us-to.html)."
>     
> 5.  Brand Keys. "[2024 Loyalty Leaders](https://brandkeys.com/wp-content/uploads/2024/09/2024-Loyalty-Leaders-Top-100-List.pdf)."
>     
> 6.  Customer Gauge. "[How To Measure Customer Loyalty in 2025](https://customergauge.com/blog/how-to-measure-customer-loyalty)."
>     
> 7.  The New York Times. “[Shareholder Value Is No Longer Everything, Top C.E.O.s Say](https://www.nytimes.com/2019/08/19/business/business-roundtable-ceos-corporations.html).”
>     
> 8.  Johnson, Zachary S. and et al. "[Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations](https://myscp.onlinelibrary.wiley.com/doi/10.1002/jcpy.1109)." _Journal of Consumer Psychology_, vol. 29, no. 4, October 2019, pp. 565-583.