09 Dec Why Brand Loyalty is Crucial in the Internet Age
A New York Times columnist argues that the evolution of the internet lessens the need for companies to build brand loyalty with their customers. Why? Because the internet has made us comfortable with buying unfamiliar brands.
Conversely, I think the growth of the internet makes building and tracking brand loyalty more critical than in the pre-internet age. Here’s why:
1) Social Media’s Impact on Word of Mouth and Loyalty
Social media has accelerated the spread of word of mouth. Thinking of trying a meal kit program? Ask your Facebook friends what they think. The internet has made it easy for many brands to come across our screens. However, praise from our friends catches our attention.
Younger generations are especially likely to share their experiences with brands via the internet. Whether they share an unboxing video or document their cooking journey with Hello Fresh, they love to share their experiences with brands. And, Gen Z isn’t the only generation that listens to company referrals on social media. According to research from Oracle, 45% of consumers find new goods and services on social media every month. Another study found that 28% of customers prefer to hear about new brands through word of mouth.
2) Customer Service’s Impact on Brand Loyalty
A brand’s customer service function also has a huge impact on brand loyalty. Customers understand that mistakes happen, but poor service recovery will damage the relationship between the customer and the brand. In the internet age, customers expect businesses to resolve all issues quickly and easily. For example, Amazon doesn’t require customers to print out return labels — UPS just scans their phone. Customers can tell Target.com they didn’t get their items and request a free replacement through the Target app — never speaking to a service representative. These brands leverage digital technology to make service failures as easy as possible for customers, strengthening brand loyalty.
3) The Influence of Personalization on Brand Loyalty
We’ve also seen the mass personalization of products grow with the evolution of the web. Businesses continue to differentiate themselves by serving niche markets. Platforms like Etsy make it simple for small businesses to showcase and deliver customized products to consumers.
With personalized products comes the desire for personalized marketing communications. Researchers estimate that over 80% of Gen Z, Gen Y, and Gen X desire personalized marketing messages from brands. Seventy-seven percent of baby boomers also want personalized messages. Brands can’t create personalized messages if they don’t get to know their customers!
Conclusion: Drive Loyalty (and ROI)!
Although massive e-commerce platforms like Amazon provide customers with a wealth of choices, they want to build trusting relationships with brands. The 80/20 rule still stands — repeat customers are the lifeblood of profits. With online switching costs extremely low, people stick with brands because they market products in a way that drives loyalty and high marketing ROI.
Loyalty marketing is crucial in the internet age.