Customer Loyalty: Why It Matters and How to Build It

Loyal customers are the foundation of a strong business. Discover how to build customer loyalty to ensure long-term success for your brand.

Some brands have achieved near-absolute loyalty. For example, Starbucks fans won’t queue at Costa Coffee if there’s a Starbucks within a 10-mile radius. Lululemon lovers are willing to pay three times more for a pair of leggings just to be part of the "Lulu Lifestyle." Meanwhile, Apple users often look down on green-text messages (non-iPhones) compared to the blue ones (iPhones).

These brands have discovered the secret to building customer loyalty. They have a devoted customer base willing to pay more just to “belong” to the brand—even without an official loyalty program. This level of loyalty is hard to achieve, but if successful, it provides a stable, long-term foundation for business growth.

What is customer loyalty?

Customer loyalty is when customers continue to purchase from a brand over time, despite competitive alternatives. Loyal customers don’t just buy products—they promote and recommend the brand to others.

Customer loyalty refers to building a customer base that is so committed to your brand that they will buy anything you offer—regardless of price—even when cheaper alternatives exist. Loyal customers also become brand advocates, promoting your products or services to friends and family and staying loyal even during difficult times.

To earn customer loyalty, a company must create experiences that make buyers want to return. The most loyal customers are those who feel an emotional connection to the brand.

Why is customer loyalty important?

Building customer loyalty is key to long-term business survival and growth. Some of the main benefits include:

• Increased customer lifetime value: Customers emotionally connected to the brand continue shopping and boost revenue.

   

• Brand protection from competition: Loyal customers stick with your brand even when others offer tempting alternatives.

   

• Higher revenue: 75% of customers are willing to pay more for a better service experience. Once you've earned their trust, they are less likely to leave—even if prices go up.

   

• Cost savings: Retaining existing customers is far cheaper than acquiring new ones. Just a 5% increase in retention can raise profits by 25% to 95%.
   

To build loyalty, businesses must prioritize customer needs and desires, earning their trust and forming lasting relationships.

How to measure customer loyalty

Businesses can assess customer loyalty using various metrics, such as:

• Customer churn rate: The percentage of customers who stop using your product or service.

   

• Account upgrades: Whether customers increase their spending with your brand.

   

• Social media behavior: Track what customers say about your brand on social media.

   

• Shopping patterns: Customers who shop frequently and spend more over time show signs of loyalty. For example, Amazon Prime users tend to shop more after subscribing.
   

Combining both quantitative and qualitative data helps businesses understand customer loyalty more clearly.

How to increase customer loyalty

Loyalty doesn’t come naturally—it must be nurtured consistently. Here are several ways to boost customer loyalty:

• Minimize customer effort

  
  Customers are more likely to return when the shopping experience is simple and convenient. Some ways to improve that experience include:

- Provide omnichannel support so customers can reach you anytime, anywhere.
- Offer self-service options so they don’t need to wait for support staff.
- Use the “Customer Effort Score” to track how easy it is to interact with your brand.
 

• Deliver excellent service

  
  Proactive customer service can help build loyalty. A support team that not only solves problems but creates great experiences makes a lasting impression.

For example, Magnolia doesn’t just focus on resolving complaints—they build emotional connections. Their customer service reps listen, share stories, and help foster a loyal community.

• Create emotional connections

  
  To build true loyalty, brands must form emotional bonds. A loyalty program or influencer campaign won't be effective if customers don't feel emotionally invested.

Here are a few ways to foster emotional connections:

- Use emotional data to identify potential brand ambassadors.
- Offer support through personal messaging apps like WhatsApp or Facebook Messenger for a more intimate experience.
- Protect customer data and use it to personalize experiences—don’t sell it for profit.
 

Once an emotional connection is built, loyalty programs become more impactful. For example, Starbucks' app allows users to order ahead, pay via phone, and collect reward points, enhancing brand attachment.

• Redefine customer loyalty

  
  In the past, customer loyalty meant sticking with a single brand. Today, consumers can be loyal to multiple brands at once.

Businesses should embrace this reality and focus on creating long-term value instead of exclusivity. Modern companies understand loyalty is a two-way street—if you want loyal customers, you need to be loyal to them first by respecting their needs, time, and data.

"For increased customer loyalty, become your customers’ best student."

Having a loyal customer base is key to long-term stability and success. To build loyalty, businesses must invest in understanding their customers, forming emotional connections, and delivering exceptional experiences.

By continuously learning from your customers and improving their experiences, you’ll earn long-lasting loyalty and set the stage for sustainable growth.