Brand Loyalty Explained With Examples
“Loyalty” is an old-fashioned word describing being deeply committed to one’s country, family, or friends. It came into marketing with the term brand loyalty. But can people be loyal to a brand? Tony O’Reilly, former CEO of H. J. Heinz, proposed this test of brand loyalty: “Just test it.. whether a housewife, intending to buy Heinz tomato ketchup in a store, finding it to be out of stock, will walk out of the store to buy it elsewhere.” That some people will be exceptionally loyal to some brands is incontrovertible. The Harley Davidson motorcycle owner won’t switch even if convinced that another brand performs better. Apple Macintosh users won’t switch to Microsoft even if they could gain some advantages. BMW fans won’t switch to Mercedes. We say that a company enjoys high brand loyalty when a sizable number of its customers won’t switch. Brand loyalty is roughly indicated by the company’s customer retention rate. The average firm loses half its customers in less than five years. Firms with high brand loyalty may lose not more than 20 percent of their customers in five years. But a high retention rate may indicate other things than loyalty. Some customers stay on because of inertia or indifference or being held hostage to long-term contracts.
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