Brand Reputation Equals Brand Loyalty

When you think about creating a business website, the notion of brand reputation and brand loyalty is often on the back burner. Many start-ups make the mistake of thinking that reputation grows with sales and nothing more. If you try to think of websites/businesses that are successful, you have to ask yourself why people keep going back to them. So why would they return to your website? What would make them loyal? How does your reputation influence their loyalty?

When starting a business, brand reputation and customer loyalty are vital parts of a business plan. Experienced entrepreneurs, like experienced webmasters, know that without brand loyalty, all you are doing is shovelling snow in a snowstorm.

How Does Reputation Translate into Brand Loyalty?

When people think about corporate reputation management, they think about:
– online reviews
– online review management software
– word of mouth
– online reputation management services
and things of that nature. What they forget is that a brand is simply a set of principles in which the target audience has been educated.

Take the example of Swedish car manufacturer Volvo. It isn't a blue-chip company because it makes the world’s best cars. It is a blue-chip company because its brand principles are “Safety”, “Reliability” and “Luxury.” Even now, you probably remember people saying how Volvos are safe, or how they are more reliable than other brands.

It has taken years for Volvo’s brand principles to become embedded in the consumer psyche. Now, when a person sees the Volvo brand, they have certain expectations because they expect Volvo to stick to the principles they have spent so long educating us about.

What Does the Volvo Example Have to Do with Brand Reputation?

Imagine if Volvo’s newest CEO decided they need a quick injection of money, so they churn out three new models. These cars are made with cheap parts, are quickly put together, and they have a much lower retail price than other models. The company profits initially soar but within five years the company's sales have halved because Volvo’s reputation goes down the toilet.

There are plenty of car manufacturers that build and sell cheap cars, yet they have a great reputation. In this example, Volvo’s reputation suffers because people expected luxury, safety, and reliability, and that is not what they experienced.

Volvo broke its brand principles, which in essence are their brand promises, and that is why their loyal customers turned their backs. In this imaginary scenario, if the Volvo brand had stuck to its principles, then its reputation wouldn’t have been ruined, and its customers would have stayed loyal.

Does A Good Reputation Create Brand Loyalty?

No, a good reputation doesn't create brand loyalty. On the other hand, a bad reputation will always cause customers to abandon your brand. Take the example of Gerald Ratner. He called his Ratner's brand of jewellery “Sh*t” in an after-dinner speech which was reported in the press and his entire business empire collapsed.

People do not become brand-loyal because of a good reputation. They buy because of the experience they have. A brand may have a fantastic reputation, but if somebody enters one of the brand’s websites and that website gives their PC a virus, then no amount of good reputation is going to compel that customer to buy.

In short, a bad reputation removes brand loyalty, whereas a good reputation removes “Barriers” to brand loyalty.

What About Non-Evergreen Industries?

Before you pick up any sort of reputation management tool, your goal is to create brand loyalty and customer loyalty. Some brands are part of evergreen industries and some are not and it is important to understand this distinction.

For example, if you sell cars, then even if people only buy cars every ten years, you can be sure they will probably come back to you if they have customer and brand loyalty. If you are a video game producer, you can be sure your brand followers will strongly consider buying your game the next time you create a new one. These are examples of evergreen industries.

An example of a non-evergreen industry is the baby industry. People have a very limited number of babies in their lifetime, and the baby-era in a person's life only lasts a short space of time. How can companies create brand loyalty in these cases?

Brand Reputation Matters More in Non-Evergreen Industries

Your reputation matters more in a non-evergreen business because your window of opportunity is smaller. A games developer can target gamers anywhere from ages 8 to 80, but non-evergreen industries do not have this luxury. Brand reputation is, therefore, more important because product marketing has to be more intense and more focused. It also has a greater reliance on referrals.

A key element of business reputation management in non-evergreen industries is avoiding negative press. Maybe your consumers can never be customers all their lives, but they can still maintain a fair amount of loyalty during the period they need your services/products.

Take the baby products example from earlier. A past customer can be loyal to a brand and recommend it when said customer’s friends and family have babies. Such people wouldn’t risk a recommendation if they had heard something bad about the company (even if that person had been a customer of the company in the past).

Summing Up – Cognitive Dissonance Applies

You have learned that brand reputation affects brand loyalty. It is the same whether the brand has a short window of selling opportunity (baby care, for example) or a long window (car manufacturers, for example).

The statement was made that “People do not become brand-loyal because of a good reputation.” So, if people may buy if a brand has a good reputation, why doesn’t that engender brand loyalty? The answer lies in the customer experience:

– Provide good customer experience before a sale and this may result in a sale. A good reputation helps in this case.
– Provide good customer experience during and after the sale and this may generate brand loyalty. A good reputation has nothing to do with this.

Simply put, a good reputation may bring people to your door, but it is your job to invite them in and give them a good time if you want them to be loyal to your brand.

Have you had enough business experience to understand the logic of what you have just read Could you apply what you read to your business? Do you want more details, information, and expert advice? Then try our blog posts.

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