How Experiential Marketing Builds Brand Loyalty

More than any event or situation, the COVID-19 pandemic forced millions of customers to throw brand and customer loyalty out the window. As the pandemic swept across the world, global supply chain disruptions, business closures and panic buying changed buying behavior. Unsurprisingly, Americans changed their shopping habits, switching to online, curbside pickup, meal delivery and other contactless methods — trends that are continuing even as the economy slowly reopens and recovers.

The more difficult challenge for marketers is the 30% to 40% of Americans who continue to switch brands, particularly younger generations, according to a recent McKinsey survey. Some abandoned their brands because of product availability issues or confusing ordering processes with apps and websites, but others switched to brands that better matched their values. So while it may be tempting to chase customer loyalty, you may generate higher returns on investment by securing brand loyalty. In my experience, one of the most effective ways to build brand loyalty is through experiential marketing.

Brand loyalty versus customer loyalty — there is a difference

Customer loyalty and brand loyalty are essential to customer retention. However, they differ in significant ways.

Customer loyalty: Customer loyalty relates to customers who transact with a business regularly and frequently. Pricing is the primary motivating factor in customer loyalty — customers buy from you because they feel satisfied that your products or services fit their needs and budgets. While they tend to buy more products or services, the profit margins are typically lower. Additionally, retention rates tend to be low because customers will quickly shift to a competitor who offers a better deal.

Brand loyalty: Brand loyalty is not driven by price. Brand loyalty describes devoted consumers who repeatedly buy because they perceive that your brand offers a higher quality experience, product or service than all other brands in the market. As a result, they are often willing to pay more, generating higher profit margins despite sometimes buying fewer products. These valuable customers are also more likely to try your brand’s other products.

Purpose-driven brand loyalty: Consumers are also pitching their loyalty behind brands that support social, environmental and health causes that matter to them. These consumers are also willing to pay more, knowing their purchase is supporting a cause.

Regardless of the motivation, brand loyal customers remain loyal because they trust your brand’s reputation, leading to high retention rates. Lastly, brand loyalty is much easier to maintain once achieved than customer loyalty.

How experiential marketing builds brand loyalty

Experiential marketing, sometimes called engagement marketing, aims to create surprisingly delightful opportunities for your target audience to engage with your brand and make emotional connections. Examples include unique events, pop-ups, tours, product sampling, public relations stunts, brand activations/sponsorships, hospitality lounges and product showcases. Experiential marketing campaigns allow consumers to interact directly with your brand in an authentic, two-way conversation versus the traditional one-way deluge of marketing noise — noise that consumers can tune out more easily than ever before.

When your target audience can touch, see, smell, hear, taste or experience your product or service in a meaningful, positive way, they will remember it. The primary goal is to create experiences consumers will remember and share with others in photos, tweets and conversations. These loyal consumers become unofficial brand ambassadors or advocates, which is the holy grail of any marketing campaign. Today’s consumers are far more influenced by their peers and social media influencers than by traditional advertising.

Experiential marketing isn’t only for product-based businesses

When we think of experiential marketing, we think of people milling around a tent or booth, touching, hearing, tasting and participating in a sensory experience with a brand’s product. However, experiential marketing campaigns can be very effective for service-based and media businesses as well.

Hollywood movie studios and streaming services are masters at creating experiential events to promote the launch of a new movie or series. A few notable examples include Hulu’s The Handmaid’s Tale campaign at the 2017 South by Southwest Festival in Austin, where a group of actors dressed in the main character’s iconic red and white clothing silently strolled around. This simple, relatively low-cost effort created significant buzz and plenty of free publicity.

In another example, North Carolina-based Ally Bank hosted a “You’re in Charge” campaign to celebrate National Online Bank Day that involved a brand-themed drone delivering free phone chargers to shoppers in a busy mall. Another effective way a service-oriented brand can engage with consumers is by hosting VIP hospitality lounges at bustling events where attendees can take a break, enjoy refreshments, get chair massages or have fun virtual reality experiences.

The takeaway – cost and time factors to consider

Brands are continually challenged to cut through the noise and differentiate themselves from competitors — and experiential marketing creates those opportunities by attracting new customers and converting them to loyal ones. Experiential marketing focuses more on providing a personalized, positive experience than on selling products or services. In addition, campaigns don’t have to be wide-scale, expensive efforts, so even smaller brands can reap the benefits. And lastly, the returns on investments can take longer to materialize but are often much higher than with other marketing strategies.