Capterra Glossary
Halo Effect
The halo effect is a phenomenon in which a consumerʻs positive experience with a certain line of products sold by a particular brand causes them to favor other products made by the same company. This occurs completely independent of the consumerʻs actual experience with other products made by their favorite brand. They simply assume that just because they like a product made by a certain brand, that other products made by that brand will prove more satisfactory than similar products made by a different brand. Therefore, the concept of brand loyalty can be considered a direct result of the halo effect. The halo effect helps businesses gain market share and increase company revenue, as it prevents customers from purchasing products from competitors, even if the competitorʻs product is of better quality.
What Small and Midsize Businesses Need to Know About Halo Effect
Small to midsize corporations tend to have more limited marketing budgets than larger businesses in their market sector. To keep up with the competition without having to increase their marketing budgets, small organizations often rely on the halo effect. By leveraging the halo effect, small and midsize companies can increase customer support for new product or service rollouts simply based of their companyʻs goodwill (the value customers recognize in a businessʻs brand and reputation), rather than by way of expensive marketing campaigns.
Related Terms
- Customer Relationship Management (CRM)
- Go-to-Market (GTM) Strategy
- Customer Information File (CIF)
- Customer Experience
- Best-in-class
- RM (Relationship Manager)
- CSS (Customer Service and Support)
- Electronic Customer Relationship Management (e-CRM)
- Customer Experience Management (CXM)
- Best-of-breed
- Business Development Representative (BDR)