Morning!
What I’m going to tell you today is going to get you that look from your boss.
Stop tightly targeting your most loyal customer and their ‘lookalikes’ exclusively and start targeting everyone in your category.
Performance marketing seems to work in the short term - since not much else changes if you’re only looking at brand performance across a handful of quarters.
But zoom out to 5 years or more, and you’ll begin to see a trend.
Categories grow faster than any single brand in them. And how much your brand will grow depends on your ability to reach and convince new customers. Because:
Most people buy more brands than one in a category (aka repertoire buying is the norm), and very few people are 100% loyal to a specific brand. Over an extended period, split loyalties reduce repeat purchases from one brand and contribute to growth for other brands.
Brand penetration (% of people who buy your brand) remains constant, with the same customers switching between different brands as long as the category remains unchanged. Brands grow by reaching and convincing NEW customers as they enter the category.
20% of your most loyal customer don’t contribute 80% of your revenue.
It’s more like 50%.
Why?
Because even your heaviest users and the most loyal customers aren’t going to buy your brand more often than they need it.
Do you stockpile your favourite brand of toothpaste? Or pay for multiple subscriptions to Netflix? Me neither.
Purchase frequency is limited by use, and more loyalty won’t bring you more growth.
The remaining 30% of medium users (who buy infrequently) and 50% of light users (who buy rarely) bring in the rest.
Your brand’s growth depends on reaching and convincing medium and light users in your category.
No one’s buying your brand if they don’t remember that you exist.
That’s why we’re willing to pay a premium to remind our heavy users that we still exist.
It’s more predictable.
But if we learnt anything from Adidas, Airbnb, and recent research in consumer behaviour, it’s that your most loyal customers will continue buying from you whether they see your ad or not.
It’s everyone else that you need to convince.
Let’s establish the First Principles for brand advertising and effectiveness:
Brand advertising must build mental availability linking the category users (Heavy, Medium, & Light) to your brand.
Brand advertising must reach and convince new medium and light users to purchase your brand.
With that settled, let’s talk about how we can do that.
Target your category: Your brand needs to reach and win over a large volume of medium and light consumers. And since these customers hop between brands, you need to reach them quarter after quarter and year after year.
Be consistent: Brand hopping isn’t limited to light users. Albeit infrequently, heavy users do it too. A long interval between purchases is typical across most categories. That’s why maintaining the same mental availability is essential to repeat purchases.
These suggestions are based on a research paper by Charles Graham and Rachel Kennedy. I chose these two because of their relevance to campaign planning.
But there’s so much more in the paper, including a campaign planning matrix that summarises the key findings of the study.
💡Inspiring ideas & insights
🖖 Lead better:
What great hybrid cultures do differently. /HBR
👩🔬 Think smarter:
Young e-commerce shoppers are willing to pay a premium for a better experience. /MarketingCharts
Luxury brands need digital commerce and hybrid customer experience to grow. /Forrester
New trends for online grocers. /GWI
Understanding the emotions that drive us to make more sustainable choices. /Forrester
👷 Build stronger:
B2B rebranding is on the rise. /Forrester
How KFC boosted in-store sales using Google’s Search Experiments. /Google
Inside Lenovo’s newfound focus on DTC. /ModernRetail
Apps are shaping the post-pandemic retail experience. /ModernRetail
Stay curious!
Aliyar