Marketing and Research Consulting for a Brave New World
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Suppose you learned that most of your brand’s buyers are switchers… that only 15% of your customers are highly loyal to your brand and account for maybe half of sales. You’re probably thinking, can this really be true? Isn’t marketing about building engagement to create and then “lock in” super-valuable customers?

The harsh reality offers some sobering facts for a typical grocery brand:

  • For a 10% share brand, models of household scanner panel data show that only 15% of your buyers are loyal, giving your brand a 75% share or more of their purchases.
  • These loyal buyers only account for about half of your sales.
  • And, these loyal buyers aren’t even so loyal. Half of your loyal buyers this year will not be loyal to you next year (Catalina Marketing’s analysis of tens of millions of shoppers).
  • On average, 30% of loyal buyers do not have attitudes about your brand that support their loyalty and are the ones who are most likely to defect (from a paper I coauthored in the Journal of Advertising Research in 1996).

Putting these facts together, now we can see how shopper research can be right that consistently shows half or more of brand purchases in the shopping cart are decided on in the store.

Let me rock your world a bit more. The idea that brand marketers win by converting low loyal buyers to become engaged with the brand, at best, is highly simplified. Consider the change in purchase patterns towards a 10% share brand that grows its share to 15%. If you segment category buyers into quartiles by loyalty level towards your brand, you will see that you must grow share in each quartile! The high-loyalty group must go up the most (the Ehrenberg double-jeopardy effect), but even those in the low-loyalty group must increase their purchases of your brand by 30% or so.

In my last blog about Facebook liking, I proved using Compete data that those who like a brand were already 8 times more predisposed towards it.  In other words, when people join a brand in social media they are already mostly in the top 1-2 quartiles of loyalty towards your brand.

So, if social media mostly reinforces loyalty of those who already buy your brand a high percent of the time, how do you build a marketing plan to grow the other half of your sales as well—the half that comes from buyers who are not really loyal to your brand?

For those buyers, they know more than one brand that is relevant to their needs. You must become one of those brands. As a shopper decides what to put into the shopping cart, you are competing for that purchase with other brands that have meaning for that shopper, right at the point of purchase, with your brand sometimes being the preferred brand, and sometimes not.

So what touchpoints map to influencing the less loyal buyer segments? Basically, it is push advertising (e.g. TV, digital display) and shopper marketing (including the pre-shopping activity of digital search and of course, packaging.  In fact, BASES’ research shows that in-store exposure is now the leading source of awareness for new products). These forms of brand communication lead to brand knowledge that can convert into purchases as shoppers weigh their options. If a behavioral economist were a shopper marketing expert, they would note that brand knowledge feeds the decision heuristics that shoppers use to actively decide on purchases as they shop.

For some consumers, what they know about your brand will take on meaning to the exclusion of other brands. In a brand equity tracker, “exclusive brand meaning” is reflected in a pattern of customers’ checking off that only your brand stands for an important attribute (i.e., they do not check off that any other brand stands for that attribute) and only that pattern is associated with super-high levels of loyalty. Brand meaning equals consideration, exclusive brand meaning equals loyalty.

The marketing approach that calls for building brand engagement isn’t wrong, but it’s incomplete. Marketers need to build both halves of the sales equation.  Use advertising and shopper marketing to build brand meaning that will lift sales among less loyal consumers.  Use social and owned media to build EXCLUSIVE meaning, leading to advocacy and engagement.

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One Response to “Marketing must build both halves of the sales equation”

  1. Larry Friedman

    Joel, great post. We need to break down the silos. Brand researchers act as if pre-store touchpoints and post-store experiences are what count; shopper researchers act as if people walk into a store with no predispositions. I’ve been kicking around some ideas with my shopper colleagues on how to jointly look at the brand and shopper sides. We should talk.