All Purchases Are Equal - But Are Some Purchases More Equal Than Others?
Updated: May 1, 2018
In George Orwell's classic novella Animal Farm, the animals lead a rebellion against the human owner of the farm. The animals, led by a pair of pigs called Napoleon and Snowball, successfully drive him out and establish Animal Farm. They agree to adopt the Seven Commandments of Animalism as their constitution, the most important of which is the last commandment: "All animals are equal."
But when Napoleon runs Snowball off the farm and gives himself full leadership, he gradually violates more and more of the commandments and his behaviour becomes increasingly like that of their previous human master. Ultimately, a definite hierarchy in the animal life on the farm is established, and the commandments of animalism are reduced to one: "All animals are equal, but some animals are more equal than others."
The book was written more than 70 years ago and is an allegory for the events leading up to the Russian Revolution of 1917 and the Stalinist era of the Soviet Union that followed. So what is the relevance to understanding shopper behaviour and influencing shopper purchasing?
Well, whether you're focused on a category or a brand, a channel or a retailer; your challenge is usually the same - how can you drive growth? Put simply, growth is achieved by getting more purchases than before. But is there a definite hierarchy of purchases for your category or brand? Are all purchases equal? Or are some purchases more equal than others?!
In his book How Brands Grow, Byron Sharp introduces us to the laws of growth and challenges conventional marketing wisdom with respect to targeting and loyalty. Sharp shows that brands grow by gaining more buyers. Further he demonstrates that all brands lose buyers at a predictable rate, and so growth is due to the "extraordinary acquisition" of new buyers. It's a simple truth and the logical conclusion is don't waste time on buyer retention or loyalty schemes; rather, focus your efforts on gaining new buyers.
All brand purchases can be thought of as either First Purchases, where the shopper is buying for the first time (or returning after a significant period of absence), or Second Purchases, where the shopper has bought before. Second Purchases are usually in the majority but First Purchases represent the occasions when a new buyer is gained and so in accordance with Sharp's Laws they can be viewed as the purchases that drive growth - or to paraphrase Orwell: First Purchases may be more equal than Second Purchases!
Recent analysis of household panel data shows that a very strong correlation exists between First Purchases and growth, be it for a brand, a category or a retailer. And shopper observation and intercept studies show significant differences in the behaviour, needs and motivations of shoppers making First Purchases compared to Second Purchases. The implications for understanding, targeting and influencing shoppers are quite profound. To be effective, shopper insights need to distinguish between First and Second Purchases, and shopper strategies need to target First Purchases as a priority.
Focusing on the purchases that are most important - or more equal - may just be the key to better understanding a shopper's behaviour and unlocking the potential to successfully influence their purchase. The approach challenges today's conventions, but are those conventions really working? Back in 1945 Orwell wrote in his introduction to Animal Farm: "At any given moment there is an orthodoxy, a body of ideas which it is assumed that all right-thinking people will accept without question. It is not exactly forbidden to say this, that or the other, but it is 'not done' to say it... Anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness."
The challenge for anyone involved in Shopper is that the prevailing orthodoxy isn't delivering the required results very often.