Nearly 10 years after publication, most brands have now taken on board the key learnings from Byron Sharp’s seminal work How Brands Grow. One consequence is that there is now a very clear focus on one metric – penetration – and a seemingly straightforward objective to gain more buyers is established. So far, so good – but how, exactly, should one go about gaining more buyers and growing penetration? What should a brand be doing differently?
Sharp is clear: the answer is sophisticated mass marketing. “Target marketing is not clever,” he says, and “tighter targeting than targeting category buyers is a recipe for negative growth.” The award-winning columnist and marketing professor Mark Ritson disagrees, “I believe in segmentation. I believe in targeting some of the market,” he says, before concluding that they might both be right. So, not a great start! Two of the most brilliant minds are of different opinions as to how to proceed.
If your objective is to gain more buyers let’s think for a moment what this means. Sharp shows that all brands lose buyers, and that buyer defection is largely outside of marketer control. Hence you have to attract a certain number of new buyers just to stand still, and more still to grow. As Sharp puts it: “growth is due to extraordinary acquisition; contraction is due to dismal acquisition.” In other words plugging the leaky bucket isn’t an option for growth – and you must attract more new buyers than you lose. I call it the golf club syndrome: sadly, every year a number of members will depart for the great golf course in the sky and so retention initiatives are futile. Only the attraction of a greater number of new members than those who have departed will bring growth.
The proportion of buyers a brand will lose varies by brand size, but it’s not unusual for a brand to lose 50% of its buyer base from one year to the next. So, let’s say you have a brand with 5 million buyers and you’re charged with trying to drive a 10% increase in the buyer base, i.e. find ½ million additional buyers. Well, actually you’re going to lose 2½ million buyers before you start so your challenge is in fact to find 3m new buyers!
You can see why you should target everyone. There are so many new buyers to find that makes sense. But what practical steps do you take if you’re targeting everyone? Where should you focus and how do you prioritise? And if you start targeting a core segment, will that segment be large enough to generate the 3m new buyers?
A new buyer is gained by a brand when a shopper purchases that brand for the first time (or returns to the brand after a significant period of absence). This is the specific task at hand: how do you get a shopper to buy your brand for the first time? To gain 3m new buyers the brand needs to generate 3m of these “First Purchases”. For sake of argument let’s say that our existing 5m brand buyers make an average of 2 brand purchases per year, or 10m in total, then these First Purchases will account for 30% of all brand purchases, so whilst they are in the minority they are significant.
If we establish how many First Purchases are needed to achieve our growth objectives how can we then specifically target First Purchases? Well, the answer is that First Purchases prove to be dramatically different from other purchases. They are different in terms of the actual SKU bought, in terms of the channel and mission shopped, in terms of the type of category shopper, in terms of shopper behaviour, and, critically, in terms of purchase influences. Some of these differences are generic and seen across all categories – First Purchases tend to happen on smaller shopping trips, they are made by lighter category buyers, they are more likely unplanned pre-store, not driven by price promotion but much more likely to be picked from a secondary display. Other differences are category and brand specific, biased towards a particular channel, or a particular usage occasion, and influenced by certain touchpoints along the path to purchase.
Targeting First Purchases, rather than buyers, is true to both Sharp and Ritson, so perhaps they are both right after all! It ensures that the net for potential buyers is cast wide, whilst pinpointing the activities that will drive shoppers to buy a brand for the first time.
Barry Lemmonis the Founder of First Purchase Research, a shopper insights company that helps brands grow penetration.