The First Purchase Approach to Gaining New Buyers

The Target All Buyers Conundrum 

In his seminal book How Brands Grow, Byron Sharp shows that the ONLY route  to brand growth is by gaining more buyers. 

Sharp’s finding that buyer acquisition - rather than buyer retention or loyalty  improvement – is key to brand growth is highly disruptive. His findings on  competition are no less dramatic, and challenge conventional wisdom on  segmentation and targeting. He shows that rival brands sell to very similar  customer bases and that brands “appeal to different buyers, but not different  types of buyers.” Consequently, Sharp concludes that ALL buyers of a product  category or service are potential buyers for a brand and rejects segmentation  and targeting in favour of “sophisticated mass marketing”. 

This new world view presents brands with a conundrum. To grow they need to  gain new buyers, but the pool of potential buyers is vast and undifferentiated.  Without unlimited budgets, how can brands target ALL category buyers in an  effective yet cost-efficient manner? As Sharp recognises, “reaching all potential  buyers of a brand, at the right time and at a low cost, is tricky and there is much  to learn.” 

Targeting First Purchases 

We solve this conundrum by targeting the different types of purchase that  buyers make, rather than the buyers themselves. Any purchase of a brand is  either a First Purchase – where the buyer is new to the brand – or a Repeat  Purchase. First Purchases can be further defined as New (first time buyer) or  Lapsed (returning buyer), and Repeat Purchases can be further defined as  Occasional, Usual or Loyal.  

Usual and Loyal purchases can be thought of as volume which is quite secure for  a brand – the brand is the default choice of the buyers making these purchases.  But there is little growth potential here – these buyers already buy the brand  most times that they buy the category. By contrast the New, Lapsed and 

Occasional purchases are more unpredictable – and offer more potential - for a  brand. The buyers making these purchases have rarely bought, or never bought,  the brand before, and the brand has to work hard to win these purchases. But  these purchases are essential – they are new buyers for a brand and they are also  a stepping stone to more Usual and Loyal purchases in the future. Win enough of  them and a brand will grow; win too few of them and a brand will decline. 

The First Purchase approach re-frames the problem for a brand: rather than  trying to target all buyers a brand can now think of targeting First Purchases - the  purchase occasions when a brand gains a new buyer!  

How Does This Help? 

Critically, First Purchases are very different from other purchases! For example: 

• one brand discovered that First Purchases were twice as likely to come from  a secondary display as they were from the main shelf. 

• a second brand found that one half of purchases in a Discounter were First  Purchases (meaning that Discounters were 5 times as effective at winning  new buyers for the brand as Supermarkets). 

• and another brand found that their small pack size generated almost 10  times as many First Purchases as their larger packs. 

• and another brand was stunned to find that a 25% price promotion on their  best-selling SKU did not drive any incremental First Purchases. 

These findings and others enable a brand to move away from trying to ‘target all  buyers’, to more precisely targeting the specific purchases that buyers make that  will lead to growth. In the upcoming articles I will share how factors such as  planning, price, promotion, pack size, usage occasion and channel can influence  First Purchases. 

The First Purchase Approach 

The First Purchase approach is flexible and can be adapted for different  categories and brands. In essence the approach is: 

1. Segment your existing purchases using panel, survey, or customer data.  Depending on the category and/or data source it may not be possible or  relevant to use the full segmentation but distinguish First Purchases from  Repeat Purchases and collect any extra detail as appropriate. 

2. Identify how First Purchases are different from other purchases. Identify  the factors that attract First Purchases. 

3. Calculate the number of First Purchases required to achieve brand growth  targets. 

4. Calculate an effectiveness for each factor in terms of First Purchases won.

5. Develop the plan to win the required number of First Purchases to achieve growth targets by prioritising the factors with the greatest effectiveness.

The First Purchase approach makes a subtle shift of emphasis from buyers to  types of purchase which is more granular and provides a platform for brands to  precisely target new buyer acquisition in an effective and cost-efficient manner.