How Brands Grow: What Marketers Don't Know
by Byron Sharp
One reason it is harder than expected to cross-sell products to existing buyers is that those who haven't bought these products from you don't need them; for example, you can't sell car insurance to someone who drives a company car. Another neglected reason is that service brands often already enjoy high loyalty; for example, most of your customers who needed a home loan came to you already (and you either gave them one or turned them down). So improving this already high loyalty is difficult. All the global market research agencies claim to provide an exclusive service that can tell if your brand is heading up or down. Every strategy consultancy says that only it can take you on the path to profitable share growth. Econometric modellers say they can quantify precisely which marketing mix will deliver maximum growth. This is all nonsense.
All the global market research agencies claim to provide an exclusive service that can tell if your brand is heading up or down. Every strategy consultancy says that only it can take you on the path to profitable share growth. Econometric modellers say they can quantify precisely which marketing mix will deliver maximum growth. This is all nonsense.
In industrial settings this may due to long-standing customers extracting better terms and discounts. In consumer settings long-standing customers may learn to pick the very best value items from a firm’s portfolio, or learn when price discounts are offered.
There is another related discovery: when you look at brands of markedly different sizes you typically see that their penetration metrics differ a lot,13 while their average purchase rate varies little. Put another way: loyalty doesn't vary much.
Perhaps the real story here is that they found that they couldn't change people's habits to use that box of baking soda in different ways, so instead of trying to change people they brought the soda to the traditional products people used.
Campaigns that, unfashionably, aimed to increase penetration were more than twice as likely to report very large improvements in all hard measures of effectiveness including sales and profits.
"One reason it is harder than expected to cross-sell products to existing buyers is that those who haven't bought these products from you don't need them; for example, you can't sell car insurance to someone who drives a company car. Another neglected reason is that service brands often already enjoy high loyalty; for example, most of your customers who needed a home loan came to you already (and you either gave them one or turned them down). So improving this already high loyalty is difficult."
"All the global market research agencies claim to provide an exclusive service that can tell if your brand is heading up or down. Every strategy consultancy says that only it can take you on the path to profitable share growth. Econometric modellers say they can quantify precisely which marketing mix will deliver maximum growth. This is all nonsense."
"In industrial settings this may due to long-standing customers extracting better terms and discounts. In consumer settings long-standing customers may learn to pick the very best value items from a firm’s portfolio, or learn when price discounts are offered."
"There is another related discovery: when you look at brands of markedly different sizes you typically see that their penetration metrics differ a lot,13 while their average purchase rate varies little. Put another way: loyalty doesn't vary much."
"Perhaps the real story here is that they found that they couldn't change people's habits to use that box of baking soda in different ways, so instead of trying to change people they brought the soda to the traditional products people used."
"Campaigns that, unfashionably, aimed to increase penetration were more than twice as likely to report very large improvements in all hard measures of effectiveness including sales and profits."
"This pattern is known as the 'double jeopardy' law because smaller brands get 'hit twice': their sales are lower because they have fewer buyers who buy the brand less often."
- →Perhaps the real story here is that they found that they couldn't change people's habits to use that box of baking soda in different ways, so instead of trying to change people they brought the soda to the traditional products people used.
- →This pattern is known as the 'double jeopardy' law because smaller brands get 'hit twice': their sales are lower because they have fewer buyers who buy the brand less often.
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