Opinion

The unbearable lightness of buying, as told by an old jar of pesto

In this excerpt from Eat Your Greens, its editor - and partner at The Commercial Works - Wiemer Snijders presents recent results from a six-year loyalty study revealing the role that vast numbers of light buyers play in building sales over time. Without them, you wouldn’t have a brand.

That doesn’t look normal…

I was holding a jar of pesto: ‘Best before 19 March 2012.’ After unscrewing the cap, it took only one look to realise this stuff would end up in the bin. I shouldn’t have bothered to look. After all, it was already 24 March… 2018.

Hundreds of products must have passed through that fridge. Yet over the last six years, this little jar has spent its time safely tucked away in the corner, blocked by other, more frequently used products. I had completely forgotten about it. Surely, my purchase will have been of little value to this pesto brand? Let’s put that assumption to the test.

What does normal look like?

Below is an example from my work in a non-alcoholic beverages category to illustrate what a typical customer base looks like for a popular brand. People bought this brand over the course of a year, although, it turns out, at very different rates; some buying far more frequently than others.

Figure 1: A lot do a little, and a little do a lot

Source: The Commercial Works client data, beverages, 2016, 52 weeks’ buying

The brand is well known, yet almost three quarters of its buyers bought it five times or less, together realising nearly 30% of annual sales. This seems surprising, yet marketing science says that it is quite normal. The pattern is closely predicted by a statistical curve, the negative binomial distribution or NBD. Every brand’s customer base is like this, as Ehrenberg (inter alia) has pointed out.

This pattern in buying behaviour is so regular that it can be successfully modelled, and the predicted values used to understand and benchmark actual or future brand performance measures. The pattern underpins much of the evidence presented in Byron Sharp’s 2010 book How Brands Grow, and is incorporated in the underlying theory of the NBD-Dirichlet model, labelled as one of marketing science’s greatest achievements.

I will not dive into the details of the model here, but one of its most intriguing and counterintuitive assumptions is that markets are stationary. Let’s examine what this pattern can tell us when we look at multiple years of buying, and investigate a well-known brand that grew substantially over that time period.

Multiple years of buying

If buying is so predictable, what does it say about people like me, who perhaps only buy pesto once in six years? Or indeed people who use pesto quite regularly, but only bought that cheaper brand once in six years because the other one was out of stock? How unusual is that? And how valuable or important can it be to that brand?

Marketing scientist Charles Graham has been looking at loyalty where the outcomes matter most – over the long term – and has made important findings about light buyers in two studies spanning six and five years (which are discussed at more length in Eat Your Greens).

Take a brand like Dove. During the period analysed, this brand grew its share by 50% and ran its famous and numerously awarded ‘Dove for Real Beauty’ campaign; yet Graham’s data shows that a little over one-third of Dove’s buyers still only bought it once. Only once. In six years.

Plus ça change…

And over 80% of Dove’s buyers bought the brand at the rate of once a year or less. Still, this group turned in more than half of their sales. So, despite being highly differentiated, the shape of loyalty in Dove’s customer base remained normal, and the brand grew not by developing exceptional repeat buying from existing customers but mostly by attracting new, but largely very light buyers (the data shown here is for female deodorants, but the patterns is very similar for other product sub categories).

Figure 2: Six years of buying Dove

In Figure 2 we have added an extra bar, the tallest of them all. It shows category buyers who didn’t buy the brand during the period. Many will buy the brand in the future, but the rate at which they are attracted in determines whether the brand will grow, decline or maintain its share.

The size and nature of this target is a golden opportunity for marketers. The potential to grow is as tall as the bar. They have probably seen this brand advertised and on store shelves, so it may be quite familiar, but they just have not tried it yet. How can they be encouraged to, even just once? This has big implications for the margin you should be willing to give up for that first purchase.

Graham’s study looked at hundreds of brands in more than twenty categories and found the same story in every one – and again in a follow-up study spanning five years.

Ever since Ehrenberg first published about it in 1959 the importance of light buyers has been known to those who cared to look. However, Graham’s findings reveal that the case was actually understated, even in How Brands Grow. Brand owners will need to come to terms with this ‘unbearable lightness of buying’, and realise that they should first and foremost be concerned with reaching and nudging all those potential buyers.

How to use this to your advantage

The law-like pattern I have described is an empirical generalisation, developed by marketing scientists such as Andrew Ehrenberg, Gerald Goodhardt and Byron Sharp. It is not prescriptive: it doesn’t tell managers what to do. Instead it is descriptive: it describes what normally happens (and what doesn’t), so knowledge of it helps to make marketing simpler and more effective.

For example, why plan to change the shape of the NBD? In 60 years of research, no brands – from global market leaders to start up challengers – have been found with anything other than NBD loyalty.

The scientists are still looking: that was the motivation for the long-term studies, but the findings together with everything that went before suggest that long-term brand building succeeds by working with (rather than against) the grain of the evidence. And that evidence still shows that all brands have some easy-to-reach heavy users, but that large numbers of light buyers are critical for brand maintenance and growth – for most of its customer base a brand will be rather like that jar of pesto: rarely bought and easily forgotten.

You will probably now see why some people are critical of short-term (ROI) metrics associated with heavier purchase behaviours, or about lofty ambitions about what a particular positioning might achieve in that respect.

The difference in scale between that and the critical, continuous task of accumulating so many light buyers who think very little about the brand should now be in much sharper focus.

If you are a great brand, attracting this majority of buyers into your customer base requires a creative, single-minded approach to the task of maintaining your rightful place in their minds and on store shelves.

Be noticed, and be there when you are needed – welcome old friends and reach out to new ones. Don’t just talk to your best friends.

Wiemer Snijders is a partner at The Commercial Works in The Netherlands, and managing editor of Eat Your Greens: Fact Based Thinking To Improve Your Brand’s Health.

At MSIX on November 9th in Sydney, Wiemer will be disclosing the top seven insights the book has to offer.

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