What Most Teams Miss About Brand Growth

Hi there.

Ever hear something like this?

“If you want to build a strong brand, concentrate on improving customer loyalty.”

Or, “Just focus on your best customers. They contribute more revenue.”

I see some version of this repeated all the time by brand strategists.

But it’s dangerous advice. Not because it’s completely wrong but because it doesn’t capture the true picture of the dynamics of customer behavior.

Because it’s partially right, you’ll likely see some results.

But they’ll fall short of what you know your brand is capable of.

And you’ll have trouble growing market share.

Here’s what brand strategists who offer this advice miss:

To get more very loyal customers, you also have to get more less loyal customers.

Sounds a bit odd, I know, so let’s break it down.

After over twenty years of doing customer research, I’ve noticed you can’t tell one successful company apart from another just by looking at loyalty data.

No matter the company, when I’ve looked at attitudes and behaviors to classify how loyal a customer is, I see the same breakdown over and over:

• 5% highly brand loyal

• 45% somewhat brand loyal

• 45% brand agnostic (shop you as much as others)

• 5% brand haters (don’t like you)

There is minor variation across brands, but it’s within a few percentage points.

So, when a brand grows, it grows across every customer type.

If you stop to think about this, it makes sense: you’re not going to only acquire highly loyal customers. They have to try you first. Then believe in you. Then prefer you.

Customers move up the loyalty scale. New customers enter in. And some customers leave. Over and over again.

That’s how brands grow.

But you may be wondering what that looks like from a revenue perspective.

You may have heard something like, “Pay attention to Pareto’s law: the top 20% of your customers generate 80% of revenue!”

Not quite:

Heavy buyers contribute more than light buyers, but not enough to grow a brand.

In reality, the math works out closer to your top 20% of buyers contributing to 60% of sales over a five-year period.

Over shorter time periods, heavy buyers contribute less. And small brands may see a skew toward heavier buyers contributing more.

But for most brands over that 5 year period, 40% of your sales come from light buyers.

It’s not a number you can ignore. It’s almost half of your sales.

So, if you focused only on the highly loyal heavy buyers, you’d be giving away the sales of light buyers to your competitors.

And you’d miss the opportunity to do what actually drives brand growth: grow all segments by getting people to start buying and then slowly move them up the loyalty continuum. Move them from agnostic to someone who prefers your brand.

But what does this mean for market share?

Many brand strategists will tell you that you can grow market share by selling more to your most loyal customers.

The truth:

You grow market share by maintaining purchases from highly loyal customers while attracting more brand-agnostic buyers

It’s hard to sell more to people who are already buying a lot.

Some have maxed out how much they need from you in a year. Others are close to maxing out how much they spend in your category.

It’s important to keep them because they contribute a lot of revenue, and you may be able to get them to spend more on new products that address other problems.

But at some point, it becomes impossible to grow your market share only by getting them to buy more. They just don’t have more to spend.

So, the way you grow your share is:

• Maintain the buying behavior of highly loyal customers

• Attract more new buyers.

• Get one-time or occasional buyers to purchase from you more often.

In other words:

You grow market share by increasing customer preference.

And you do it in two ways:

• Increasing preference among existing customers to get them to purchase more often.

• Increase preference among non-customers to get them to purchase from you one time.

In the coming weeks in The Brand Strategy Brief, I’ll be writing about insights, tactics, and strategies to help you boost customer preference in both of these ways.

If you want to start with a strong foundation, in my article “Answer These 3 Questions to Boost Brand Preference (and Market Share)” I talk about how it’s critical for you to consider the macro environment, your brand’s place in your category, and your customer to grow your brand. This approach is necessary because if you want to win, you have to consider everything affecting your customers’ decisions.

For example, if you only consider your brand, you operate in a vacuum and risk ignoring larger forces shaping behavior. But if you only consider what drives purchase in your category, it becomes very hard to stand out. And when you don’t stand out, it’s almost impossible to be top of mind when customers make purchase decisions.

But when you consider all aspects of your customers’ environment, you start to see patterns.

You start uncovering insights about what’s relevant and what truly matters to your customers.

And you can use those insights to start building strategies to improve customer preference.

See how powerful that can be?

Having a complete picture of the customers’ environment enables you to know what’s relevant so you know the levers to pull to boost preference and grow every customer category along the loyalty continuum.

That’s how you create sustainable growth: increasing the chances that more customers, across all customer types, will choose you.

Boosting customer preference across all customer types is the key to winning market share.

When you do that, you’ll get the results you should be getting from your brand.

You’ll know you’re headed in the right direction when you see things like:

• Current customers stick with you longer, and some buy more.

• More new customers go from one-time buyers to repeat buyers.

• More first-time buyers are drawn to your brand like a magnet.

The key is to understand your customers and the market so deeply that you not only know what gets them to buy today, but you start to understand what will also get them to buy in the future.

You won’t be 100% right about future behaviors. But if you take this approach, you’ll be right more often than your competitors. And that’s where it counts.

This is as close as you can come to being clairvoyant in business.

Onward,

Aaron

P.S. Ready to build a brand more customers prefer? Book a free 15-minute call and I’ll help you pinpoint where to begin.

Resources

• For the research on 20% of customers contributing only 60% of sales, check out “There is a Pareto Law - but not as you know it,” by Byron Sharp and Jenni Romaniuk