Suppose you learned that most of your brand's buyers are switchers... that only 15% of your customers are highly loyal to your brand and account for maybe half of sales. The harsh reality is that that's a typical pattern for many grocery brands, for example.
You're probably thinking, Can this really be true? Isn't marketing about building engagement to create and then "lock in" super-valuable customers? Well, here are some sobering facts about the average brand:
- Half of your loyal buyers this year will not be loyal to you next year (Catalina Marketing's analysis of tens of millions of shoppers).
- The 20% of buyers who account for 80% of sales includes super-heavy category users who might even prefer another brand and purchase that brand more.
- On average, 30% of loyal buyers do not have attitudes about your brand that support their loyalty and are the ones who are most likely to defect (from a paper I coauthored in the Journal of Advertising Research in 1996).
- For most brands, only a single-digit fraction of your customers connect to you via social media. Consider Coca-Cola on Facebook. When I last looked, Coca-Cola had 3.5 million fans, but the number of people on Facebook who drink Coke is probably north of 100 million.
So how do you build a marketing plan to support the other half of your sales—the half that comes from buyers who are not really loyal to your brand?
For those buyers, it isn't that brands don't have meaning; it's that more than one brand has meaning and is trusted. As a shopper decides what to put into the shopping cart, you are competing for that purchase with other brands that have meaning for that shopper, often right at the point of purchase, with your brand sometimes the preferred brand, and sometimes not.
But are those "occasional" buyers really important? When a brand grows, doesn't it do so by converting low-loyalty buyers into becoming engaged with the brand—so sales from those who remain low-loyalty buyers actually go down?
Let me shake your belief structure a little more. Modeling of longitudinal purchase data proves that you must succeed with people at all levels of loyalty if you are going to grow your brand.
Based on the statistical ("beta" and "Dirichelet") distributions that modelers use to analyze purchases for frequently bought goods, consider what happens when a typical 10%-share brand grows to become a 15%-share brand.
If you segment category buyers by loyalty level into quartiles, you will see that you must grow share in each quartile! The high-loyalty group must go up the most (the Ehrenberg double-jeopardy effect), but even those in the low-loyalty group must increase their purchases of your brand by 30% or so.
In other words, yes, you must find more people to become loyal, but you also must increase your share of purchases among those who buy your brand less than half the time.
So if building engagement is not the Holy Grail, what does that say about the value of advertising? Is advertising wasted if you aren't building engagement? Actually, nothing could be further from the truth. Advertising helps give brands their meaning. Sometimes this leads to engagement, but it always leads to brand knowledge that can convert into purchases as shoppers weigh their options.
Brand meaning gives people an ability to anticipate, to predict. For example, "A commercial from this brand is going to tell me X"; "a product with this brand name will be the healthy alternative"; "a product with this name will be less expensive but will work well enough."
Brand meaning feeds the decision heuristics that shoppers use, so it goes beyond creating loyalty; it also is needed to raise share among those who buy your brand only occasionally. It also can lead to engagement. Brand meaning can and should extend beyond a product's functional characteristics. For example, the Dove Campaign for Real Beauty gives the Dove brand meaning about beauty and female self-esteem.
There are more ways than solely advertising to give a brand meaning. You can do it by having advocates spread the word via social media, creating a brand experience (virtually or physically, such as the Apple stores), offering retail activations where the meaning becomes obvious (McCormick spices barbecue center), or co-branding with media properties or celebrities (Wheaties Fuel). Certain options are better for certain types of products or services, and it is up to the marketing team to figure out that Rubik's cube.
For some customers, your brand will take on meaning to the exclusion of other brands. In a brand-equity study, "exclusive brand meaning" is reflected in a pattern of customers' checking off that only your brand stands for an important attribute (i.e., they do not check off that any other brand stands for that attribute). I think of this pattern as "owning" that attribute. Owning important attributes is where super-high levels of loyalty kick in, and at that point you can start to build true brand engagement.
However, as I implied at the beginning of this article, for 85% or so of brand/customer relationships your brand has meaning but does not "own" attributes, especially if your brand isn't the market leader. In those cases, brand meaning must partner with brand activation to produce sales.
Brand activation means that you have made the brand accessible to people and an attractive option for shoppers as they fill up their grocery carts. Activation implies imaginative shopper marketing, visibility, packaging (which is your "ad" that every buyer sees), the right configuration of features, the right price, findability as people search and pre-shop digitally, and buying ads in special-interest magazines... just to mention a few ideas.
Brand activation plus brand meaning will help you win purchases that are up for grabs at retail by enabling shoppers' decision heuristics to work to your benefit.
The marketing approach that calls for building brand engagement isn't wrong, but it's incomplete. It doesn't help you figure out how to grow the half of your sales that comes from less-loyal buyers who find multiple competing brands are acceptable.
You must give your brand meaning to occasional buyers and even to nonbuyers, because consumers will switch back and forth from your brand over time. Activate your brand effectively. Most brands should be spending more on shopper marketing to help shoppers make smart choices... Hmm, your retail partners will like that!