It’s Byron Sharp’s World. We’re Just Marketing In It
Six years ago, Byron Sharp’s “How Brands Grow” challenged the conventional wisdom surrounding brand loyalty, purchase frequency and market share growth.
Marketers and academics alike have taken to the book’s bold assertions about consumers and our efforts (or lack thereof) to reach them en masse. Kantar Worldpanel’s most recent Brand Footprint report, which tracks the 150 most “chosen consumer brands,” shows that fortune favors Sharp’s bold approach for growth. The principles that come to life in the report include:
Market penetration drives growth
Across categories, a brand’s size and market share correlate with its number of buyers, not just its sales figures. Last year, Colgate dominated Kantar’s list (ranking second to Coca-Cola) by reaching a leading 67.7% of the world’s households[i]. While Colgate stands out from the pack, even the biggest brands worldwide have plenty of room to grow; Kantar’s top 50 brands commanded an average household penetration of 20.2% worldwide[ii], and one-third of the entire list only reached 5% of a given country’s households[iii].
Customer acquisition is an unsung hero
While retention helps to stabilize a brand’s number of buyers, Sharp finds that acquisition actually delivers the strongest growth results. In 2015, 79% of the report’s growing brands expanded market share by adding new customers[iv]. For example, Nutella, one of the fastest-growing brands on the list, added 7.2 million new customers last year, most notably in the Middle East, where they grew CRP (consumer reach points) by 24.3% [v].
Loyalty doesn’t boost your bottom line
Contrary to the “80/20 rule” in today’s college marketing textbooks, the Brand Footprint report shows that loyal customers do not provide as strong of a sales boost as previously thought. The biggest brands in the U.K. only commanded an average loyalty figure of 36% in 2015[vi], and loyal customers only accounted for 8% of their sales dollars[vii].
Light and non-buyers do the heavy (sales) lifting
While infrequent and non-customers may seem like some of the least alluring segments to reach, data tells us otherwise. One to two-time purchasers (light buyers) accounted for almost 70% of product category leaders’ customer bases in the U.K., France and Germany (and even greater portions of smaller brands’ bases) last year[viii]. Brands with higher market penetration also began to see a stronger purchase frequency following their sales growth.
In short, the Brand Footprint report shows how Sharp’s ideas continue to make themselves apparent in the marketplace today. If you’re reading this and live for CRM, you can wipe your tears with a brand of tissues whose competitor you’ll likely buy from next.
[i] “Brand Footprint 2016,” Kantar WorldPanel. http://www.brandfootprint-ranking.com/#/download