Let there be light buyers: Media strategy part 1

We’ve all just sort of accepted that 80% of sales come from 20% of loyal customers.

We’ve taken at face value that “it’s easier and cheaper to retain a customer than it is to find a new one.”

We also presume that super-brands like Coke, Nike and Apple command unbelievable customer loyalty.

These brands command incredible loyalty, right?

The truth is much more interesting … and effective.

In chapter 7 of How Brands Grow, Byron Sharp of the Ehrenberg-Bass Institute takes a look at one of those so-called super-brands … Harley Davidson.

According to Sharp, “Harley-Davidson buyers purchase other bikes twice as often as they buy Harleys. This is a very normal sort of loyalty figure for a brand.” Emphasis ours.

Sharp writes, “Stereotypically fanatical Harley bikers … represent less than 10% of Harley owners and they are the least likely to have bought a bike new, so they represent a mere 3.5% of Harley Davidson’s sales revenue.”

40% of Harley owners are what Sharp calls “light buyers,” and they account for 50% of yearly revenue.

That’s not 80/20. It’s not even close.

Harley commands the same relative amount of repeat buyers as other brands in the category. Sharp and his team found this holds across the board for brands in pretty much every category.

That’s reassuring. Because, for the most part, customer loyalty is a function of brand size. Larger brands have more buyers who buy slightly more often.

Consumers are actually “polygamously loyal.” People generally have a small set of preferred brands they reach for in a buying situation. 

That’s because our System 1 brains are satisfiers, meaning 95% of the time we’ll choose the best available option — as long as we recognize it as “good enough" — rather than searching for an optimal solution.

For smaller brands, this means a lot of light buyers in any category are continuously up for grabs.

That’s why building mental availability in the minds of your light buyers through distinctive brand assets, category entry points and effective, emotionally-driven advertising campaigns is critical to growing your brand. 

Trying to grow market share through customer loyalty doesn’t work. The math just doesn’t check out. If 20% of your customers are worth 50% of sales, growing sales 6% within this group only means 3% actual growth. 

You’re also playing uphill because even your most loyal customers can only purchase so much of what you’re selling. 

So focus most of your efforts on acquiring more light buyers. That means broad reach, brand-level marketing and advertising combined with targeted activation/performance tactics. 

And we’ll talk more about that next week. See you then. 

Sources! 

“How Brands Grow” by Byron Sharp