[Summary] How Brands Grow by Byron Sharp — 3 Takeaways, 2 Quotes, 1 Question.
Don’t believe everything you’ve learned from marketing textbooks.
Welcome to the second of my 3-2-1 book summaries!
For a bit of background on what these are, here’s a link to my first book summary.
Next up in the series is from the brilliant Professor of Marketing Science, Byron Sharp.
“Customer retention is cheaper than acquisition”.
“Mass marketing is no longer competitive”.
“The best brands have loyal fanatics that only buy from them”.
“The heaviest 20% of a brand’s customers deliver at least 80% of its sales”.
These are some of the statements that Byron Sharp aims to disprove in How Brands Grow. He presents decades of research that tackle common marketing issues such as how loyalty programs really affect loyalty, how advertising affects positioning, and if price promotions really work (if at all).
To be fair, I found that a lot of the case studies he used are a bit dated and feature mostly large consumer brands (as opposed to smaller, up-and-coming SaaS companies, for example). At times, “How Brands Grow” seemed to be more tailored towards how big brands can continue to grow — however, I think there are still some interesting takeaways that we’ll cover below.
3 Takeaways
#1: Think critically about commonly held marketing beliefs.
Sharp uses data to introduce several laws that are counterintuitive to what many marketers (myself included) tend to accept at face value. One example is the “double jeopardy” law, which says that a brand’s percentage of “loyal” customers is relative to its market share — meaning, brands with a larger market share tend to have more loyal customers, while smaller brands have far fewer buyers and those buyers are slightly less loyal. In other words, customers are churning across brands all the time — and your brand’s lower loyalty is likely just a function of your lower market share (as opposed to anything fundamentally wrong with your brand).
At first glance, I think this should make sense, yet how often have we marketers developed growth strategies focused on “maximizing customer loyalty”? Which leads to the next takeaway…
#2: Prioritize acquisition over loyalty.
Many of us are familiar with the Pareto principle which —at least from a marketing lens — says that roughly 80% of a brand’s sales tend to come from their top 20% customers. Sharp argues that all brands have a long-tail of “light and occasional” buyers (e.g. Coke customers that only buy 1 or 2 cans a year), and illustrates that these light buyers actually account for up to 50% of sales (not the widely accepted 20%).
By focusing marketing efforts only to loyal (or “ideal”) customers, brands are actually ignoring half of their total potential. Thus, to grow a brand, the priority should be on acquiring as many “light” buyers as possible.
#3: Maximize your brand’s physical and mental availability.
Acquiring “light” buyers involves maximizing your brand’s distribution (i.e. making your product easy to find and buy) and maximizing your brand’s salience (i.e. making sure your brand easily comes to mind when consumers have a need for your category).
Key to this is creating brand assets that are distinctive and easily stand out — this includes memorable logos, colors, shapes, and even jingles. A great example is Kit Kat — widely available, consistent and memorable branding, and has even forged a strong association to a commonly spoken phrase: “have a break”.
2 Quotes
#1:
“Marketers easily forget how rarely their buyers buy their brand. They are often surprised how low their average purchase frequency metrics is (and mistakenly conclude that this means there is plenty of scope to easily increase this metric)”.
#2:
“Yet the most important part of any buyer’s purchasing process (i.e. the part that marketers should be most interested in) occurs almost entirely without being noticed. This part of the process occurs before buyers consciously evaluate which brands to choose: buyers, in effect, ‘decide’ not to consider the vast majority of brands on the market. Instead they notice only a few and quite often, only one”.
1 Question
What are some beliefs I hold that deserve another look?
Thanks for reading! Let me know if you have any feedback below :)
P.S. The link above that drives you to the book’s Amazon page is an affiliate link – meaning that, at no additional cost to you, I will earn a commission if you click through and decide to purchase.
