Why You Must Grow Penetration To Win
Mark Sareffon 26 August, 2014 at 11:08
‘Current users die’.
I really liked Don Fritz. He was Chairman of Kellogg in this part of the world when I worked on the business.
I’ve never forgotten presenting a ‘copy strategy’ to him that spoke of growth among current users. He thumped his fist on the table. He was a likeable but somewhat daunting man. Like so many Agency folk, we were a bit twitchy around him.His response was the terse: ‘Current users die’.
We slunk back to the Agency, tails between our legs, to have another try.
I well recall reading articles over the past decade that lay out a case for growth among current users – because it’s cheaper to maintain them than to obtain new users.
Well I have bad news for you. That may well be a successful short-term strategy. (Goodness knows, we do have a disproportionate emphasis on the now). But robust work out of Bain using our sister company Kantar’s data is very clear:
‘The best way brands can grow over the long term is to grow the number of buyers.’
The leading consumer brands focus a lot of their attention on growing Brand Consideration and thereby growing household penetration. If this makes you uncomfortable, that’s good. Trust me, you’re nowhere near as uncomfortable as I was seated across the table from Don all those years ago.
The situation that worries me most – and it has played out in front of me more than once in the last 3 or 4 years – is this: customer counts have slipped a bit. But everyone seems happy because the contribution by Heavy users has gone up.
Think about this for a moment: When a brand is slipping, who tends to jump ship first? Probably your Lighter users – for whom the brand is less ‘a part of life’.
If Light users desert you, what happens to the proportion of total sales attributable to Heavy users? It magically goes up. Which leads many a marketer (trust me, I’ve seen this a fair bit, firsthand) to claim they’re doing really well. Even when their business is actually in trouble. After all, it seems their most valuable customers are accounting for even more of their business.
Taken to it’s (ludicrous, I know) extreme, you end up with one highly committed customer buying loads more than they did before.
Or look at it differently: every Heavy User was once (by definition) a light user. So let’s keep feeding in light users in order to have heavy users for our long term good.
If we fail to do this, not only do current users die. As a business, we do too.
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