They’re your ideal customers. They’re incredibly brand loyal, already your heaviest buyers, and arguably the easiest to target with marketing campaigns.
But what if they didn’t offer the highest growth potential? What if the 80/20 rule that’s been touted ad nauseam by marketers for decades, where the top 20% of your customers account for 80% of your sales, doesn’t apply to your business? What then?
Brand Loyalty Has Limits
According to Jan-Benedict Steenkamp, Chairman of Marketing, C. Knox Massey Distinguished Professor of Marketing, & Executive Director AiMark at UNC Kenan-Flagler Business School, and author of Global Brand Strategy: World-wise Marketing in the Age of Branding, the real organic growth opportunities for most brands might actually lie with non-buyers and light buyers—not heavy buyers with high brand loyalty.
In his article “What is the most effective way to organic brand growth: Mass marketing or target marketing?” Steenkamp shares empirical data that spans a number of brands in a number of different industries. In each case, he analyzed the percentage of total sales volume allocated to each individual brand to identify opportunities for potential growth. His findings?
The 80/20 rule doesn’t automatically apply to every business. In fact, Steenkamp suggests heavy buyers typically account for only 40-60% of purchases, meaning light buyers can account for 50% of your sales.
Is There Room to Grow?
As business owners and marketers, we spend so much time fixating on buyer personas and finding new ways to convince our best customers to “buy more”—but what if they’re already buying just about as much as they can possibly consume? Say you’re a coffee brand (an example Jan-Benedict highlights in his article) and your heavy buyers are already buying 19 bags of your coffee a year. Unless they start giving them away as gifts, how much more coffee can they possibly consume over 12 months? One more bag? Maybe two? Compare that to your light buyers and the growth potential can be significant.
Steenkamp’s article is a powerful and data-driven reminder that you can’t forget about non-buyers and light buyers and only market to customers with a high degree of brand loyalty. Organic brand growth requires both.
Does the 80/20 rule apply for your business?
Don’t rely on your gut or anecdotal insights. Dig into your data. If 20% of your best customers account for 80% of your sales, then consider staying the course and focusing the majority of your marketing messaging on the 20%.
However if your best customers only account for 40-60% of your sales, launching more general, mass marketing campaigns can be a great way to reach and build brand awareness with non-buyers and light buyers—and drive organic sales growth.
Targeted Marketing vs. Mass Marketing
One word of caution. Marketing to both groups requires different strategies and execution. Email marketing and marketing automation have made it incredibly easy to lump everyone together and hit them with the same message. Highly targeted marketing campaigns directed at your heavy buyers are going to be different than mass marketing to your light buyers—they both have different needs, different motivations, and different buying habits!
Spend time understanding both buyer segments including their growth potential and your overarching marketing goals. In other words, if they’re already buying as much of your product as they can possibly consume and you're hoping they’ll double their consumption it’s probably not going to happen. You’re better off focusing on mass marketing to get new buyers into your pipeline.
Want to take a closer look at the empirical data for buyer behavior of different brands? Find Jan-Benedict Steenkamp’s article here.