As many of you know I am a huge fan of Byron Sharp’s marketing book, “How Brands Grow”. I have bought copies for all the marketing teams I have led and most of the peers I have worked with who expressed an interest in what I do. I have always said it is the best marketing book. Period. It is the only book that looks at what we actually KNOW about marketing vs the BS that usually dominates the space. It is also the #10,557th most best-selling book on Amazon. It doesn’t rank in the top 100 marketing books on the site (unlike timeless gems like “500 Social Media Marketing Tips” and “Social Media Marketing for Dummies”). It is a prime example of quality not rising to the top.
Earlier this year Byron partnered with Jenni Romaniuk to publish a follow-up to How Brands Grow, titled appropriately (if unoriginally), “How Brands Grow Part 2”. The new book launched with incredible buzz to become the best selling marketing book of all time. Actually no. It’s ranked even worse than the original, #22,268 (#239 in Marketing). But in many ways Part 2 is even better than the original.
How Brands Grow focused on exploding the myths of marketing. It was very effective at helping you avoid activities that were a waste of your time and resources. Skipping the bloodletting and witch-doctoring of marketing to allow you to focus on what works. Unfortunately it was very light on what you SHOULD be doing. Part Two fixes that problem. It is still light on tactics, but it gives some very clear guidance on what your overall strategy should be.
The book is meaty. In addition to the overall strategy piece it covers some specialized findings on marketing in emerging markets, luxury brand marketing and digital marketing. I’m going to skip over the specialized stuff to summarize what I think are the biggest take-aways in terms on general marketing strategy everyone should be following (but hardly anyone does).
Here is the summary:
1. Double Jeopardy is real and everywhere
This is a re-hash of How Brands Grow, but is worth mentioning again. Double Jeopardy means that customer penetration and purchase frequency are highly correlated. There are very few (maybe zero) examples of “niche” brands that have low penetration but high average purchase frequency. In addition, the largest brands have much higher penetration and slightly higher frequency. The take-away is that, to a significant digit or two, you should be putting all your effort into customer acquisition and stop worrying about retention. If you are successful on customer acquisition, then you will automatically get retention for free. It’s a very counter-intuitive notion given how much emphasis consultants put on “loyalty”, but it’s extremely obvious when you look at the data. Note this pattern remains true even when you look at what we generally think of as highly “loved” brands like Apple and Harley-Davidson.
2. You grow customer penetration by being “available”
There are two types of availability: Physical and Mental. You need to win in both. If you aren’t there when customers are looking for your solution, they will use a competitor who is. This is why Coke wants to be within arm’s reach at all times. This is why Starbucks in on every corner (and in grocery stores and office break rooms). This is why you want to dominate Google Search. This is why you want to be on the end aisle at the grocery store. This is why you want to be sold at Wal-Mart.
Mental availability is why you spend money on advertising and public relations. You want to be top of mind when customers are thinking about your category. If you aren’t in the selection set you likely aren’t going to be chosen (unless your competitors dropped the ball on physical availability). When building mental availability, you want to focus on NON-CUSTOMERS. If you try to increase availability for non-customers, you will get customer impact for free. Customer already know your product, at least a little. When you run an ad and a customer sees it they are far more likely to register seeing the ad than a non-customer would. You need to break through the clutter targeting non-customers. If you are successful, you will automatically reinforce your brand with existing customers for free.
3. Make it easy to buy
Understand what all the objections to buying your product are. Understand what the barrier are to buying. Work through them one by one and eliminate them. This means having the right varieties. A customer may want spicy and if your salsa is only mild you will lose that customer. It means having the right prices. If your product only comes in large sizes some poor customers may not have an entry point. It means eliminating break points. If your site doesn’t take American Express, some customers are going to walk away. If your site crashes during the shopping experience, you aren’t going to make a sale. Find barriers and lower them.
4. Light category buyers matter more than heavy buyers
What!?!? What about the 80/20 rule? It turns out the 80/20 rule is not so much a rule at all. In most markets it is far closer to the 50/20 rule. Your top 20% of buyers produce about 50% of your sales. But it’s even more complicated than that. Who your top 20% of buyers are will shift from period to period. Some of the top 20% are consistently heavy buyers, some just happened to spike during the period you were looking at (Byron calls these people “heavy by happenstance”). Some of your top customers love your product. Some had their first Superbowl party and had to fill their pantry with potato chips.
Most importantly the Top-20% are already high users who are engaged with your brand. They are the easiest to reach with messages. If you reach them, it doesn’t mean you have any impact with anyone else. But if you reach everyone else then the top-20% will become aware of your message for free – they are just paying attention that much more. It’s a sub-rule of focusing on non-customers. When you do target customers, target the worst ones, not the best ones.
While we are on the topic of targeting: Don’t. Customers don’t actually differ that much. Where there are actual differences it should be obvious (If you only sell in New York State, you should target your marketing to New York State only). If you have a product that only appeals to a small group (say vegetarian meat alternatives) you shouldn’t focus on that group, instead do all you can to widen the appeal (position it as a healthy option rather than a vegetarian option).
5. Loyalty programs are bad
Loyalty Programs and the Selection Effect. I agree in general, but I also think that you CAN design good programs that create value. It’s just than most programs are not like that. And even if you can get a program that creates value it will not be your company’s growth engine. It’s a nice to have that could get you a little boost. But don’t let it distract you from customer acquisition.
6. Build Mental Availability using “Category Entry Points”
Category entry points are reasons or occasions when someone considers buying a product in your category. It can be broken down into five categories:
- Why are you buying a product (“I want a refreshing drink”)
- When are you buying the product (“I need a morning beverage”)
- Where are you buying the product (“I need a drink when I am on the beach”)
- With whom are you with when buying the product (“I’m hanging out with my kids”)
- With what are you buying the product with (“I need a drink that goes with French fries”)
You need to know what all the most common (and less common) entry points are to your product category. Then you need to increase your mental availability for each one. A good example of this is McDonalds running an ad campaign talking about McDonalds’ breakfast. The goal is to increase the mental availability of McDonalds when customers are thinking about the category entry point of “I need breakfast”.
Note that mental availability / category entry point connection direction matters. It doesn’t help if your brand creates a connection with breakfast. You need breakfast to create a connection with your brand.
How many CEPs should your brand attempt to dominate? It depends on how big a brand you want to have. Big brands with high market share link to more CEPs than smaller brands. There is no such thing as a large brand that has niche CEP penetration.
Sometimes marketers talk about “consideration set”. It’s another BS marketing term. It turns out there are LOTS of consideration sets – one for each CEP. Family vacation, bachelorette party weekend, romantic getaway, and business trip all need a hotel. But each has its own CEP consideration set for which hotels (and which booking engines) should be considered. If you want to be a big brand you need to ensure you are mentally available for all of them.
7. Smart metrics
Most metrics are a waste of time. We collect them but don’t do anything with them. When they go up we pat ourselves on the back and claim credit. When they go down we point to something external which was outside our control. But some metrics are helpful and actionable:
- Mental Market Share: The % of CEP associations your brand has as a share of the total CEPS for the category
- Mental penetration: % of category buyers that link your brand to at least one CEP
- Network size: Average number of CEPs tied to your brand for customers who are aware of your brand
(Note Mental Market Share is just Mental Penetration x Network Size)
All three metrics should correlate with sales. If they don’t you likely have issues with physical availability (distribution say), marketing mix (i.e., price is too high), or messaging (too narrow targeting). New marketing activities should clearly focus on either penetration or network size. A new CEP (“Breakfast at McDonalds”) should increase network size. A media schedule with extended reach should increase mental penetration in the market. Relative weakness on one vs the other in your category vs competitors is a good place to start for low hanging fruit.
8. How to build a marketing campaign
Each marketing campaign needs one clear message. Focus on one CEP at a time. Each new marketing campaign should focus on a different CEP from earlier messages. Every campaign should be tied together so they build on each other and it is clear that it is your brand being advertised (and not another brand or category entirely).
Good questions to ask when you build your campaign:
- Which CEP will it build mental availability for?
- How common is this CEP in the market? Have we already nailed the more common CEPs?
- How long has it been since the last time we focused on this CEP?
When buying media you want to focus on REACH not FREQUENCY. Rule of thumb in marketing has traditionally been you want to have frequency of “three” (in whatever time period you are talking about apparently). The reason is some early research that showed that retention spikes at three repetitions. This research is BS. What actually happens is the impact of seeing an ad decreases with each repetition. So impact of spot #4 is worse than #3. But #3 is worse than #2 which is worse than #1. So you are far better to have reach of 90% with frequency of 1, then reach of 30% and frequency of 3. There is nothing magic about number three.
Getting high reach is difficult. There are a LOT of shows on TV. Maybe you wonder who is watching channel 317 at 3am on a Thursday? I don’t know, but I can tell you with absolute certainty that that is not the only TV show they are watching that week. Low rated shows are watched by heavy TV watchers. If someone only watches an hour of TV a week it is likely a very highly rated show, (it might also be a premium cable show like Breaking Bad, but even Breaking Bad’s viewership is largely made up of people who watch a lot more TV). So if you want to get very high reach on television you need to advertise on highly rated shows. The industry knows this, which is why the cost-per-impression of highly rated shows is much higher than lower rated shows.
But once you advertise on a highly rated show, you need to stop. Too often brands will decide to advertise during the Oscars and then run a dozen ads during the show. Unless you have some reason to believe that people watching the first half of the Oscars are very different people than those watching the second half, you are far better spending your additional marketing dollars somewhere else. Oscars are a great way to get reach on your first ad, but you are almost guaranteeing limited incremental reach running a second ad during the same show.
9. Distinctive Assets
Distinctive assets are important for three reasons:
- Decrease confusion between your brand and competitors (how many times have you seen an ad and said, “I remember it was for a running shoe company, but I can’t remember which one”?)
- Increase the number of memory structures that allow recall for your brand
- Ability to generate a wider variety of creative while maintaining advertising effectiveness at increasing mental availability
Distinctive assets can be many things from logos to taglines to music. At a very minimum your brand should have the following:
- A color or group of colors that define the brand
- A logo and/or shape (Nike Swoosh)
- A face – either a celebrity or a character. Something that humanizes
- A sound (think Intel)
- A short phrase (“What’s in your wallet?”, “Expedia… dot commmm!”, “A Place for Answers, A Place For Mom”)
It also includes things like “style” that is harder to define, but should be pretty clear when you see multiple ads lined up.
Note that distinctive assets are about being DISTINCT not DIFFERENCIATED. Differentiation is about what needs are being served (Red Bull = Caffeine), Distinctness is about how a consumer identifies and finds the brand (Red Bull = Red and silver swirl).
All brands should have all five elements at least (and often multiple elements within each of the five types), but what is emphasized depends a lot of the primary media used to advertise. Print ads have little use for sounds. Radio ads can’t use logos or colors. TV ads can obviously use them all (which is another reason why TV is so effective when done correctly).
When executing on distinctive elements you want three things:
- Reach as many people as possible
- Co-present your brand with the elements and the elements with each other as much as possible
- Be consistent. Don’t change the elements unless you absolutely have to
The nice thing about building a stable of elements is it lets you be more creative with advertising and still be effective. There is a debate in advertising on whether you should reveal your brand at the beginning of a spot or wait until the end. The argument for immediate is to build more brand impression. The argument for waiting is to increase audience engagement as they try and figure out what the brand is – and wait to see the entire ad instead of clueing out as soon as the ad starts. If you have strong brand elements, you can get the best of both worlds. You can open a spot with lots of brand elements, but wait until the end to reveal the brand name.
10. Smart market research
Most market research is a waste of time. It is done so senior management can feel good about a decision that was already made. It is like when we decide to grow by 20% next year and then ask finance to build a model showing us how we are going to do it (Only a lot more expensive than the FP&A guy’s salary). But there is some market research worth doing if it hasn’t been done already:
- Competitive analysis: Get data on the customer base demographics of your brand vs competitors. They should be almost the same (even Chili’s and KFC basically have the same demographics). Find out where (or if) they are not the same. If you are under-indexing with a particular group, try and figure out why
- Category Entry Points: Figure out what the most common category entry points are. Then see how well your product compares to others in the category on each entry point
- Distinct elements: Test all your brand elements and competitors to see how famous and unique they are. Fame is the % of buyers who tie a specific element to your brand. Unique is the % of buyers that tie an element to your brand that ONLY tie it to your brand. You should end up with all of your elements on a xy graph. You can roughly divide the graph into four quadrants
||AVOID these elements
||USE these elements
||INVEST in these elements
That’s not all obviously, but if you focus on those ten principles you will be light years ahead of most marketing departments on the planet who are trying to target customer segments, cross sell, increase customer loyalty and build Facebook fan-bases. Even when companies are doing the right things (brand extensions to target different use cases), they are often doing it for the wrong reasons – or at least not thinking through the most important reasons for doing it. This post should be enough to have you understand what matters in marketing. Once you know that you can get creative on the execution.
The HOW is important, but doesn’t matter until you are working on the correct WHAT.
Which is coincidentally a chapter in the book I am writing, Good Enough: Why Good is Better than Excellent. If you found this post valuable, sign-up for my newsletter. I am sharing behind-the-scenes work and book chapters weekly (sometimes for fortnightly) exclusively with that list. Hope to see you there.