Keep Telling Customers You’re Still Around

Brand growth comes more from acquiring new customers than from customer retention, according to research at University of South Australia. This was found even with the online fashion category analyzed in the studies, a product category where many would expect emotional brand attachments. Still, keeping the customers you have now is important to business success.
     Almost identical conclusions come from researchers at London South Bank University and University of South Australia after their analysis of purchase patterns over time of fifty-five brands of consumer-packaged-goods categories. A third of initial brand buyers purchased the particular branded product no more than one more time during the next five years. Revenue from those many customers counted, but market expansion was essential. Moreover, profitable expansion requires precise definition of the most receptive target markets.
     University of South Australia and Massey University researchers add that loyalty is valuable, but they advise you don’t waste money chasing after customers you’ve lost for no discernable reason. They’ll likely come back on their own. Half the number of first-year buyers of a breakfast cereal brand who were lost in the second year bought the brand again in year three.
     These findings were inspired by, and provide support for, a theory called the Dirichlet model, which uses a group of mathematical formulas to predict purchase behavior. Researchers from University of Southampton and Kingston University applied the theory to explore what persuades people to buy a particular brand of a commodity offering. Commodity offerings such as milk, paper towels, lumber, and gasoline are those in which shoppers are likely to perceive few differences in benefits when comparing the brand options. Purchase decisions are often based solely on price and availability, not quality. Brand loyalty is likely to be low. Efforts to build loyalty often center on distinctive labels and attention-grabbing item displays.
     The study findings argue for initiatives which continually keep the brand name top-of-mind. Remind your target audiences what you make and sell. Tell them where to find your items. Distribute news about the brand, such as variants, extensions, added features, and special offers.
     Recognizing the value of this drumbeat also makes sense of the other findings. Keeping the customers you have now for any item—a commodity offering or not—works best when shoppers remember who you are. The customer lost in year two returns in year three or beyond only if they know you’re still around.

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Monitor Variety Seeking 

Shepherd Profit-Potential Defectors 

Present Commodity Products to Distinguish 

Repeat Yourself Repeatedly