Inconsistent experience limits lifetime customer potential
Growth requires mastering
momentum over lifecycle
Chief Global Brand Analyst
Over the past few years we have heard a lot about the need for companies to pursue customer-centric growth. But it is difficult for a company to maintain its attention on the customer’s functional and emotional needs when different functions focus on different activities with different key performance indicators. As a result, customer experience may differ dramatically depending on where the customer is in the buyer lifecycle. While marketing woos new customers with special offers, existing customers feel neglected and wonder why they are not getting the same deal.
Your customers do not distinguish between your product lines, service staff, call center, website, or social feed. To them they are all one entity and experience of them creates your brand: the ideas, feelings and associations that will determine whether a person wants to use your product or service. To complicate matters, people’s exposure to and experience with a brand changes over time, moving from incidental exposure to a brand for which they have no need and little interest to an intimate understanding of what your brand has to offer, which may lead them to praise or decry it.
To drive customer-centric brand growth companies must create a holistic view of how well they are creating the potential for growth across the buyer lifecycle. Broken down to its most simplistic level, we can envisage this as three stages: experience, exposure, and activation. In an analysis covering a wide variety of brands measured in BrandZ™ across a three-year timeframe we found that only 4 percent of brands outperformed the average on all three stages—but this group grew usage by an average of 46 percent.
Retaining at least a fair share of customers is the bedrock on which growth is built. Unless a brand can retain at least its fair share of existing customers it will find it difficult to grow. Actual experience of a product has an obvious impact on the willingness to buy again but marketing can also shape that experience.
Predisposing new customers
However, attracting new customers is vital to growth. Your marketing might target these people as prospects but until they need a product or service like yours, claims will fall by the wayside and all your potential customers will be left with is an impression of what your brand stands for, gleaned from fleeting references in conversation and casual exposure in day-to-day life. Shaping the right impression and creating a predisposition to choose your brand is critical to growth. Our analysis finds that, on average, brands which under-perform at exposure do not grow.
Over the last decade—led on by readily available short-term, volume-oriented metrics—companies have increasingly invested in activation, targeting and incentivizing people actively exploring their category. However, our analysis finds that two-thirds of growth comes from people who are already predisposed to choose a specific brand. Fulfilling that predisposition is less a matter of incentives than making sure your brand is easy to mind and easy to buy.
One brand that has found renewed success through a more balanced and informed approach to brand building is Adidas which ranked No. 100 in the 2019 BrandZ™ Global Top 100 and this year rose eight places to 92. However, back in 2014, Adidas was on the back foot, suffering from declining global sales and market share losses in the US. That year, recognizing that most people were not ready to buy the brand today, CMO Eric Liedke introduced a plan to drive brand desire by leveraging popular culture.
Then in 2017, new CEO Kasper Rorsted introduced organizational changes under the title “One Adidas.” He announced a reduction in product portfolio with the aim of increasing price point and an emphasis on e-commerce sales (the most profitable distribution channel). Market mix modeling highlighted the halo effects of marketing across product categories and across retail channels, dispelling the assumption that digital advertising drove digital sales, and identifying that performance marketing under-performed brand marketing in terms of ROI.
Adidas is not alone in discovering that an over-investment in digital advertising designed to activate immediate sales can undermine longer-term success. In the UK insurance market, Direct Line Group identified that a substantial proportion of revenues were being driven by brand equity. This new understanding of cost per sale, combined with in-market testing, led to an increased investment in brand building and TV advertising. BrandZ™ data identified that this investment increased the proportion of people predisposed to choose Direct Line and strengthened perceptions that the brand was worth the price. As a result, the Group’s sales and share have improved, even in a market dominated by price comparison websites.
Both these examples speak to the need to better understand the real drivers of sales, not just rely short-term performance metrics. But that need does not just apply to media. Looking at its customer data, Adidas identified that its customer relationship marketing was over-investing in the minority of people who bought four or more pairs of sneakers per year. A far greater opportunity might be to focus on the 60 percent of buyers who only bought once in a year but might be encouraged to buy again. Findings like this confirm that companies cannot afford to have a siloed view of the people who buy or might buy their brand.
Like Adidas and Direct Line, the brands that grow market share most strongly are the ones that align their resources appropriately to deliver a clear, consistent, and coherent impression across the buyer lifecycle. Existing users do not wonder why they are being ignored; potential users know what the brand stands for and are not motivated by unsustainable claims; and messaging at point-of-choice reinforces existing perceptions without defaulting to unnecessary incentives. Central to success is the adoption of a coherent set of key performance indicators that create a holistic view of the brand across the buyer lifecycle. The metrics chosen should be ones that assess the brand’s performance at each stage and reflect what drives growth over time.