The heavy buyer fallacy

It seems obvious, a brand’s currently heaviest buyers generate more sales and profits (per customer) so they should be the primary target for marketing.

This is commonly held misconception. The rise of direct marketing and CRM gave this fallacy a big plug, after all it can be hard to justify sending expensive letters to light customers.

But if our aim is to grow sales then our efforts should be directed at those most likely to increase their buying as a result of our attention. It takes only a moment of thought to realise that customers who already buy our brand frequently are going to be difficult to nudge even higher.

If, instead, our aim is to prevent sales losses then heavier customers would seem more promising – after all they represent a lot of sales we might lose. But then again, they are more loyal, other brands make up less of their repertoire, their habit to buy our brand is more ingrained, our brand has rather good mental and physical availability for them. In short, they aren’t particularly at great risk of defecting nor of downgrading.

So the idea that heavy buyers of your brand (“golden households” or “super consumers”) are your best target is flawed. Dangerously simplistic.

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13 thoughts on “The heavy buyer fallacy

  1. Hi Byron,

    Thanks for the post. The problem with pursing sales growth, of course, is that it can be unprofitable in the short-term, which in today’s economy can be risky and unattractive

    The pursuit of sales growth is, in my experience, something commonly pursued and usually is done so at great cost and without much regard for profit.

    Best,
    Ken.

    • I should have mentioned that the Heavy Buyer fallacy is true for maintaining sales too. Meaning that focusing on existing, heavier buyers is a way to shrink, not maintain, a brand’s sales and profits.

  2. Excellent stuff. I have an example of how this plays out in practice.

    Many years ago the consulting firm I was working for was hired to do some consulting work to help a pharma company grow sales of a particular brand. The temptation was to use the traditional “visit your top customers more” approach. Thankfully we called in some OR guys to run the numbers and discovered exactly what you’re saying.

    The heavy buyers were being visited about 12 times a year on average. But the numbers showed that within that group, it made no difference whether you visited them 10 times, 12 times, or 16 times. You’d essentially maxed out what they were buying from you.

    There was a different, lower buying segment that we’re being visited about 6 times on average. However, within that group, those who were visited 8 times bought more than those who had been visited 4 or 6.

    There was also a bottom group who basically didn’t buy no matter how many times they were visited.

    The normal response would have been to divert resources to focus on the top of the 80:20. But in fact, visiting that middle segment more produced much higher incremental sales.

    Of course, I’m simplifying a bit – there were more criteria behind the segments. But the
    logic plays out. Your biggest current buyers aren’t necessarily the best focus for growth.

    – Ian

    • Ian’s post is great, because it highlights to me that what Byron is saying (increasing penetration is key) doesn’t mean that you want to focus on just anybody who’s not a heavy user, but the most likely “non-heavy buyers”. For example, if you are marketing a yogurt for kids, you likely want to target households with children.

      • Yes, although you wouldn’t want to just guess, you’d either want to test or use any data you already had on which groups responded better to marketing. So if you could segment into groups X, Y and Z and you had within-group variation in the amount of marketing/advertising/selling or whatever done and you could see which group responded better (via increased sales) to increases in marketing (or I assume, different messages etc) then you’d focus on them.

    • Thanks for sharing the example Ian. Very valuable to have an additional real life example, explained simply.

  3. Hi Byron,
    You have mentioned that heavy users have low repertoire. My understanding is heavy users tend to flirt with many brands ( and hence repertoire is high) and light buyers are loyal. However I agree with the inference the chances of influencing heavy users is very less.

    • Hi Karthik, yes heavy category users have larger repertoires. I said that a brand’s heaviest users have a great deal of their repertoire devoted to that brand, so other brands don’t constitute much of their repertoire (even if they are heavy category users).

      • Hi Byron,

        Thanks for your clarification. From what I understand from How do brands grow book,
        Light users of category – Loyal consumers of a Brand (They buy only once in a year or twice in a year)
        Medium users – Can try one or two Brands
        Heavy users – Have Large Repertoire

        However if we do similar LMH analysis for Brand (Let us assume Market leader ),
        Light users of Brand – Light users of category ?
        Heavy users of Brand (20% contributing to 50% sale)- Heavy users of category ?
        Atleast this is the trend which we see in Milk additives category in India.

        Hence I do not understand how heavy users of Brand are Brand loyalists.

      • Yes heavy users of the brand, by definition canít be light category buyers.

        But they donít have to be especially heavy category buyers. And even though they may have a larger repertoire they still have to devote much of their repertoire to that brand in order to be one of its heavy buyers.

      • I think part of the confusion here is an over-literal interpretation of statements like “heavy category users have a wide repertoire”. That doesn’t mean that every single heavy category user has a wide repertoire. it means that most heavy category users do. Depending on the category, probably a large majority of heavy category users. But there will always be exceptions: a smaller number of brand loyal users within the heavy user (and medium user) categories.

        And some categories have more brand loyalty than others. Though this is more often to do with structural factors (e.g. high switching costs) than it is to do with being a dedicated fan of the brand. The guy who’s eaten a zillion Big Macs is the exception rather than the rule.

  4. By the way, here’s different type of example of the heavy buyer fallacy I’ve seen play out in practice: the natural buying/replenishment cycle.

    So if you sell PCs to large corporates then they’ll typically upgrade all the PCs in one go to get a good deal, and they’ll do it every 2 to 4 years. So by the very nature of this buying cycle, your heavy buyers this year aren’t the best place to put your attention for sales next year as they’ll have done the refresh and won’t be buying again for a couple of years.

    Sadly, the consulting firm I worked for who had the great insights for a client mentioned above about not over-selling to heavy buyers made the classic mistake themselves of targeting heavy buyers who were unlikely to buy again.

    We did large scale transformation projects. Making big changes across an organisation in projects that took typically 9 months to 18 months to complete. At the start or in the middle of a transformation program it was highly likely that the companies that hired us would keep paying us lots the next year (to finish the project as planned). And often there would be spin-off work that followed in the year after. But after that, the transformation was done and they were highly unlikely to buy large amounts of consulting in the next few years (certainly not the large scale transformation work we did. You don’t reinvent your business every year).

    Sadly, out leadership did an 80:20 analysis, figured out that most of our sales came from a small number of large accounts, and focused our selling efforts on those accounts. So when the big transformation programs in those accounts came to a natural end we were basically screwed. Our sales efforts prolonged the small additional pieces of work that follow a big program, but because we hadn’t put any sales effort into targeting “light brand users” who were about to go into big transformation efforts themselves, we had no big projects coming up and sales plummeted.

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