Nerd alert. Learning is important, right?

Yes, exactly. What a bunch of nerds. Nerd alert. Marketing Architects. Hello, and welcome to the Marketing Architects, a research-first podcast dedicated to answering your toughest marketing questions. I'm Elina Jasper. I run the marketing team here at Marketing Architects, and I'm joined by my co-host, Rob DeMars, the Chief Product Architect of Misfits and Machines.

Hello, hello.

We're back with your weekly Nerd alert. Every week, I'll take a deep dive into academic marketing research and translate its complex ideas into simple, understandable language for Rob, and of course, for all of you. So Rob, are you ready to nerd out?

Feed my brain, Elaina. Feed my brain.

Okay, let's get into it. As always, we'll link the research we cover in the episode notes. This week I read, Where is the brand growth potential? An examination of buyer groups by Zang Tou Trinh, John Dauze, and Byron Sharp from the Ehrenberg Bas Institute. We are going to talk about a classic marketing Which buyers should you focus on? Loyal frequent buyers or light infrequent buyers? Or what about your non-buyers? But first, Rob, what's the last brand that managed to turn you from a light buyer into a regular? And How did they do it?

The brand definitely got me, which was Nespresso. I was a light Espresso drinker, not a major one. But then I was staying at a hotel where they had a Nespresso machine with the capsules and everything. At first, I'm like, Oh, man, I want the coffee machine, not the Nespresso machine. Then, boy, the caffeine weed got me. They got me hooked. I just started popping their capsules. It's such a unique product experience. You can't just go buy another brand. They hooked me. They got me using it. And now I'm buying capsules all the time, Elaina.

That's a great example because I'd say them successfully converting into more of a frequent buyer is probably quite valuable for them. I think a product like Nespresso. I know those pods ain't cheap. I don't think so. Ain't cheap.

They're not cheap. No.

Yeah. So for them, that was a big success getting you hooked on it. So let's talk about the study. We might be tempted to think that focusing on heavy buyers is key to driving sales, and those heavy buyers are important. But this study breaks down how light buyers and even non-buyers hold the most untapped potential for growth. I know we've all heard this before if you're a fan of marketing effectiveness, but I think that the data and the way that they came with this conclusion is interesting. So these researchers, they used both a simulation study and an empirical study of purchases of approximately 12,400 UK households across different brands and categories. They used a model called the MBD Dereclay to simulate sales growth potential across different buyer groups. They looked at how much a brand's heavy, light, and non-buyers contribute to both brand sales and overall category sales. They found that for most brands, the head room for growth, meaning the difference between how much a group buys from a brand versus the total category, is much larger among light buyers or non-buyers. Then they tested this with real purchase data. Even for big brands with high penetration, light buyers and non-buyers still offered more growth potential than heavy buyers.

For smaller brands, the difference was even more pronounced, with non-buyers providing the majority of growth opportunities. The logic is actually pretty simple. Heavy buyers already buy a lot from brand, so there's not much more you can get from them. On the other hand, light buyers and non-buyers have a lot more room to increase their purchases. Rob, I know it sounds simple, and we here at MA agree with this belief system that there's more growth potential in light buyers, but how accepted do you think this is by marketers in general?

I think a lot of people think of their brand like a high-ticket B2B brand where it's like, Oh, man, just the cost of getting another customer is so expensive that I got retain the customers that I have. But when you're dealing with mass audiences with lower price point items, you can see why you might go in with that mindset, but no, you just need to keep churning the soil and bringing in new customers.

Yeah, and I think that doesn't mean that loyalty is not important. If it's a leaky bucket, then those new customers are just going to defect anyways. But I think about that phrase, it's more expensive to acquire a new customer than to maintain an old customer. That's become just something people say. Everyone's like, Oh, yeah, that's right. It just makes sense. Yeah. Yeah, but that's really working against this finding, which is that you should be focusing on your life buyers. It actually made me think about the new CEO of Starbucks, he was at Chipotle. I just think about Starbucks, and I've heard a lot of people talking about what they should do next and how can they improve things. If he does what it sounds like he might do, which is simplify their menu, maybe make it more approachable, I feel like that's going to be a better strategy. Whereas I've heard other people saying, Oh, they need to focus on their loyal buyers and more stuff in the loyalty program, more stuff in the apps, and more customization. I don't know. If we're thinking about this, they're probably better off getting more people that aren't currently going to Starbucks to stop by.

Yeah, they are just trying to become a total churn model, which makes sense. I had heard on another podcast, even, they're trying to get people to not purchase at the register anymore. They're just trying to get people to use the app because they are just trying to keep that flow going. They're actually not prioritizing in-person customers versus the ones using the app.

Well, I'll tell you what drove me to the app. This is very random, but everyone's adding that tip thing where you have to look them in the eye and not give them a tip. If you use the app, you don't have to do that. That's why I use the app, and I'm a loyal Starbucks It doesn't even have to do with Starbucks. But anyways, all right, let me say our GPT for this one because it's fun. All right. Imagine a brand's customer base as a concert. Heavy buyers are like your front row fans. They're already singing along to every song, so there's not much more energy you can get from them. But the light buyers and non-buyers are like the folks hanging out in the back or outside the venue. They have the potential to join the excitement and fill the space if you play the right tunes. The study shows that if you want to turn your concert into a full-blown festival, you need to get those people in the back and outside to move closer to the stage.

Makes sense.

That's it for this episode of The Marketing Architects. We'd like to thank Iona Klaffhaki for producing the show and Taylor DeLos Reyes for editing. You can connect with us on LinkedIn, and if you find the show valuable, please leave us a rating and review. And if you'd like to hear more from us, subscribe to our weekly email newsletter. It's built for marketers seeking research-first analysis of the latest trends. You can go to marketingarchitects. Com/newsletter to subscribe. Now go forth and build great marketing.

All of that was super interesting. Isn't the new guy from TACO Bell?

I thought that he was TACO Bell to Chipotle to- That's what it was.

Thank you.

Yeah, I think he did the same thing at TACO Bell. Well, apparently, Starbucks has five quintillion options, right? On their menu? Yeah. Something like that?

Yeah. It was funny when one of them was like, They're not a coffee company. They're a sugar company.

Yeah, that's hard to think about. Marketing Architects.