Heavy users are every Marketers dream segment. Large sales, highly profitable (usually), and inclined to stay with your brand forever. Large sales: yes; highly profitable: usually; inclined to stay with your brand forever: not necessarily.
Do Heavy Buyers Really Stay Heavy ?
Jenni Romaniuk and Samuel Wight, both of the Ehrenberg-Bass Institute of Marketing Science, recently conducted an analysis of heavy buyer buying behavior using 2006 Kantar Worldpanel data.
Buying behavior was defined using multiple schema—using both relative consumption (e.g. top 20% of consuming HH’s) and also purchase frequency (number of purchase occasions per year).
They examined 15 categories and 139 CPG brands across the 2006-2007 time period. Their analysis shows that, on average, about 50% of heavy buyers become non heavy buyers of the same brand in the next year.
Let me put that differently: heavy buyers aren’t heavy buyers forever. They can become light or non-buyers if you’re not paying attention to them.
Heavy Category Buyers and Category Effects
Of course, some heavy buyers become non heavy buyers because they leave the category (e.g. parents of a diaper age baby). But even after looking at category heavy buying, Romaniuk and Wight’s analysis still shows that 65% of category heavy buyers remain heavy buyers in the subsequent year.
This is surprising to say the least. What should Marketers do about it? Romaniuk and Wight suggest focusing on light or non-buyers given the annual churn of heavy buyers and also the fact that growing brands growth is often due to the acquisition of non or light buyers.
I agree with this, but also think that CMO’s need to ask the question: “what do I need to do to keep my heavy buyers buying heavily?” And, how do I turn light buyers into heavy buyers?
3 Considerations for Advertising to Heavy Buyers
1. Heavy buyers are not heavy buyers indefinitely. As the Ehrenberg-Bass data shows, Marketers cannot just assume that heavy buyers will hang around and stay loyal. You have to constantly re-earn their loyalty.Marketers need to have a continuing dialogue with heavy buyers and find new ways to delight them.
2. Heavy buyers tend to be more profitable. Although there is some debate on this point, especially in promotion intensive categories, most analyses I’ve ever seen show that heavy buyers not only buy more, they also tend to be disproportionately profitable.
3. Competitors often target your heavy buyers. Heavy buyers are attractive not just to your brand, but to competitors as well. Heavy buyers tend to be the gold that every brand likes to mine—so if you don’t mine it, some other brand will.
Dissenting Opinions — Issues with Heavy Buyer Targets
All of the above seems obvious, but there are dissenting opinions on this. Kevin Clancy wrote a blog post in his “Shocking Truth of the Month” series titled: “Heavy buyers are the worst target for most marketing programs.”
His argument is twofold. First, heavy buyers tend to be more deal and promotion conscious and are, therefore, inherently more price sensitive and less profitable. Second, competitive heavy buyers are already “psychologically locked” to a competitive brand and hard to convert.
There are no doubt cases where the first is true–e.g. brands have heavy buyers who buy the brand heavily because it’s often on sale. Make sure your brand doesn’t fall into this trap. His second point contradicts the first. If consumers are locked-in to another brand, then they are inherently loyal and unlikely to be price sensitive. Lastly, my point is not to advertise to competitive brand heavy users; it’s to consider targeting your own heavy users before they become light users.
50% — A Loss Too Much?
Let’s come back to the central point here: that 50% of your heavy buyers are likely not going be your brands heavy buyers next year. And on average, this will contribute to a -15% loss in sales for your brand all things being equal.
Assuming you’ve done your homework and know they’re not just loyal, but also profitable, then the question remains: should your advertising target heavy buyers (before they’re not heavy anymore)?