There has been a scientific revolution in the social sciences but so far it has not fully engaged the marketing community. Which is a pity given that its probably costing their organisations, the businesses that pay their salaries, several $billions each year.

Take the issue of loyalty. Is this statement true or false? Does it matter to you and to your organisation if you don’t know the correct answer?

True or False: “Your brand’s most loyal customers (100% loyal or near-100%) are your most valuable customers. They not only buy your brands most often but also act as its vocal and visible champions”

At Mountainview Learning we have the unique perspective of knowing what marketers believe the answer to be. Over the last few years, we have either interviewed or surveyed 805 marketers on this very question from a range of different markets and geographies.

The sample of 805 is significant not only because most academic studies are presented on the basis of one/two hundred subjects, it’s one of the largest surveys of marketers opinions ever undertaken.

So what’s the answer? About 15% of the sample didn’t have a clue (they didn’t have a view) 60% thought that the statement was true and 25% thought that it was false.  So, only 25% of the sample gave the correct answer. As for the others if they are focusing on their most loyal, or their 100% loyal customers then their brands might be struggling and now you know why.

But should it be?

Pareto’s Law states that 20% of your customers make up for 80% of your sales. In this case, it would be true that your heaviest 20% of buyers (i.e. the most loyal) would be the most valuable. Phil Kotler and other authors of marketing texts have been extolling the virtues of targeting these loyal buyers through, among others, loyalty programs, fan websites and customer relationship management.

But the data says another story. Ehrenberg Bass data indicates that 100% loyal customers are loyal for one important reason; they are light buyers of the category. If a customer buys the category  once then they are 100% loyal to the brand they bought.

Nielsen Brandscan data has shows that the top 20% rarely account for more than 50% of sales. So ‘light’ buyers account for about half of all sales! Looking at Coca-Cola, for instance, TNS data for 2005 shows that half of all Coke buyers buy just one or two cans every year… about 30% of Cola buyers don’t even buy a single can in one year. While they may not purchase very much, their numbers are so significantly large as to contribute a huge degree to sales. As we have said, light buyers account for at least half of sales volume.

So what does this mean for strategy? As most companies seem to think that their most loyal customers are their most valuable, it is likely that they spend their marketing budget chasing these extreme buyers. This is a waste. Studies have shown that loyalty programs generate little or no change in market share.

Marketing “secrets”?

Going back to the figures, only a quarter of senior managers and marketers at market-leading brands knew that their 100% loyal or near 100% loyal buyers were not their most important.

You might be mistaken for thinking that this “secret” is new and privileged information… Actually, the Ehrenberg-Bass Institute has been pointing this out, to anyone who will listen, for about half a century! In 1959, Andrew Ehrenberg found that the purchase frequencies for all brands have a negative binomial distribution (i.e. a very large number of infrequent buyers, and a long “tail” of frequent buyers accounting for less and less volume). Even today, 50 years later, major brands are ignoring these marketing truths and instead wasting their valuable cash chasing rainbows!

The value of loyalty is not the only marketing myth that holds the field, and many businesses, back from progress. If you are operating under the belief that brand differentiation is key to growth, or that people are more motivated by the joy of gain than the fear of loss, then you may stand to benefit from learning this invaluable marketing secrets. Please get in touch to learn about the courses Mountainview have to offer.

For further reading on this and other topics related to marketing science pleae read Professor Byron Sharp’s book, “How Brands Grow”, its available to pre-order from all good book suppliers.

Professor Byron Sharp, director of the Ehrenberg Bass Insititue has just published a new book, how brands grow. We at Mountainview are lucky enough to have had a sneak peak and can’t recommend it highly enough. It empirically demonstrates what we have been saying for years – that laws in marketing exists if you know how and where to look for them. So if you want to be able to separate the marketing facts from the myths we suggest you pick it up at:

http://marketinglawsofgrowth.com/index.html

The posterior superior temporal sulcus has been identified as the centre through which our brain responds to both facial and vocal expressions of emotion. Researchers at the University of York’s Neuroimaging Centre used a MagnetoEncephaloGraphic (MEG) scanner to test responses in this region.

Participants were shown photographs, either of people with fearful, or neutral facial expressions, and were played either fearful, or neutral vocal sounds, either seperately, or together. Responses in the posterior superior temporal sulcus were significantly higher when subjects could both see and hear the emotion of fear, in the words of lead researcher Dr. Cindy Hagen,  ‘the response was greater than the sum of the parts.’

We already know the importance of emotion in gaining attention and in getting remembered, this research suggests that media which transmit both aurally and visually simultaniously may have an advantage in transmitting emotion.

Read more at York University

VW have recently launched their ‘fun theory’ website, and the videos from it are a smash hit on Youtube.  The concept is based around the idea of changin behavior, to make a healthier, greener happier world.  While some of the science may be a little dubious the practical approach to behavior change is an inspiration.

http://www.thefuntheory.com/

At Mountainview Learning we have long been aware of the problems that inattention blindness can cause f

or brand marketers.  Indeed it is our main enemy in the ongoing War of Attention.  Yet inattention blindness can have far more serious consequences than someone missing your brand communication.

Dr. Ira E. Hyman, Jr. and his team at Western Washington University documented real-world examples of people who were so distracted by their cell phone use that they failed to see a unicycling clown passing them on the street.

Compared with people walking alone, in pairs, or listening to their iPod, mobile phones users were the most oblivious, with only 25% noticing the clown, half as much as walkers not using their phones.

Perhaps even more worrying was that people using their mobile phones also had trouble walking, finding it difficult to maintain a steady speed and direction, and failing to acknowledge those with whom they were sharing the pavement.

Walking is a far less cognitively demanding activity than driving, and this study clearly shows why mobile

phone use is such a menace on the roads.

Read more at Livescience

Shaming, and other ’social mobilization’ techniques were far more successful than financial aid at inducing people to improve sanitation standards. Thats according to Subhrendu Pattanayak, associate professor at Duke University’s Sanford School of Public Policy and Nicholas School of the Environment, the authro of a report in the August issue of the Bulletin of the World Health Organization.

Health workers  had persued a campaign of visiting homes accross india, offering subsidies for latrine construction which radically reduced the cost, had met with little success.  So twenty Orissa villages were selected at random for locally led efforts, including village “walks of shame” and “defecation mapping” that identified sources of contamination.

The results were striking when surveys from those 20 villages were compared with 20 other randomly selected communities where no social mobilization efforts were organized. Although subsidiesn were available to residents  in all 40 villages, latrine ownership only rose in those undergoing shaming.

Within those “shamed” communities, latrine ownership rose from 5 percent to 36 percent among families below the poverty line, and from 7 percent to 26 percent among households above it. Subsequent surveys by Orissa’s state government showed that all households had installed latrines by 2007 in 10 of the 20 villages subjected to the shaming.

So how can we make use of this?

This research shows very clearly the impact of two key psychological tools.  Firstly in mapping which homes were poluting the water supply it re-framed their behaivour into a matter of concern throughout the community.  Secondly they used social proof, to shame those who had not yet installled a latrine so to do.

watch?v=gTkmlwXar2o

I love this new ad from Kwick Fit.  A great example of how humour creeps up on you.

Pehaps by teacher had a point, sitting up straight in your chair isn’t just a good way of steering clear of the chairopractor, it also boosts your confidence, thats according to research published in the October 2009 issue of the European Journal of Social Psychology.

Pablo Briñol, a former postdoctoral fellow at Ohio State now at the Universidad Autónoma de Madrid in

Spain, Ohio State Professor of psychology Richard Petty and Benjamin Wagner, a current graduate student at

Ohio State conducted an experiment on 71 students.

They asked the students either to sit up, or slouch while writing down positive and negative personal traits that might impact their future suitability for a job.  Those who had been sitting up straight appraised

themselves as being significantly better qualified for future success than did those who were sloutching.

So how can we use this? Firstly SIT UP STRAIGHT! Secondly observe the body language of those around you, and be aware that those who are slouching are probably more open to having their opinions overturned than those who are not.