Stop Obsessing Over Your Best Customers

For years, marketers have been told variations of the same story. Your loyal customers are everything, twenty per cent of customers generate 80 per cent of your revenue, retention is cheaper than acquisition and the goal should be to create superfans who love the brand enough to become advocates. There is enough intuitive truth in that story to make it extraordinarily seductive, particularly because the customers who buy most frequently are the easiest people for organisations to see.

The problem comes when looking after existing customers is mistaken for a complete growth strategy. One of the most challenging ideas I have taken from Byron Sharp's How Brands Grow is not that loyalty is worthless, because that would be an absurd conclusion, but that marketers need to distinguish between taking care of customers and growing a brand. Those two jobs overlap, but they are not identical.

If the objective is substantial growth, concentrating primarily on people who already buy from you may actually be one of the least ambitious things you can do. The uncomfortable implication of Sharp's evidence is that some of the customers with the greatest future importance to your brand currently do not care very much about you at all.

Growth requires people who don't currently care very much about you

Ask most businesses who their most important customers are and they can probably tell you immediately. They know the regulars, the biggest spenders, the subscribers, the customers who open every email and the people who comment on every social media post. Those customers are visible because they constantly interact with the organisation, which means they naturally dominate internal conversations about the market.

Light buyers are much easier to ignore. They bought once last year, occasionally choose the brand, vaguely recognise the name and probably buy several competitors as well. They do not attend brand community events or describe themselves as part of a tribe, and in many cases they barely think about the brand at all. From inside the organisation, those customers can appear relatively unimportant, yet collectively they may represent a huge proportion of the market and much of the potential for future growth.

Sharp's central empirical argument is that brands generally become bigger primarily by having many more buyers, rather than persuading a relatively small number of existing buyers to become dramatically more loyal. This is the principle of penetration. If one million people buy a category and 100,000 of them buy your brand during the year, your annual penetration is 10 per cent. Growth could theoretically come from convincing those 100,000 people to buy much more frequently, but the recurring pattern Sharp highlights across categories is that large brands are distinguished most obviously by having many more buyers.

That does not mean purchase frequency is irrelevant. Bigger brands tend to have somewhat higher loyalty measures as well, but the difference in customer numbers is far greater. It is the combination of vastly more buyers and slightly more loyal behaviour that underpins one of the most important patterns in How Brands Grow.

Double Jeopardy changes the diagnosis

Sharp uses the term Double Jeopardy to describe a recurring pattern in which smaller brands suffer twice. They have fewer buyers, which is the first jeopardy, and those buyers also tend to purchase them slightly less frequently, which is the second. This is important because looking at the loyalty numbers in isolation could easily lead a smaller brand to conclude that it has a serious retention problem.

Perhaps it does, but perhaps the loyalty figure is partly the predictable consequence of the brand's size. Smaller brands often have lower mental availability, narrower physical availability and fewer opportunities to be chosen. If the marketer responds by immediately creating a loyalty programme, increasing discounts to existing customers and sending more communications to the same people, the activity may improve some customer metrics without solving the larger growth problem.

That is why diagnosis matters. Before declaring a loyalty crisis, the marketer should understand the category, purchase frequency, market share, retention norms, penetration and the brand's relative size. Otherwise, there is a real risk of treating a predictable symptom as though it were a unique strategic problem.

The 80:20 rule deserves considerably more scepticism

Marketing has a peculiar affection for the 80:20 rule. Twenty per cent of customers generate 80 per cent of revenue is often repeated as though it were an immutable law of business, even though the actual concentration of purchasing varies considerably across categories and time periods. Sharp's work challenges the simplistic assumption that the heaviest buyers always account for an overwhelming majority of sales.

The important strategic point is not whether the true figure in a particular market is 80:20, 60:20 or something else. It is that medium and light buyers collectively contribute more than many marketers assume, and they also represent an enormous pool of potential future demand. An organisation that builds its entire strategy around a relatively small heavy-buying group may therefore end up designing marketing for the people who already have the least room to increase their behaviour.

There is another complication in the form of buyer moderation. Heavy buyers in one period do not automatically remain the heaviest buyers forever. People's purchasing behaviour moves around as circumstances change, some heavy buyers become lighter, some light buyers become heavier and some non-buyers enter the category. The CRM segment labelled “our best customers” is therefore partly a snapshot of behaviour rather than a permanent description of a fixed type of human being.

That does not make customer value analysis useless. Historical purchasing behaviour can obviously help organisations make better decisions, and some customers genuinely do have greater expected future value than others. The danger comes when behaviour becomes identity and the organisation starts thinking of “heavy buyers” as a permanent tribe rather than people whose purchasing may change.

Most customers are promiscuous

Marketing language can become strangely romantic. We talk about brand love, relationships, communities, advocates and evangelists as though the ultimate achievement is a form of emotional monogamy between customer and brand. Actual buying behaviour is usually far messier and, from a marketer's perspective, much less flattering.

People buy repertoires of brands. Someone can genuinely prefer Coca-Cola and still drink Pepsi. A Tesco customer can shop at Aldi, a Nike customer can own Adidas clothing and somebody with a favourite coffee shop can still buy from somewhere else tomorrow morning because it is closer. Buying another brand does not necessarily mean the customer has defected or that the relationship has failed; in many categories it is simply normal behaviour.

The Duplication of Purchase Law explored in the Ehrenberg-Bass tradition reinforces this point. Brands share customers with one another, and larger brands tend to share more customers simply because more people buy them. That means the marketing team should be careful about interpreting occasional competitor purchase as a betrayal that needs to be fixed.

Customers who sometimes buy competitors are not necessarily failed loyalists. They are often just behaving like customers.

Customer loyalty still matters

This is where How Brands Grow can be reduced to an unhelpful caricature. “Byron Sharp says loyalty doesn't matter” is much easier to repeat than the more nuanced argument, but it gives marketers permission to make bad decisions. If your service is dreadful and customers leave at an abnormally high rate, you have a problem. If a subscription business cannot economically survive its churn rate, retention clearly matters, and if customers actively dislike an experience, fixing it should be a priority.

The more useful lesson is that customer care and customer growth are different jobs. Look after the customers you have, make the experience good, remove preventable reasons for leaving and reward people where the economics justify it. At the same time, recognise that even an organisation with exceptional retention eventually reaches a mathematical ceiling if nobody new ever joins.

Acquisition and retention should therefore not be treated as competing religions. They are parts of the same commercial system, but marketers need to understand where the greatest realistic headroom for growth exists before deciding where disproportionate investment should go.

Marketing departments are naturally biased towards existing customers

Digital marketing has made this particularly interesting because the people easiest to observe are usually the people who already know us. Email databases contain customers and prospects who have already identified themselves. Organic social media often amplifies engagement from followers already familiar with the brand, retargeting reaches people who have previously visited the website and CRM systems naturally organise people with an existing relationship.

Meanwhile, the enormous population of potential future buyers who do not currently interact with the brand is largely invisible. They are not in the email database, do not appear in customer research unless specifically recruited and rarely comment on the organisation's social posts. The business therefore has rich information about existing customers and very little information about the people it may need to recruit for growth.

That creates a fascinating bias. We often know the most about the people with the least headroom for growth. The heaviest buyer may already be buying as frequently as is realistic, while the occasional buyer who barely thinks about the brand has much greater potential to increase their behaviour.

This is one reason why a market orientation matters. Customer research should not mean only speaking to current customers. Understanding non-buyers, light buyers and the wider category can be every bit as important because it shows the business what it currently cannot see from its internal databases.

This changes how you think about advertising

Once you accept that meaningful growth usually requires more buyers, advertising starts to have a slightly different job. It cannot exist solely to communicate with enthusiasts and people who are already close to purchasing. It also needs to reach people who are only mildly interested in the category, are not currently shopping and may not enter the market for months.

That is where mental availability becomes useful. The question is not simply whether someone has heard of the brand, but whether the brand comes to mind when a relevant buying situation occurs. Somebody might know an insurance company exists but never remember it when renewing a policy, know a hotel chain but never think of it when planning a weekend away or recognise a restaurant without considering it when deciding where to eat.

Advertising can help build and refresh those memory structures before the purchase happens. Physical availability then becomes equally important because memory is commercially useless if the customer cannot easily find, access or buy the brand. The two work together: be easy to think of and easy to buy.

The irony of “waste”

This has an uncomfortable implication for the obsession with targeting efficiency. Broad reach inevitably means communicating with some people who will not buy immediately, and marketing technology has spent years promising to eliminate this supposed wastage. The ideal has been the right person, at the right moment, with the right message, and every impression that does not convert starts to look inefficient.

The problem is that the person who appears “wrong” today might become valuable six months or two years from now. Binet and Field's work on long and short-term marketing helps explain this tension. Short-term sales activation is exceptionally useful for converting existing demand, while long-term brand building has a different role in creating future demand and making the brand more likely to be considered when customers eventually enter the market.

If everything is optimised against immediate conversion, marketing investment naturally moves towards people already close to buying. The numbers can look beautifully efficient while the organisation gradually becomes less visible to tomorrow's customers.

The best customer you have may be the customer you haven't met yet

None of this means abandoning CRM, customer experience, loyalty initiatives or segmentation. It means putting them in the right strategic context. There is something reassuring about marketing to existing customers because they respond, click, recognise us and occasionally tell us they love what we do. Non-buyers are considerably less rewarding because they scroll past us, ignore us and often barely know we exist.

But that is exactly why they matter. If you want a substantially bigger brand, eventually you need more people who currently feel almost nothing about you to start buying you. That is not as emotionally satisfying as talking about tribes, advocates and superfans, but it may be considerably closer to the reality of brand growth.

So look after your best customers, reward them when it makes commercial sense and give them a brilliant experience. Just do not spend so much time loving the people who already buy you that you forget about everyone who doesn't.

Your most important future customer may currently be somebody who barely knows your name.

Sources and further reading

This article draws principally on my interpretation of Byron Sharp's How Brands Grow, alongside the work of Andrew Ehrenberg and the long and short-term effectiveness research of Les Binet and Peter Field. Sharp's empirical generalisations should not be treated as absolute rules for every individual category, particularly where subscription economics, contractual relationships or genuine submarkets create different dynamics. The useful lesson is to challenge loyalty assumptions with evidence rather than replacing one marketing dogma with another.