Shopper research reveals long-term value of existing brand buyers

A newly published report from customer science and retail data experts dunnhumby has revealed the true value of existing heavy brand buyers in a direct challenge to the claims of academic Byron Sharp in his 2010 book ‘How Brands Grow’.

  • Top 20% of brand buyers provide close to 80% of sales over five years
  • Extensive research from dunnhumby questions Byron Sharp’s findings
  • Study used data from 800,000 regular grocery shoppers and 200 million transactions over five years

London, UK January 11, 2018 - The report, ‘Mass Marketing or Tailored for your Tribe?’, produced by customer science and retail data experts dunnhumby analyses the impact the most frequent brand shoppers have on sales over time, using the Pareto 80/20 rule as a measure (e.g. 20% of a brand’s customers are responsible for 80% of sales).

It reveals that across seven categories tested over a one-year period the most frequent 20% of shoppers were responsible for 69% of a brand’s sales on average, and over a five-year period the most frequent 20% of shoppers were responsible for 76% of a brand’s sales. This is in contrast to Sharp’s claim – from just one year of research – that the most frequent shoppers claim only up to 50% of sales.

The trend for brands within a category to be reliant on a small group of customers is especially prominent with smaller brands by market share. Whereas market-leading brands realised 66% of sales from their top 20%, for other non-leading brands the figure rose to 78%.

Adam Smith, head of media strategy at dunnhumby, said: “Thanks to Byron Sharp we have seen much debate around the value of marketing to your heaviest brand buyers, but this report reveals that marketers will be missing a trick if they focus solely on mass marketing at the expense of talking to highly valuable existing buyer segments. The research implies an optimal marketing strategy with a much greater balance between acquisition and retention than Sharp would advocate, while still going after your widest available market.”

“The growth of a brand’s market share is still in line with Sharp’s findings” Smith continued. “Big brands have a lower Pareto share than small brands and the implication is that growth is associated with developing customers who are light and infrequent buyers. However, this research demonstrates conclusively that the value of the heaviest buyers has been under-estimated and is more in line with Pareto than not. Furthermore, significant differences between categories suggests the need for FMCG marketers to more fully understand the drivers at both brand and category level to optimise marketing investment. A simple one-size-fits-all mass marketing approach will not produce the best results and we see this with many of the brands we work with.”

“These findings will no doubt prompt debate and reassessment of marketing strategy across the industry – both for small and market leading brands.”

Download the research report

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About dunnhumby

Pioneering customer science results for retailers and brands

A world-leader in customer data science, dunnhumby has pioneered the use of big data to drive growth for retailers and brands since 1989. With 46 offices in 27 countries, dunnhumby’s strategic process, proprietary insights and multichannel media capabilities deliver competitive advantage for clients including Coca-Cola, Homeplus, L’Oreal, Monoprix, Procter & Gamble, Raia Drogasil, Raley’s, Shoprite and Tesco. Applying insights from 800 million shoppers globally, with specialisms in customer knowledge, customer engagement, pricing & promotions, category management and supplier collaboration – dunnhumby optimises retailer data investment, develops internal expertise and creates tailored solutions that build margin, sales & profit in all competitive environments. Visit www.dunnhumby.com to find out more.