Marketers Need to Focus on Profitable Brand Users

In today’s tough economy, it is critically important that marketers focus more on brand loyalists than brand occasionalists. Why?

Brand loyalists are far more profitable than brand occasionalists, both short- and long-term, because loyalists require no price reduction while occasionalists buy brands only when the price is reduced from its standard price.

brand loyaltyWhile brand loyalists account for only 30% of total brand sales, they account for 100% of profitable sales both short- and long-term, because loyalists require no unprofitable price as a reason to buy the brand. Meanwhile, brand occasionalists buy the brand only when the price is reduced, and they account for 70% of total brand sales but 0% of profitable sales, because they buy the brand at a reduced price where there is no brand profit. Thus, brand loyalists improve both short term and long-term brand profit because they are both short term and long-term brand users at profitable brand prices.

Why do loyalists not require price reduction? Because they VALUE the brand more than brand occasionalists do. To both acquire and retain profitable users, it is critical that marketers focus on the positive perceptions loyalists have about brands and continually measure the importance of brand loyalists to prove to CEOs and CFOs that eliminating price reduction against loyalists improves short term and long-term brand profitability.

Today, marketers have increasing access to first party buying data from two sources:

  1. direct to consumer ecommerce sales
  2. retailers selling marketers first party data from all the brands buyers

Both of these sources help marketers differentiate between loyalists and occasionalists.

Marketers are advised to focus more on brand loyalists because their profitability is measurable both short-term and long-term, especially now that so much first-party buyer data is available.

by Mike Donahue