Brand growth is often seen as the ultimate goal for businesses, and many companies spend a significant amount of time, effort, and money focusing on customer retention strategies. While retaining customers is certainly important, it’s not the primary driver of growth. According to Byron Sharp in his landmark book How Brands Grow, the key to brand growth lies in market penetration—the ability to reach and attract a broader, more diverse audience. By increasing the number of buyers, a brand’s presence grows, which fuels its long-term success. Let’s explore why reaching more customers is the true path to growth, and how you can apply these insights to your own marketing strategy.
Sep 16, 2024
Key Insights:
Loyalty is often romanticized in marketing. Many businesses pour resources into loyalty programs, customer rewards, and targeted retention strategies, believing that cultivating a small, dedicated group of repeat customers will result in long-term success. However, marketing research challenges this notion. It has been found that brands don’t grow by increasing loyalty—they grow by increasing the number of customers they reach.
Why is this the case? Loyalty, while valuable, is typically concentrated among a small percentage of your customer base. Data shows that most brands see only a modest number of truly loyal customers who account for a disproportionate amount of repeat business. However, a larger, more diverse pool of customers is essential for growing your brand’s market share. This means that instead of focusing solely on nurturing your existing customers, your marketing strategies should emphasize attracting new ones.
Practical Application: While maintaining relationships with existing customers is important for repeat business, your marketing strategy should aim at attracting new buyers who haven’t purchased from you before. This can be done through advertising, social media campaigns, influencer collaborations, and SEO to drive new traffic to your website.
Market penetration is a simple but powerful concept: it’s the process of increasing your brand's presence in the market by attracting new customers, rather than just convincing your existing customers to buy more frequently. Many market researchs shows that growth occurs when brands widen their customer base—not when they double down on loyalty or focus on increasing repeat purchases.
This is where the concept of acquisition comes in. Growing your brand’s customer base can be accomplished by targeting new demographics, entering new geographical regions, or simply reaching individuals who have never interacted with your brand before. By expanding your audience, you create more opportunities for new customers to convert into loyal buyers over time.
Data Insight: A 2017 study by Kantar found that brands with a higher level of market penetration grew at a faster rate than those focusing primarily on loyalty-building efforts. The study revealed that brands with over 20% market share were 2.5 times more likely to experience sustained growth compared to smaller brands. This is because larger brands naturally attract more buyers, which helps them secure long-term profitability.
Practical Application: If your brand is already performing well within a niche market, it’s time to look beyond that. Evaluate your product’s appeal to broader segments. For example, if you're a local coffee shop, consider expanding your target market to include office workers, students, and tourists who might not have visited before. A larger, more diverse customer base provides a foundation for stable and sustainable growth.
Many marketers make the mistake of focusing primarily on a brand’s most loyal customers, assuming that they are the key to long-term success. Research shows, however, that acquiring new customers is where the real growth potential lies. Existing loyal customers represent only a fraction of your overall market, and their continued business doesn’t result in much growth after a certain point.
Think about it: if your loyal customer base is limited, then increasing the number of loyal customers won’t substantially increase your revenue or market share. However, by targeting untapped or underserved audiences, you have the potential to exponentially increase your market penetration. This broader audience will eventually help create an ecosystem where both new and existing customers contribute to sustained growth.
Data Insight: In a study by Accenture, 91% of consumers are willing to switch brands for a better experience. This shows that the market is not static—there are always new customers to attract and loyal customers to retain. If your focus remains on reaching new customers, it will ensure that your brand remains competitive and adaptable in a constantly changing marketplace.
Practical Application: Examine your current customer base and assess whether there are untapped segments that you could be reaching. This could be a different demographic, new regional markets, or even exploring new social media platforms where your target audience is more active. Expanding your reach by connecting with new customer segments is a crucial part of sustained growth.
While personalized marketing and niche targeting are widely used, research suggests that mass marketing is the more effective strategy for growing a brand. By reaching a broad audience, you maximize the number of potential buyers and improve brand recall, which drives increased market penetration.
Mass marketing works because it ensures that your brand is visible to a wide audience across multiple touchpoints, whether it’s through TV ads, social media campaigns, or even direct mail. The more people who are exposed to your brand, the higher the likelihood they will remember your product or service when making a purchasing decision. Bryon Sharp’s research has shown that brands that focus on broad-reaching campaigns create more opportunities for brand recognition, which in turn increases the probability that their brand will be chosen when customers are in the buying process.
Data Insight: Another 2020 study by Nielsen found that mass marketing strategies resulted in a 24% increase in brand awareness compared to targeted campaigns focused on smaller, niche audiences. This is because mass marketing ensures that the brand stays visible and relevant, appealing to a wider and more diverse customer base.
Practical Application: To implement a mass marketing strategy, you don’t need to abandon personalized or targeted tactics entirely, but you do need to balance them with more broad-reaching campaigns. For instance, you might run an online ad campaign that targets a specific audience segment while also investing in broad social media posts or TV ads to create widespread awareness.
The path to true brand growth doesn’t lie in simply retaining loyal customers—it lies in expanding your reach and increasing market penetration. By focusing on acquiring new customers, leveraging mass marketing strategies, and broadening your brand’s exposure, you’ll lay the foundation for sustainable and long-term growth. The data supports this approach, showing that brands with a larger market share are more likely to experience ongoing success.
If you’ve been focusing your marketing efforts solely on loyalty and retention, it’s time to shift gears. Broaden your horizons, target new customers, and implement mass marketing strategies that will boost brand awareness and accelerate growth.
Is your brand reaching enough customers? At 254 Pixels Marketing, we specialize in helping businesses develop strategies that increase market penetration and drive brand growth. Our team can help you create a comprehensive marketing plan that attracts new customers and builds long-term success. Contact us today, and let’s start growing your brand by reaching more people!
+61 452 432 775
info@254pixels.com.au
