How digital methods can improve loyalty

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Has marketing professor Byron Sharp’s theory that reach not loyalty is key to brand success been overturned by digital channels’ ability to ‘nudge’ consumers to buy more?

What makes a brand successful? Is it getting the same people to buy your products more often or simply encouraging as many people as possible to put them in their basket in the first place?

Australian professor of marketing science Byron Sharp suggested in his 2010 book ‘How Brands Grow: What Marketers Don’t Know’ that companies should focus on a broad reach to grab as many people as possible, and used academic research to prove his theory, building on the ideas of marketing scientist Andrew Ehrenberg.

Professor Byron Sharp quote

“A Byron Sharp [-influenced] ad is really broad. It doesn’t say ‘If you’ve bought X, you’ll like this product’; it just says ‘Come [into the brand],’” says Justin Gibbons, creative director at Arena Media, who has done a study on Sharp’s theory and how new digital applications might influence it. “If a person had never eaten a chocolate bar and suddenly discovered a Mars bar, in the first few months they might find their loyalty level at one bar a week and stick to that. Sharp says no amount of nudging [people to buy more] will change that.”

Put another way, competitive brands hardly differ in their loyalty levels; their success is due to the difference in their user bases. “If you want to win a general election, you just need someone’s vote. You don’t need them to become a party member or have a subscription,” Gibbons says, summarising Sharp’s theory.

Gibbons does not believe that endless discounts and promotions are effective in encouraging people to buy more. “Couponing, on the whole, just doesn’t work. The cat only needs feeding seven days a week and there’s only so many times you can wash your hair. People’s consumption patterns are perfectly natural and right,” he says, adding that around 80 per cent of any brand’s volume comes from its light users.

Sharp’s theories have influenced marketing: Gibbons says he changed the way clients Sainsbury’s and BT communicated by reducing their advertising in the late 1990s. However, Sharp’s theory was based on an analogue world before the explosion of digital channels, and Gibbons wanted to determine their impact on customer loyalty and whether they can increase frequency of purchase.

According to Arena Media’s study, ‘How to grow brands in a digital age’, digital media such as apps, blogs and emails can help shift loyalty by 11 per cent across 10 categories, including books, betting and pizza delivery, when looking at the number of times a customer buys a brand. The study advocates ‘virtual availability’, or making products accessible on any channel. “In a grocery aisle, [the choice of product] is about physical availability and Sharp says people choose the ones they know well enough to buy,” says Gibbons. “The new idea is virtual availability: am I close to it and is it accessible to me? That seems to be the new driver of growth.”

The agency spoke to more than 1,000 consumers from a nationally representative sample for the study, asking how many times they had bought brands over a fixed period and how they had done so – online, offline or via an app, for example. 

trends digital methods betting

In the case of betting, people are likely to spend much more, and more frequently, via apps than through other channels. On average, consumers placed 8.9 bets via an app in the previous three months, versus 8.2 via a brand’s website and 6.9 in store. The average claimed spend on an app in that period was £111.70, compared with £82.16 in a shop and £81.21 online.

“Betting used to be a pain as you had to go to the bookies,” says Gibson, “but now it is easier to be impulsive. Marketing had to work really hard to sell you in [to doing something], but now it just nudges you in all the time.”

Amazon Kindle

Digital channels such as ebooks can give frequent and timely nudges to encourage people to buy more

For book buying it is electronic texts rather than ecommerce channels that are having the most impact. The frequency with which people buy physical books from Amazon is surprisingly similar to that of high street retailers, with customers saying they bought 5.1 books online and 4.9 books offline in the previous 12 months. But the figure is much higher for downloading ebooks, at 8.7. 

Gibbons says: “When people buy ebooks, their frequency shoots up. If I finish reading a book on Kindle, it nudges me to buy the next one. If I finish a physical book, there’s no prompt to go back to Amazon. Price is an influence too as ebooks are cheaper, but the nudge is a very effective disruptive tool. This is effortless purchasing.” 

Trends Digital methods books

The study also looks at the impact of digital channels on takeaway pizza orders. Domino’s, Pizza Hut and Papa John’s have all experienced the ‘digital effect’, with customers ordering 3.4 times via online means and 3.1 times offline over the six months. Twenty-one per cent of those who order Domino’s via its website and apps say the brand communicates with them “a lot”, compared with 13 per cent ordering offline. Domino’s communicates with consumers via its apps, emails and vouchers page, and aims for seamless access between its retail channels. Using data, the pizza chain also targets promotions at local customers to encourage in-store purchase.

Marketing director Simon Wallis told Marketing Week last month: “Now we’re able to look at what they’re doing when they’re out and about. If we could target the lunchtime occasion far more efficiently with people in and around the store, it could open new opportunities by increasing ‘carry-out’ sales for us.”

Pizza loyalty trends

For Sharp himself, the figures in the study simply show that people buying via online or app are heavier users. “This is called a selection effect,” he says, speaking to Marketing Week. “People who eat a lot of pizza are more likely to download the app and use it. Why would an infrequent user bother?”

These new digital channels should not totally replace broadcast media, says Gibbons. “Marketers can start to think it is all about microtargeting but you still have to get the brand out to as many people as possible. The battleground for virtual availability is Google, being in search and organising a brand around digital such as ecommerce and apps.”

For Nicky Whichelow, marketing director at funeral director GreenAcres Woodland Burials, being available via search is crucial. Using a combination of SEO, local newspaper advertising and content, she has increased visitor numbers to the brand’s website from 500 a month to more than 5,000, while reducing its cost per acquisition.

“The availability of our content has a major impact on [people’s] willingness to come and buy from us,” she says (see Marketers’ response, below).

For Gibbons, broadcast media combined with digital methods can bring Sharp’s theory up to date. “Online shoppers are behaving differently from their non-online counterparts: they’re consuming a bit more frequently. You still need lots of users but digital seems to be proving itself as a way to dial up their behaviour. Byron Sharp’s not wrong, but he needs updating.”

Marketers’ response

Nicky Whichelow Green Acres

Nicky Whichelow, Marketing director, GreenAcres Woodland Burials

Byron Sharp said ‘Don’t segment your market; it is just about being available,’ but I don’t agree. 

In our industry and being a consumer brand, we have to stand out among all the other noise. If you add the fact that someone is grieving, we have to be head and shoulders above [the others] so the ability to innovate is far more important than our distribution model. By innovating, we find we can stretch our loyalty. Someone will seek a particular brand [and if it is not available] they may not seek a substitute because their relationship with the original brand is so strong.

When it comes to digital, we have used organic search on keywords to make our brand easy to buy. Typing in the brand name or service that we offer has increased exponentially.

Nick Dutch Dominos

Nick Dutch, Head of digital, Domino’s

Byron Sharp’s theory is still valid for us because penetration is increasingly important in our sector. I’d also agree with the Arena research and leveraging brand loyalty through digital channels, and our research backs it up. Do we see people shopping with us more often through digital? Yes we do. When they shop online, do they spend more money? Yes they do, and we certainly see better conversion rates.

Over the past four years [of being on] mobile, and three of having an app, there has been an overall migration from offline to desktop to mobile. Certainly our most loyal people got there first – apps take up nearly half of our online sales. That is genuinely a representative cut of our customers who are a bit more valuable to us.

METHODOLOGY

Arena Media carried out more than 1,000 online interviews using online research service Toluna, weighting the data to be nationally representative. It asked consumers how often they had bought products from 10 categories in the previous six months and whether these purchases were online or offline.

High street habits

Consumers value stores’ appearance and atmosphere

 

Customer loyalty and why people switch brands

Customer loyalty and why people switch brands

Readers' comments (3)

  • Digital helps brands with significant digital distribution. Right. Thanks.

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  • The pizza graphic has a huge mistake in it

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  • Thanks for bringing this to our attention, the graphic has now been amended.

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