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The 80/20 Myth

Jamie Allebach
Jamie Allebach Chief Executive & Creative Officer

We all love a good cliché. Especially in marketing. And, if we repeat it enough, it becomes gospel. For instance, the 80/20 rule (the Pareto Principle). Have you ever said something like; “80% of my brand sales are coming from 20% of my consumers, so we need to focus on the loyalist”? Or “we need a better customer loyalty program”? Or better yet, “I want to focus more marketing dollars on my brand advocates, ambassadors, loyalists, yada, yada, yada”?

HERE’S THE TRUTH, the heaviest buyers of most CPG food brands, over the course of a year, typically account for about 50% of purchases. What this means is that most marketers have been duped into thinking their budgets are best invested in TARGETING that sacred 20%. In fact, simply targeting and segmenting will not deliver true brand growth.

There are significantly more light buyers of most brands than there are heavy buyers. “But they’re not loyal buyers,” you might say. To which I would say, “no one really is truly loyal.” Not even your heavy buyers. Everyone buys other brands.

Light buyers may not purchase your brand often, but collectively, they can make up a significantly larger portion of your brand’s total purchases. And, there is a tremendous amount more of them, compared to heavy users, i.e., greater opportunity to grow your brand.

Let’s do some hypothetical basic math. I’ll even use the 80/20 split, just for kicks, to demonstrate why it doesn’t make sense to target heavy users. If you have 10 buyers, 2 (20%) are your heavy buyers, 8 (80%) are your light buyer. Let’s say your heavy buyers make 4 purchases in a given time period and your light buyers make 1. Even in this scenario, it’s an even 50-50 split (8 purchases per group), however, the opportunity for growth is clearly with the 80%. Now, let’s say you implement an advertising campaign, with the ambitious goal of each of your buyers making one additional purchase, in this same time period. Your heavy users now increase to a total of 10 purchases, but your light users jump to 16. If they make 2 additional purchases, your heavy users now make 12 purchases, and your light users jump to 24.

Fuzzy math? In part, perhaps, but you get the point.

So what is the most effective way to grow your brand? It all comes down to reach (and availability, which we’ll talk about in another article). Reaching all buyers—but especially impactful reach among light, and non-buyers. And BTW, when you market to your light buyers, your heavy buyers are seeing it too, and will most likely come along.

Moral of the story? Just because someone says something over and over again, doesn’t make it true. The 80/20 Rule is a classic example.

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