Let’s start with a fable about the invention of chess.
The game of chess was presented to a great King. The King absolutely loved the game and offered the inventor any reward that he wanted.
The inventor asked that a single grain of rice be placed on the first square of a chessboard. Then two grains on the second square. Four grains on the third. And so on – doubling each time.
The King couldn’t believe that this was all the inventor wanted. So, he immediately agreed and ordered his treasurer to pay the sum.
A week later the inventor went before the King and asked why he had not received his reward. The King summoned the treasurer demanding to know why the inventor hadn’t been paid.
The treasurer explained that the sum could not be paid. By the time you even get halfway through the chessboard, the amount of grain required was more than the entire kingdom possessed.
The King thought for a while. Realised that he had been outwitted. Then had the inventor killed.
There are two morals to this story. Firstly, don’t try to outwit a King. It doesn’t end well. Secondly, and more importantly, is the power of compounding.
Something that starts small can become very big.
Why are we talking about this? FMCG brands have been told that to grow their brand they have to grow their penetration.
So, brands have focused on penetration. When you focus on penetration you focus on recruitment. Recruiting new shoppers into your brand.
This means that you do the things that you think will deliver this. You look to drive distribution. You look to increase visibility. You look to do more price promotions.
These things will often work. Well, in the short term. More shoppers buy you. They appear in your penetration figures. But they often only buy you once. You get the shoppers. Then they drop out again. They go off and buy other brands.
This pattern has led to one of the craziest words we’ve heard used in our industry – “re-recruitment.” You spend all your time (& money) recruiting shoppers. Then lose them and have to try to “re-recruit” them again.
Surely it’s better to recruit once. Then retain these shoppers.
Keeping them in your penetration figure and getting them to start contributing to your spend figure. Start compounding their behaviour and spend with you.
So, how can you move from recruitment to retention?
Make it REWARDING. Too many promotions are focused on getting this purchase. Getting shoppers to buy you now. They give little, or no, consideration to future purchases. Getting shoppers to buy you again. And again.
So, can you rethink your approach to promotions? Could you give shoppers immediate AND future rewards? An incentive to buy now AND an incentive to keep buying in the future – e.g. 20% off this purchase AND your next 2 purchases. Could you reward shoppers for aggregate spend? The more they spend with you the more rewards they get. Retailers do this through loyalty cards. Brands rarely do.
The more rewarding you are to buy, the more shoppers will keep buying you.
Make it EASY. Most brands are not as easy to buy as they could or should be. They are too busy running the traditional race. Fighting to be visible. Striving to get heard. Battling to get bought. They do it this week. Then back on the hamster wheel next week. And the next.
So, what can you do to make it easier for shoppers (and yourselves)? How can you become the default purchase? It could mean things like automatic replenishment. Things like Subscribe & Save. Getting on favourites lists. It could mean pack size or format. Yakult want you to drink one a day. They come in a 7-pack. It could mean more solution selling. Getting into existing meal deals. Creating new deals – e.g. snack + drink. Bundled solutions – e.g. a laundry (detergent + fabric conditioner + scent booster) deal.
The easier you can make something to do, the more likely shoppers are to do it.
Make it OBVIOUS. The most fundamental question any brand needs to answer is “why?” Why should shoppers buy your brand? Having a clear why helps you recruit new shoppers. It gives them a reason to try you. It also helps you retain existing shoppers. It gives them a reason to keep buying you.
So, ask yourself are you crystal clear on your WHY? Then ask (and track…) are shoppers crystal clear? Are you as clear as Actimel? They never tire of talking about immune support. Or Innocent? They never tire of saying “we never add sugar.” Or Fairy? They never tire of talking about “lasting longer.”
The more you reinforce your why, the more likely shoppers are to buy.
Recruitment is important. No buyers means no sales.
But retention is essential. Retained buyers means more value. Value that compounds over time.
One grain can quickly turn into a lot of grains.
Feel free to forward. Have a great weekend. Speak to you in a fortnight.