Editor’s Note: We launched a new podcast show this week, hosted by our Director of Community, Kristen LaFrance, about mental health and the founder journey. Hugh Thomas, founder and former CEO of Ugly Drinks, was her first guest. You can listen here.
Earlier this week, we wrapped our first podcast show, “Customer Hat.”
If you haven’t listened, our Director of Marketing, Alex McEachern interviews some of our favorite people in CPG about their preferences, habits and behaviors as a customer. It’s refreshing, different and, on occasion, explicit (shout to Jake Karls of Mid-Day Squares for tripping that wire with me).
It’s also insightful.
If you were to treat these guests as your customer database, and start plotting their demographic information, you’d find that, really, they’re not too dissimilar.
Similar age brackets, mostly metropolitan areas, some minimum level of disposable income, so on and so forth.
In short, at least for certain brands and products, they’d nearly all be likely to check the boxes of an ideal customer profile.
But, as Mandi Moshay pointed out on Twitter, the preferences, behaviors and habits discussed by the guests are pretty varied.
There’s a mathematical technique, often used in risk analysis, called the Monte Carlo Method, which provides its user with a range of possible outcomes instead of an average. Setting aside any shortcomings of the method, the underlying premise is that seeing a distribution of various possible outcomes is preferable to seeing a single, average outcome, because the average outcome may not, in fact, be the most likely outcome, given the underlying variables.
When it comes to customers, an ideal is not much different than an average. In fact, you could argue an ideal is just the average of a particular segment of customers.
On its face, this appears helpful.
After all, if you want to grow, you’d assume the best way to do that would be to acquire more customers who look like your best customers.
Except, as we discussed in Double Jeopardy, growing by way of an overly loyal customer base has rarely been seen, particularly in CPG:
From a 1990 article by Andrew Ehrenberg, Gerald Goodhardt and Patrick Barwise in the “Journal of Marketing:”
“For branded packaged goods, the less popular a brand, the less loyal its buyers tended to be. The reverse, a small brand having few but exceptionally loyal buyers, has seldom if ever been reported.”
Absurd as the following may sound, we think it can be further distilled in this way: “Big brands are big because they’re big. And because they’re big, people buy them more.”
This, it seems, aligns to tactical execution, as well. Talk to any media buyer who is well respected on Facebook advertising, and they’ll tell you the most efficient advertising is to keep your targeting broad.
What’s the point?
Two things, really: To Mandi’s point, you probably don’t know as much about your customers as you think you do. To our earlier point from Double Jeopardy, even if you did know enough, focusing on trying to build a customer base primarily comprising “ideal” ones would likely be a growth limiter.
Better, then, to think less in terms of ideal and average customers, and more in terms of likely scenarios. If you aim to build a brand that’s resilient to a number of different customer distribution patterns, you may be more likely to end up with an ideal outcome.