Three marketing laws of growth

It’s hard to know what to do to grow your firm. This article aims to unpack some recent research out of the marketing science think tank, the Ehrenberg-Bass Institute. They have recently published a white paper in conjunction with the B2B Institue around “How B2B Brands Grow”. Anyone who knows me knows I love reading a good non-fiction book. So, I’m a little obsessed with Byron Sharp, who published “How Brands Grow” and the scientific research that underpins it. One of his colleagues, Professor Jenni Romaniuk, has also published a super exciting book, “Building Distinctive Brand Assets” - they are two of the researchers behind most of these insights. 

Rule#1 Nobody wants to buy from someone they don’t know

They suggest that there is a simple mental model of “mental availability” and “physical availability” that indicates that buyers buy brands that are “easy to mind” and “easy to find”. Understanding what “mental availability” means in a B2B context is essential. Mental availability is a shortcut to sales. Sales calls and advertising are more effective when brands tap into these memory structures. Professor Sharp goes on to say that 

“Building mental availability requires distinctiveness and clear branding, while brands seldom compete on meaningful differentiation. This means that marketing attention should be on building these assets so that a brand is easier to buy, for more people, in more situations” (Sharp, 2021). 

Outtake: As a professional firm, the more mental availability that you have means, the more sales you are likely to get, which in turn drives the profit that you’re likely to make next year. And who wouldn’t want that? 

Question: How much-dedicated marketing activity do you conduct to build your brand and its mental availability? 

Rule #2: The 95-5 rule: most B2B buyers are not in the market right now 

This one is a doozy. To unpack this rule, first, you need to consider the average purchase lifecycle of your professional services offering. It’s not what you must buy weekly, like milk or bread. So, 95% is a number to demonstrate that up to 95% of your business clients aren’t interested in your product or service at any one time. 5% are. What does that mean for your advertising? It works by your advertising creating memory links to your brand so that when these buyers come into the market, they know your firm and are more likely to buy from you. 

“To grow a brand, you need to advertise to people who aren’t in the market now so that when they do enter the market, your brand is the one they are familiar with. And that they mentally associate your brand with the need or buying situation that brought them into the market. That way, you increase buyers’ purchase propensity. And if you come across enough buyers, your market share will grow.” (Dawes, 2021). 

Outtake: Think about how you might create some advertising discussing the 95% and the 5%. 

Question: Do you know how long it takes for a new client to become a paying customer and what sort of advertising you could create to keep your firm present over the 12-18 months it takes for this client to become a paying one? 

Rule #3: The Double Jeopardy Law: it is not possible to grow by focusing on loyalty alone

Right. Let’s get into this. The essential principles of the double jeopardy law mean 

There is only one strategy to grow in B2B - primarily from new customer acquisition, expanding the size of your customer base

Loyalty metrics can be easily predicted, which helps in KPI setting 

Deviations from the law can be easily identified and can be investigated to identify barriers to growth

So, essentially to understand this rule, you need to think about the importance of building your company's mental and physical availability and then be “easy to mind, easy to find.” This rule discusses the link between market share gains or losses, market penetration (the number of category buyers that buy the brand), and loyalty (i.e., purchase frequency). 

“Double jeopardy tells us that loyalty is largely a predictable function of market share. It shows that it is normal for smaller brands to suffer twice - to have fewer users, who are less loyal - compared to their larger share competitors.” (Romaniuk, et al, 2021).  

This law tells us that sustainable growth is not possible through loyalty tactics alone. If growth through sales is the ultimate aim (and for most firms, it probably should be), more customers and recruiting non-buyers who don’t know their firm will be the key to long-term growth.   

Outtake: The more market share you have, your customers are loyal. To grow, expand your customer base. 

Question: What is the balance of your marketing activities between brand and loyalty? 

How can I use this information? 

• To grow your business, you need to increase the size of your customer base. This is non-negotiable. 
• Make mental & physical availability a bedrock of your advertising efforts 
• Think about those who are non-customers and what sort of marketing you could be created to keep your brand top-of-mind through a long purchase cycle 
• Look at your market share as a proxy for loyalty and set benchmarks for growth from that