By Daniel Joyner

Should you focus efforts on new customer acquisition or existing customer retention?

Short answer: That might not be the right question.

Driving brand growth  depends on getting more people to buy from your brand more often. In pursuit of this, there are often misconceptions and misinformation that focus wholly on customer retention/loyalty or customer acquisition. Across every brand/retailer and category Circana tracks,  retention and acquisition are deeply connected. For brands to sustainably and consistently grow, they need to understand the driving forces behind consumer behavior, and more importantly, understand the complexities of modern consumers.

Over-simplifying concepts like customer loyalty, retention, or acquisition can lead to a distorted view of the market. In this guide, we will cover why brands need to look beyond traditional views of acquisition and retention and how a deeper understanding of complex consumer behavior can lead to brand growth.

Customer Acquisition and Retention Are Linked and Driven By Market Penetration

Simplistic Definitions Distort Market Reality & Sabotage Brand Performance

There’s no shortage of opinions and strategies about whether to prioritize retention or acquisition. But the truth is, these strategies don’t reflect how consumers actually behave or how markets work. Our receipt panel and consumer panel data consistently show that across industries, retailers, and categories, acquisition and retention are inseparable. Strategies that are aimed at one impact the other, because as a brand’s market penetration grows, so does its number of buyers.  You can’t pull a lever that only targets new customers or existing ones—they’re always linked.

Even worse, these oversimplified definitions can make strategies unnecessarily complicated. There’s a myth that loyal customers only shop with one brand, but that’s not reality. Our data shows that any brand’s consumers do not really belong solely to them, and that churn is inevitable. Basing a strategy around acquiring high buyers and focusing on their retention misses the fact that light buyers are critical to brand growth.  The popular 80/20 rule (Pareto Principle) doesn’t hold up in today’s market—80% of your performance likely doesn’t come from just 20% of your customers.  

 

Brands Need To Control Mental and Physical Availability

What truly drives brand growth is your brand’s availability to consumers.

• Physical availability is straightforward. Are your brand’s products/services available where your consumers are? By optimizing your supply chain, tracking on-shelf availability, and tracking the causes of retail leakage, you can get a better understanding of when/why your brand lost a sale it could have had.

• Mental availability is more focused on brand equity and consumer sentiment. When consumers think about your category, how likely are they to think about your brand, and what are their feelings about your brand?

Most consumers will frequently change which brands they shop with for a myriad of reasons. Understanding those reasons through both comprehensive survey data, consumer trend analysis, and linked verified purchase data can help your brand understand why consumers shop with competitors.  Maximizing both mental and physical availability ensures that your efforts in acquisition and retention work together to boost short-term sales and long-term brand health.

 

Mass Marketing + Advanced Targeting = Growth

Because market penetration has such a large impact on mental availability and brand growth, it is important for brands to adopt a mass marketing strategy, but not necessarily with the same strategy for all their consumers.  The best brands know how to send the right message to the right people through the right channels.

Understanding and segmenting your audiences can unlock opportunities to improve mental availability for specific groups. Consumers are more complex than ever, and relying too heavily on traditional demographics can miss a lot of the nuances in how people really shop. For example, two 30-year-old men can have extremely different shopping habits when it comes to food and beverage retail. Segmenting your audience and understanding their unique behaviors can help you tailor your messaging and improve mental availability.

Insights Drive Innovation and Long-Term Brand Success

Start with Availability, Then Innovate

The first step to growth is maximizing availability. When your products are easy to find and your messaging aligns with consumer needs, you’ll attract more buyers who shop with you more often. Ensuring that your products are where they need to be prevents retail leakage. But brands that have this data and are analyzing it effectively can go further. Insights into what is limiting a brand’s mental and physical availability can drive innovation.

 

Understand Why Buyers Leave

Buyer churn is inevitable, but not all lost buyers are the same. To grow, brands need to understand why consumers change their buying habits. With verified purchase insights, a brand can accurately answer questions like:

• Are our consumers driven by different need states or purchase triggers?

• Are our consumers comparatively more/less familiar with our brand, and what are the associations/sentiment toward our brand?

• Are our consumers shopping the category at different channels or day parts where our brand is more/less available?

• Are our consumers geographically concentrated in areas where our brand is more/less available?

• Are our consumers learning more about the category or our competitors through different marketing channels?

• Which brands are our lost buyers shopping with, and is this in line with expectations based on the size of those competitors?

For example, a CPG retail coffee brand might traditionally assume that sales leakage is going to the other CPG retail coffee brands on the same shelf. Without proper investigation, this can lead to ineffective and wasteful strategies, like focusing on competitive pricing first. In reality, a group of lost consumers might be replacing their coffee with energy drink brands. By understanding these shifts, brands can innovate more effectively.

Innovation Requires Better Data

To get a full picture of your performance, you need accurate data from surveys, consumer panels, and linked receipt panel data. Traditional consumer data can identify trends, but with access to linked purchase data, you can gain invaluable insights into how consumer behavior is actually impacting buying decisions.

For example, consumer data might show that consumers are shifting their eating occasions away from restaurants and toward at-home meal prep. With the right managed surveys, a brand can uncover how/why consumers are making that shift. But most importantly, receipt panel data that is linked to the same consumers[3]  can be used to validate the relationships between consumer trends and how they actually shop. With these insights, a restaurant brand could develop a line of in-store products that meet its customers’ needs.

How Should Marketers Engage New, Lost, and Unreached Customers?

Don’t Focus on Just One Group

Consumers are too complex, and marketing channels are too diverse, for there to be a one-size-fits-all approach. Every marketing effort should consider how it impacts all potential buyers. Studying your lost buyers, unreached customers, and frequent shoppers can unlock insights into where the gaps are in your availability.

 

Marketers Need to Consider Light Buyers & Buyer Churn

The white whale for many brands is an illustrious group of buyers who shop frequently and exclusively with them. Focusing on targeting and retaining this group is not accurate to how consumers shop.  Every brand experiences churn, and so do your competitors. It is equally important to understand how/why consumers switch to your competitors, as it is to understand what factors might cause a consumer to switch to you. Your consumers aren’t “yours” nor are they “theirs.” Instead of focusing solely on the number of customers, you also need to consider frequency. A fast food customer will likely eat at many different fast food restaurants over the year. The key question is:  How often are they choosing your brand compared to others?

Don’t Rely on Correlation Alone

Too often,  brands rely on correlation in consumer behavior instead of causation. Brands may learn from surveys or consumer panel data that a specific group is increasing or decreasing their spending in a category, and go from there. Consumer trends should act as a starting point, and not the end point.  Linked receipt panel data connects real purchases to consumer insights, helping you understand the “why” behind the buy.

Accelerate Brand Growth with Complete Consumer Insights

Circana’s Complete Consumer™ solution combines data from our robust consumer panel and linked receipt panel to empower brand managers, category and insights teams, and marketers to identify brand growth opportunities. With a clear view of how consumer trends connect to real purchases, you can maximize availability and innovate with confidence.