myth number six : the 80/20 rule always applies
This isn’t a myth per se, but the numbers don’t quite add up. Sharp, on the basis of numbered evidence once again, shows that Pareto’s Law does apply but real numbers based on observation are closer to 50% for most brands and never reach 80%. This reinforces the need to acquire more customers.
myth number seven: advertising doesn’t sell
Sharp shows on the contrary that advertising has a clear (but mostly long-term) impact on sales… Provided your product is distinctive enough and that your campaigns follow a few simple principles amongst which:
- reaching all by categories
- no lapses
- clear brand links
- easily noticed and remembered
myth number eight: price promotions increase sales in the long term
That one is far less counterintuitive I find. Price promotions are quite effective in boosting sales. Evidence produced by Byron Sharp shows that promotion have no or little effect on long-term sales. Sharp sees little rationale for maintaining price promotions over time apart from maintaining a relationship with retailers.
myth number nine: loyalty programs are effective
In fact, loyalty programs work a little, but their impact on loyalty is minimal and in some cases, brands won’t even feel the true effect at all for many external reasons. My friend and colleague Prof Christophe Benavent from the Paris University has been a long-time contender that loyalty programs don’t work. He’s actually quoted in Byron Sharp’s book as well. One may have the vague feeling that conclusions might be different whether one looks at airlines for instance, or a company like AMEX which has built its distinctiveness upon its loyalty program (I even chose to get an AMEX card a few years back which is coupled with my airline frequent flyer program and I have transferred the entirety of my purchases to AMEX) but evidence is required before one makes any rash conclusion.
Overall, I really enjoyed Sharp’s approach which is based on fact rather than fiction, even though some of the most counterintuitive conclusions would benefit from a serious data update. I definitely recommend you buy this book and place it on your bookshelf.
Byron Sharp’s blog is available at http://marketinglawsofgrowth.com/
… to be continued
[This report has been published in instalments, type bit.ly/sharpgrow in your browser location bar to display the piece in its entirety]