How Brands Actually Grow with Byron Sharp

Speaker A: And how do you win lots more customers? Well, I need to improve my mental and physical availability. So if I expand my mental and physical availability, I'll get a bit more from my existing customer base? Yes, but the main thing you'll get is lots more customers.

Speaker B: You're listening to the Growth Manifesto podcast where we host in depth interviews with business leaders, authors, industry experts and entrepreneurs with a singular focus around business growth. At the end of each podcast, we want you to walk away inspired to think bigger, uh, and to have actionable takeaways you can apply to improve your business. Each episode is like a masterclass on a key topic, so make sure to browse the episodes to find the topics that are most relevant to your biggest business challenges today. This podcast is brought to you by Web Profits, a digital growth consultancy that helps challenger brands drive growth in a complex and fragmented digital landscape. You can find out more about Web Profits at, uh, Web Profits IO. Uh, now let's get into it. Hey, this is Alex Clianthus and today we're talking with Byron Sharp, who's the author of the book Our Brands Grow. And in this episode we talk about how to think about marketing in a world where marketers seem to have got it wrong. Performance and brand are, uh, conversations that have been going around for a while, but the conversation should probably move to mental availability and physical availability. And that what we're going to be talking about in this podcast with Byron Sharp in particular, he talks about how most important thing is rich and how loyalty isn't what companies think it is. So if you want to grow, if you want to have more loyal customers, and if you want to understand how the big brands became big brands and why they seem to continue to last over time, then this episode is for you. So I hope you enjoy it and I will see you at the end or I'll catch you on the flip side. So I'm a marketer and I've been around lots of marketers and marketers tend to have this way that they think that they gut feel means something and that kind of the things that they know and the things that they've experienced and the people kind of who they know kind of represent how it is. Right. And so what I found super interesting about your book, How Brands Grow, is that you've actually gone and found some evidence based facts around how consumers make decisions, kind of how loyalty works, kind of how sales work, and so on. So what did you find that was interesting? Um, compared to how marketers think that things work?

Speaker A: Okay, um, before I exactly Answer your question. Um, it's quite normal that people use intuition and what feels good, but that just doesn't work for marketing because our brains are designed for survival out on the African savannah. Uh, and we're very social, right? So we love telling stories and we're apt for we know how to communicate in largely one to one, maybe a few more than that. As marketers had this weird job of having to sell to um, thousands, if not millions, sometimes even billions of strangers that it's never happened in human evolution, right? And uh, your brain just can't handle that really. Um, but you think you can and that's very misleading. Um, also the sort of people that marketers typically are, uh, well who sort of like in the 1% of human wealth, uh, education, you know, they just aren't normal people. Uh, and they don't hang out with normal people. So uh, it gives a very uh, biased, weird view of the world. Um, but what the book How Barons Grow does is um, show. I mean it's famous for introducing or publicizing um, and explaining some scientific laws. And scientific laws are repeating patterns that occur in the real world and they tend to be uh. Every scientific law has been a bit mind bending. You know, almost every scientific discovery of any value is a bit weird until we get wrap our heads around it. And so the same. So um, the most famous is the double jeopardy law, which is we call it, you know, it's a law because it's ubiquitous. It's everywhere. Uh, you know, from m. Anywhere where there's competitive brand choice. Whether you're choosing between, um, following a football team, you know, which television programs get watched, uh, which brands of laundry detergent get bought. This pattern occurs and it says that bigger brands in the more popular items are bought by more people or known by more people. And those people are slightly more loyal than the buyers who buy a small brand. Um, and that has really profound, you know, if you're a CFO or a numbers based person, of course you immediately recognize wait on how many customers I have and then how much business each one gives me or how loyal they are. That's my sales. And so this is describing your sales. It's saying your sales are made up of if you're a big brand, a lot more customers and you also get a little bit more from them. But the main driver of why you have so many more sales than the small brand is you have so many more customers. And that is really counterintuitive because it feels right that you could have lots of what we Call niche brands in marketing. It's small and it doesn't have many customers, but those customers are really loyal. They like it so much. And uh, well, if that happened, we wouldn't get a double jeopardy law. We wouldn't see a double jeopardy law. You'd go, well, the smallest brand in the category is the loyalty leader. But no, uh, never, never.

Speaker B: So the double jeopardy law, just for listeners, is that you get more loyalty the more penetration, but the reverse is not the same. Right?

Speaker A: So less penetration, you get less loyalty.

Speaker B: But what's interesting is that brands think that if I'm smaller, I have more loyal customers, right? Because I'm more personal, I'm more customized and so on. And so what your evidence has found is that that's not the case at all. And so this concept of I'll attract it was Seth Godin. Right. Like you find your first thousand customers, um, your first thousand, the true believers or whatever, and that starts the brand off. But what you're saying is that it's not exactly the same way round, right? Is the fact that you're not going to get loyal customers from a thousand.

Speaker A: Yeah, it's um, I mean Seth Godden's a, he's not a researcher. He doesn't let data or evidence get in the way of a good story.

Speaker B: How many people do you know that have done the research around this type of purchasing decisions? Like as far as I know. So you're the first person I've heard that's actually kind of done anything that's more kind of evidence based. And all the marketing books I've ever read, I don't think there's any evidence in any of them. Fascinatingly. Except for your one. Was the first one I actually read something I was like, ah, uh, ah, uh. Everything I thought was true was not true exactly. Like. So can I ask a question? Right. How does marketing work if people got it so wrong? You know what I mean? Like if people like this thing where, oh, is it just that there's so many kind of failed brands that we don't hear about and they just get kind of left to the dust and then the ones that we do hear about have figured this out where the more penetration, the more loyalty, the less penetration, the less loyalty. And this goes to the conversation which we often have is like, oh, should we keep advertising just to the same people that we already have in our email database or should we like an email marketing handle that part and advertising is now for acquisition. Right. Because this is a conversation I have with a lot of e commerce brands and they often are. Ah, speaking about. Oh well we've already acquired them, um, and they're part of our database and now because of our email marketing and flows, it just seems to work. My perspective always, has always been you need to keep advertising to them because they're going to forget you. And email marketing is maybe not that powerful. Is this on the right path? Is this incorrect? Like I don't mind if you just shut me down and say nah, wrong if you.

Speaker A: Yeah, uh, I mean uh, it's, it's like going back in time, isn't it? But you know, database marketing was a, was the big thing at the turn of the century.

Speaker B: Um, it's still big now by the way. It's still like, it seems to have like stopped for a bit because everyone thought the social media was going to happen. And then now for some reason email marketing is one of the top sources. Um, just lots of brands right now.

Speaker A: Yeah, well even better than you know, in the days of database marketing it actually cost you a dollar to sort of send a letter to people. Now it's sort of free. But uh, yeah, you're up against an awful lot of clutter. Um, yeah, there's nothing obviously that is an asset to have a list of names and email addresses. But it's not a growth strategy that the value of that asset actually erodes over time. So you've got to reach beyond it.

Speaker B: Um, because you talk about um, the two kind of areas um, that the brands need to think about is the mental and the physical availability. Could you just expand on just what you mean by that? Because I think this all starts to connect.

Speaker A: Well, yes, well the mental and physical availability is the story, the theory that happens to fit with the empirical laws that we now know of. Um, and the previous dominant theory was the thing called segmentation, targeting, positioning, which was a sort, um, uh, it said that the way you compete, or at least try to compete and be viable in marketing and profits is to try to sort of run away from your competitors. That you try to find a bit of the market that you can serve, uh, hopefully um, better than they can, um, and you position yourself into that segment. Uh, and this is idea that uh, if there are 10 brands in a category, they're all differentiated in a different way so they're all targeting a different segment. And that's um, not, that's not what the evidence shows at all. Uh, so you have to come up with a new explanation of how brands compete and why some are bigger than others. And it's that bigger brands have more mental and physical availability so they are easier, uh, to buy for more people. And those people buy multiple brands, but they'll buy you sometimes and, uh, you will get the right amount of loyalty for your size in line with the double jeopardy law. Uh, so the really big implication is that reach is not optional. If you want to grow, you can't write a growth plan that doesn't acquire lots more customers. Expand the size of your customer base. You can't grow without more customers.

Speaker B: Should brands continue advertising to customers who have purchased? Couple times. Uh, so should you continue to advertise to people who you've already acquired inside of your database? Now there is a customer, but now you think that email marketing is going to fix everything.

Speaker A: Like, well, it's nice that you've now got their email address and you can send them an email, but you have no idea whether that's actually reaching any brains. Um, so it helps to advertise as well.

Speaker B: Um, what does mental availability mean?

Speaker A: It's a chance. It's the chance that people think of you when they're going into a buying situation or that they notice you on shelf or they see you on screen. And that's a really valuable asset.

Speaker B: Right.

Speaker A: That you should be talking to your CFO and saying, my job is to nurture that asset and make it more valuable. But my biggest job, of course, is to make sure it doesn't erode and to do that. The cheapest way that I can do that is usually to tap into some sort of, um, what? Publicity. Publicity is a great way of doing it, but into some sort of broad reach, cheap media that I can meta

Speaker B: ads or something or Facebook ads or whatever it is, or TikTok or outdoor or whatever. I mean, everything changes prices and trends, doesn't it, these days? But it's basically the key point is to get in front of people. Right. And to stay in front of people and.

Speaker A: Yeah. And just, I mean, to remind them that your brand still exists. I mean, a lawful lot of advertising. It's, you know, if we really boil it down, its job is to say, hi, remember us? You know, you bought a shirt from our shop three and a half years ago. Uh, yeah, it was a good shirt. You could buy from us. Again, we're still here.

Speaker B: It's not the same as. And so what I found interesting is that maybe it was in your books and maybe it was in some podcasts I listened to because I did some research ahead of time, obviously, and I saw some of the other podcasts um, which I quite liked was that, um, people have to have the brand in their head before they can see the brand on the shelf. Like, the brand itself is going to be so good. It looks amazing. The fonts, the color scheme, everything's so amazing. It's not that that does the work. That just helps you to recall the brand. Could you just expand on that? Because I found that really, really fascinating, by the way.

Speaker A: Yeah, I think that is an important Ehrenberg, uh, Bass contribution to the world. Just to remind people that, uh, people screen out stuff so much and it's almost mind blowing of thinking, like, well, why did we not notice this massive psychological thing that we screen out? And, uh, I think the answer is, of course you don't notice what you're not noticing. So you think, oh, I went into the supermarket and I saw my stuff and I got out. What? You don't. But the really amazing thing is all the things you did not see

Speaker B: is how many products are on the shelf.

Speaker A: Like, there's like, uh, 30,000 in a typical supermarket.

Speaker B: Yeah. And so nobody goes, I just saw 30,000 products. And I really like that logo from that. 30,000. Right?

Speaker A: Yeah, yeah. A typical household only buys 300 out of the 30,000 over a whole year.

Speaker B: So then the goal of the marketer is to be in their mind when they're walking down the aisle. So when they see it, they go, get a chance. Yeah, they get a chance.

Speaker A: Uh, it's often thought that the job of a marketer is to make the pack, you know, stand out and leap out off the shelf. But it's actually, that's just so difficult to do. I mean, every now and then, you know, you're on Amazon or something and someone's bought a display ad. So, you know, you see it. And I happen to be in the category that you were really interested in. You see it. But the reality is we zoom in on things that we already know. Um, see, I knew the brand of microphone that you were, uh, using. I think you mentioned a couple. And, uh, I couldn't. They just went, yeah. It's so hard to. It's so hard to take in stuff that you don't know. Uh, and so that's why mental availability is really so valuable. Because once you have got it between people's ears, it doesn't ever, um, really disappear. It gets harder to retrieve. And that's why you do need to keep refreshing it, you know, saying, hi, we're here. But. But it has. It can last for a very, very, very long time. That's why brands just don't fall out of the market. Someone invents a better brand, it's better, it's functional, it tastes better, whatever. And it comes in, it does not storm the market. Because the established brands had mental and physical availability advantages that are just massive. Um, and that's particularly true in B2B. You know, there's what about four big accounting firms in the world? Um, I bet you when we're in retirement there'll still be four big accounting firms.

Speaker B: And so that's mental availability and the second one, um, physical availability or.

Speaker A: Yeah, yeah. Uh, it's about. Is it easy to buy from you? Are you in the store I shop in? Do you have the pack size I can fit in my car? Uh, have I got the app on my phone? Um, if someone hasn't got the Uber app on their phone, their chance of ordering an Uber when they could order a taxi or anything is near zero. Right. So that's physical availability. Just, just be being there.

Speaker B: So for an E commerce brand.

Speaker A: Yeah.

Speaker B: Who just sells online is just the fact that they can purchase the product fast and it comes fast. Is that enough of a physical availability or does it help to have like something in, in stores where people can see it, touch it, feel it? Like how does it affect in from an E commerce perspective, this is just

Speaker A: all about the quality of, of the physical availability. Right. I mean uh, we have a brand here in Australia, Flight center. I was just walk through Random mall and I noticed a big, you know, banner new flight center, you know, coming, you know, soon. And it was all beautifully branded and things. They're successful brand but they're hugely online. Right. But they're also, they also have physical stores that's just, ah, you know, that just gives them better physical availability. But uh, look, it's, it's little things like um, uh, you know, does, does your website take PayPal or do you demand that people type in their credit card, you know, which is More physically available? 1 click with total security or a real pain that I have to put my credit card in and hope that you don't leak it to someone else? Ah, so there are all these little things that we do as marketers. Uh, you know, do you take American Express? Uh, will you deliver? Uh, will the delivery be fast? You know, these are all physical events.

Speaker B: A return policy. Right. Because the risk experiencing it. I was talking um, to a client and um, and they were telling me a story about like this campaign they ran ages ago and it was around um, free pickup and delivery for Car service. And it kind of helped this car dealership in the US make so much money that year because, um, uh, because, um, it made it easy for them is to get a service done. So now I can just get it done. And so is that an example of physical availability? Just making it really easy for the consumer to go, yeah, yeah, take it.

Speaker A: Thanks.

Speaker B: Bye.

Speaker A: You know, uh, absolutely. And it's quite astonishing, isn't it, how complacent some marketers are? They'll say things like, oh, we're an E Commerce brand. You know, you know, we're on Amazon. You're like, okay, and what. That's where your thinking stops. You should be thinking every day, how do I make it easier for people to buy me? Uh, not something else.

Speaker B: There's a concept called nudging. Is this part of the process where you kind of encouraging people to take something a little bit more of a step towards your brand or, or to. Or to shift a behavior? Install the app for Uber?

Speaker A: Yeah, it is, it is. It recognizes that we're incredibly habitual. And, uh, most of the time we don't, you know, we don't. We don't need something new. We don't like changing our behavior. And so you have to fit in. Rather than saying to people, um, I often talk about marketing's attitude problem. Marketers have this, um, they tend to convert all problems into an attitude problem. Right. So if you say, we need to get more people, I don't know, recycling their cardboard, uh, people go, right, let's run an ad about the beauty of nature and get people to care more about the environment. And say to them that recycling is about caring for the environment. It isn't an attitude problem. They actually already do care about the environment. Uh, it's just you haven't made it easy for them to recycle the cardboard. So the whole nudge thing was about, right. How could I do it? And so it was easy for people. Uh, a classic is, you know, if you go to a park, you're at a music festival or something like that, and you're like, oh, which bin does this go in?

Speaker B: I know, I know that one very well.

Speaker A: A really simple thing is to put on the bins, um, pictures or actual physical things of the different products that go into the bin. Everyone can understand that. Color coding. Well, I have to remember the color, and I'm in a different country.

Speaker B: What does yellow mean?

Speaker A: What's red? Um, so that is, yes, very much in line with the idea that the, the consumers are habitual. Uh, they There's a very big world out there with so many things, and they just, they just want to get on with their lives. So, um, this is why mental and physical availability are, uh, the, the. It's not the total battle for a brand. Right. I mean, there's product quality and making sure your price isn't a barrier and all these sorts of things, but in the long run, there's no such thing as a big brand that has a mental and physical availability deficit.

Speaker B: That's true. And I like your example on Flight center, because, yes, probably the majority of their traffic and sales. Well, I would assume only because I'm an online marketer or would be online. And yet having physical locations adds credibility, adds a place where people can go. Maybe there's a whole segment of the market who doesn't even kind of use the Internet. Right. So that's part of that whole thing, which I can't imagine as someone who's on the line, as someone who's on the Internet. But, um, I think this is where marketers have to get out of their own heads about how they shop and how they experience the world and understand that the world's a very big place.

Speaker A: Yes. I was reading recently, Uber's introduced a phone number for people who don't have the app. You know, a phone number, like, you know, like, uh, taxi.

Speaker B: That's amazing.

Speaker A: Yeah, I know. So, I mean, I think some clever person in Uber suddenly went, you know, not everyone has a smartphone or, you know, like. Or maybe the battery's gone down and there's a pay phone, which, you know, which are often now not pay phones. They're free. Right. But they still can't call an Uber because, uh, we don't have a phone number. All right. It would improve our physical availability to have a phone number as well. Yeah.

Speaker B: When I was in the U.S. i think it was the first time, maybe 15, 20 years ago, it was the first time that I saw online companies advertising on billboards. And I was like. And I started talking to a few.

Speaker A: Oh, really?

Speaker B: Yeah, People around there.

Speaker A: I'm old enough to remember the dot com revolution. They advertised on billboards all.

Speaker B: Yeah, yeah, that was after that had crashed and it had come back. So it's like 15. So probably around late 2000s, maybe early 2010s. Um, yeah, but. But, uh, I just remember that they were advertising on billboards, on tv, and this were just kind of websites only. And I started speaking to some marketers over there and they were saying, yeah, because they're fully exhausted online every Possible kind of section online has now just been, you know, kind of optimized. They have to go like expanding out because otherwise they're limited in their market. So I found it quite eye opening that online companies would go offline or into kind of above the line to expand their market. And I think it's a similar example.

Speaker A: Right, yeah. Uh, a lot of marketers don't think about their mental and physical and realize there's quite a lot of separation between the two.

Speaker B: Right.

Speaker A: And so they're doing things online which they think are advertising, but it's not. It's only catching the people who are like in the market now. Uh, and you're not reaching the brains of people who, the vast majority of people who aren't in the market now. Uh, and so yeah, billboards, mass advertising is the way to do that. Also. Just a simple thing, if someone's not online, if they're like they're a low user of social media or something like that, why is that? And the answer is because they're probably out and about and being busy. So you think, right, what's a medium that would be uh, uh, this thing called outdoor TV? Yeah, yeah, yeah. TV. Yeah.

Speaker B: But TV's not really outdoor.

Speaker A: But particularly radio and TV and outdoor. Yeah, it would be obvious fit for that. Yeah. You've got to reach, right? I mean reach is not optional. Unless you want to shrink or be small.

Speaker B: The rich is not optional. Uh, I've got a few questions. Let me ask you this question first though. You, um, mentioned either in your book and podcast somewhere that I think it was McDonald's or Coca Cola. The like, there's uh, hundreds of millions of orders a year, but it's one time purchase. So it's like this big chunk of their sales are uh, not loyal at all. There's no loyalty in there. But what a big part of their sales.

Speaker A: No, no.

Speaker B: Or is that not right?

Speaker A: There is loyalty.

Speaker B: There is, there is loyalty.

Speaker A: Yeah, yeah. Loyalty is absolutely fundamental. Consumers. You know, as I said that households, typical household, only mine, 300 items out of 30,000. You're like, what baby? It's because they keep going back.

Speaker B: They buy.

Speaker A: You know, I just asked my daughter to get milk from the shops. Of course she got the same brand of milk. Uh, you know, it's like that's our brand of milk. Yeah. You know, it's consumers are loyal. Um, yeah. I wanted to show a thing which is a particular statistical distribution that underfits, underpins the laws like um, double jeopardy. And uh, I chose the biggest brand I could think of, which was Coca Cola. And um, yeah, the biggest single group of Coca Cola buyers in a year are people who bought them once, and the next biggest is twice. And the next biggest is three. And by the time you're doing once, twice, three, you've covered something like 30, 40% of their sales volume.

Speaker B: That's, that's a really important point. I just want people just to reflect on right now that 30, 40 of the sales volume of Coca Cola are from people who buy a maximum three times a year. I think I've had a Coke because, uh, I drink kind of Coke Zero because it's like kind of, it's my one thing I've got left. Right. But I have that much more frequently. But I'm now kind of just probably one of the more kind of loyal customers. Right. Versus.

Speaker A: Yeah, you're heavy.

Speaker B: Yeah, you're heavy user. Yeah, yeah, yeah. Heavy user. Right. Um, yeah. But what's interesting is that when brands think about marketing, I mean list all the ones I talk to, their focus on their top segments, on their most loyal customers are focused on kind of loyalty kind of programs. But what you just mentioned is that this whole other section which are going to buy from m you kind of once or twice a year, but that can make up a very large proportion of your total revenue for that year. So how do brands start thinking about this again? Again, like, is this just coming back just to the mental and the physical availability and then just to get everything else? Almost.

Speaker A: Yeah. And reach is not optional, you know,

Speaker B: and reach is not optional. And reach optional.

Speaker A: You can't write a growth plan that says we're going to get more out of, uh, our existing customers. It's like, well, your existing customers will buy you a little bit more if you win a whole lot more customers.

Speaker B: This is the dichotomy almost. You get more loyalty by increasing, by winning more business. Because everyone would think counterintuitively that, oh, the big brands have the worst kind of loyalty because they're so big and they're not because they're impersonal and all this shenanigans, Right.

Speaker A: This is because the market is using this sort of intuition and seeing everything as an attitude thing, uh, whereas it's, it's not. So if you, I mean, how do you win lots more customers? Yeah, well, I need to improve my mental and physical availability, particularly amongst people who can't. I've got to find ways to, you know, to reach people who it's, you know, I need to expand like, uh, my stores are in the South. I don't have any stores in the North. Well, we should open some stores in the North. Right. And you go, right. Well, that would win us more customers. It'll win us, like, northerners, but it'll also win a few more sales from the Southerners, because the Southerners sometimes drive in the north, uh, and say, oh, uh, okay, so if I expand my mental and physical availability, I'll get a bit more from my existing customer base. Yes, but the main thing you'll get is lots more customers.

Speaker B: Okay, I'm going to ask you a controversial question. Well, I'm not sure if it's controversial yet, but loyalty programs, if loyalty is a function of penetration, m. What is a loyalty program for then going to do?

Speaker A: Uh, yeah, well, the research is pretty clear. They don't do a lot. Um.

Speaker B: Is that true? They don't do a lot.

Speaker A: Yeah. Chapter 12 of How Brands grow. You can read all the. Some. Well, you can read a very short summary of all the research, and it is basically, do loyalty programs increase loyalty? And the answer is yes, a little bit. But, I mean, they're very tidal, right? Loyalty programs, and they don't increase loyalty very much? No. Oh, why is that? Well, it's a selection effect. The problem is.

Speaker B: Yeah.

Speaker A: Who's going to join my loyalty program? Well, Rado, let me start. Who would I like to join my loyalty program? I'd really like people who were, uh, very heavy buyers of the category, but were buying lots of other brands, and then they switched to me and they give me all their purchases.

Speaker B: Yeah.

Speaker A: Yeah. Okay. Who's going to join your loyalty program? Uh, the people who already buy from me. Yeah. Oh. Uh, so, you know, even that heavy buyer who buys other brands is probably not going to join your loyalty program, even though they could get a lot of points and stuff if they did, because they go, I don't buy that brand.

Speaker B: There are.

Speaker A: Whoa. Sorry. That's. Even if they say that, because of course they wouldn't. They don't even see the loyalty program. Right. I mean, uh, I don't know. I'm sure that South China Airlines has a loyalty program. Um, if you ask. Uh, but I'm guessing, right, Because I go, I've never flown them. They're not in my repertoire. Um, so, yeah, of course I don't belong to the loyalty program. Who's the airline loyalty program do you belong to? Byron? Qantas. Why? Because I have to fly Qantas. You know, I cannot avoid flying Qantas. So, of course I joined the program. Because they give me all stuff. They give me stuff that's, that's, that's

Speaker B: super interesting because you think, oh, uh, like. Because that was going to be the first example, right? All right, so I fly with a particular airline. I just keep flying with them. But you know what? If there's no flights, I'll fly with the other. I'll jump on the other flight, like straight away, right? I would just tend. But, but, so, but in some examples,

Speaker A: a bit of an effect, but. But not much. They're not gonna, they're not gonna like, you know, go on a way more expensive or inconvenient flight because you might get a few points. We're not that stupid.

Speaker B: What? So, uh, okay, so all these brands, companies that have departments on a customer life cycle and they have like, kind of like the loyalty specialist and like all these different things. What should they be doing then? Okay, just to say, for example, if they're listening right now, right, they're like, oh, my God, what am I doing? Um, I've picked the wrong job. I just heard Byron Sharp again and he said it again, is there things they can do to like, stop all this fluff that makes no difference? And like, are they saying, hey, here's my budget and just go spend it on ads for Reach instead? You know what I mean? Like, is there anything they can do to help loyalty?

Speaker A: Unfortunately, it's really hard to get out of a loyalty program, right? It's because there is this psychological effect consumers do. If they've got points or something, they're theirs. If you try to take them off them, they get very, uh, even if they're not using them. So, uh, that is one of the problems. So, I mean, the first thing you do is go, how do I reduce the cost of this program? And ideally, how do I stop giving too much away to the people who are already my heavy loyalists? Uh, so it's a bit like you

Speaker B: can save money on the incentives. That's a big one.

Speaker A: My local supermarket, they introduced their loyalty program and I thought, this is nuts, right? This was a supermarket in a. Had a catchment area where there were no other supermarkets. I was thinking, you've already got the people, so. But yeah, I'm going to join, right?

Speaker B: Yeah.

Speaker A: And, um. Oh, it took them less than a year and they started winding back. The, uh, you know, the value of the points, I think they suddenly realized, all right, nothing happened to sales and we're just given a discount to everyone. Oh, wow. And so suddenly the points expired at the end of the year. And also so they were winding back the costs and that's uh.

Speaker B: Yeah, yeah, no, understood. But then also now they're causing a bit of, um, of frustration with the brand because they didn't have to introduce it. Now they're taking it away and I never wanted it, but don't take it away from me kind of thing. You know what I mean? Exactly.

Speaker A: But they did it in a way that was quite quiet, you know, reducing the value of the points. Most people don't, you know. Yeah, yeah.

Speaker B: Uh, let me give you a different example.

Speaker A: But there is a, there is something else to do and that's think in the same way that you think about growing a brand. You think. So how do I, how, how can I make this loyalty program recruit people who are not already loyalists? So take away the most stupid. Um, there was a department store here in Adelaide that launched a lot of, and you had to buy, you had to pay, you had to spend like in a month, fifteen hundred dollars to be able to join the loyalty program. Uh, so the only people who were joining were, you know, heavy buyers or someone who bought a, a TV or lounge or something that month. That's utterly stupid. You want to make the barrier to joining, uh, very low so that it reaches, you know, you want, you want and very easy. So an occasional buyer who's never really shopped at your store before, they mostly shop at some other department stores, but they just happen to come in today. You want to grab them and make it super easy, get them into law to bar you get their email address and then you've got a chance that's the valuable customer to you, not the customer who shops at you every month anyway.

Speaker B: Understand? So you going for loyalty program for the first time. Buyers who aren't the loyal ones yet because you want them to become more loyal. But again, does the loyalty program help? Probably not. So if you're going to do it like what you just said before.

Speaker A: Well, I mean, yeah, don't go into it. Yeah. I was in New York recently and I found this lovely, very cool, uh, sort of Australian style coffee, uh, shop. And uh, uh, it was quite new. And I said to the owner here, look, um, I'm a marketing professor. I'll give you some advice, right. And partly is like, you know, make sure it's really easy for people to see on the street that there's a coffee shop here. Uh, but the other thing is, I said don't, don't, don't start a loyalty program.

Speaker B: Right.

Speaker A: Because coffee shops, uh, their profitability is About a few hours in the day, a busy time. And, you know, this was a cool, funky coffee shop. You could sit down with your computer and things like that. But the reality is the money they make is the people who come in quickly get a coffee and leave.

Speaker B: Yeah.

Speaker A: And so you don't want to do anything that slows those people down. You don't want people fumbling for their loyalty card and can I. I need a stamp for something, and you do not want that.

Speaker B: That was going to be my other example. It's funny, like, how you went there. I mean, obviously you've done lots of interviews like this, so you know what's coming next. Um, but, but, um, um, but, okay, so the coffee is a good example, right? Because when you like your barista, you don't care if it costs an extra 20 cents. You don't care if the 10th coffee is free. It's just extra niceness. But I'm going to come to you anyway. And if you make me one bad coffee, maybe I'll let you have two. I'm done. I don't care how. How many stamps I've got. Right? So it's like, that's the psychology that

Speaker A: also for the store, for a store, you can almost draw a loyalty circle. You know who sell most loyal customers? Well, uh, the most loyal are, uh, you know, the people in the office upstairs, you know, but our least loyal are the ones five blocks away because they have to walk a long way here and they pass other coffee shops on the way.

Speaker B: That's amazing. I think that's so, like, you know, what's interesting about this conversation, which I really like, it's one of those counterintuitive things that when you hear it, it's obvious, but no one ever thought it or said it or did the research about it. And so what you're just saying obviously makes sense. You had to go and do the research to find out the thing that actually makes sense. Because we're all lying to ourselves about something that we think's true, but it's actually not true.

Speaker A: Yeah, it's, uh, like, you know, I mean, uh, was it Galileo or there were others, you know, who said, you know, actually we're making all these recordings of, you know, planets and, you know, Star wars stars and things, you know, movements and day, length of day. This all fits with the idea that if the Earth is going around the sun. Okay, not the sun going around the Earth. Uh, that fits. Actually. People didn't like that, right?

Speaker B: Heresy. It was bad. It was bad for him.

Speaker A: Yeah, unfortunately, uh, he had some friends, so he only got house arrest, not burned at the stake. But of course, afterwards, people go, oh, duh, yeah, of course.

Speaker B: Yeah. It's like that took a while. I think we're getting faster at going, ah, uh, of course we were wrong. I think in the past, maybe it was a bit more of that strong dogma going on, you know? Um, yeah, yeah, I think you're right.

Speaker A: So a lot of people say to me, um, you know, um, really, you know, how brands grow has been having impact on the marketing world for 10 years now and how come everything hasn't changed? I'm like, uh, I think that's. We've actually made pretty good progress. Right?

Speaker B: Yeah.

Speaker A: In fact, I joke usually, you know, it took doctors 100 years to start washing their hands.

Speaker B: Well, so you wrote this book like 15 years ago, right? And like, I think. And I've been in marketing for much longer than that. I'm not gonna say how many years, but let's say, um, it's been a while. Um, it seemed to be making the circles around E commerce the last few years again. It's like kind of almost had a resurgence. Do you know why? At all?

Speaker A: Like, good marketing by the Aurenberg Bass Institute?

Speaker B: No.

Speaker A: No.

Speaker B: Mental availability and physical availability.

Speaker A: It is probably actually about that, that mass reach. But I will say it was a surprise to me that, um, when the book came out, because the book uses lots of examples like Coca Cola and things, because I deliberately chose, you know, brands that readers would know about. Uh, but yeah, a lot of people in the, in the E commerce and sort of and database marketing world got it even maybe before some of the, Some of it was. So I'm not sure what that is. The. I mean, this is not reaching a lot of them, but those that did, they got it. Or maybe it's because they lived more in a more data world and so they could read it and go, let's have a look. Oh, oh, he's right. Well, okay. Yeah.

Speaker B: What's interesting, I think, as well, about your, uh, concepts and thinking and studies and, and all the evidence, um, is that in digital marketing for E commerce, there's this concept of top of funnel, middle of funnel, and kind of bottom of funnel, where like, at top of the funnel is like kind of mass market. And then it's kind of as people start to engage with you, they go to the middle and the bottom is where you convert them. That died many, many, many years ago. But that was how people thought about it. But I think how Meta structures, us. Uh, how can I.

Speaker A: What was the middle of the funnel?

Speaker B: I don't know. The middle of the funnel is like, I haven't heard of you, but now I've heard of you. I'm considering you. One, uh, of the funnel is like, I'm ready to buy something. Who can I buy it from? Kind of thing.

Speaker A: Right? Okay, which is. Which is. I say, that's the physical availability time, right? That's the catching people, they go, I. I need. I bought this new house. It's got a lawn. I need a lawnmower. Right?

Speaker B: That's. That. That's Google Ads. Let's call that kind of the Google Ads place where everyone thinks that they're a marketer, but all they're doing is putting up an ad is getting someone lawnmowers 20% off. Yeah. That's it. And that doesn't get you loyalty. Right? So this is where the Google Ads marketing.

Speaker A: But it's still important, right? You're trying to catch the people who are, uh, you know, for 99.9% of your life, you're not interested in lawnmower.

Speaker B: Yeah, okay, that's a good point. Again. Again, this is part of the. You just want more customers. It doesn't matter where they come from.

Speaker A: You've got to be there when people go into that cycle. Um, but it helps enormously if you've built some mental availability. So someone sees your lawnmower ad and they go, oh, yeah, I know that brand. Every salesperson in the world knows if they're talking to someone in a, uh, electronic store or something and they introduce something and someone says, oh, yeah, I've heard of that. That's a buying signal. Yeah, yeah, we don't like, we don't like. I mean, it's. If I say, like, I know we need a new microphone for your podcast. This is. This is brand you've heard of. And then there's this totally unknown one.

Speaker B: Got it.

Speaker A: It's just not. You got to be convinced to buy that unknown one.

Speaker B: So what's interesting with. For marketers is that. Especially for digital marketers. Anyway, so that's what I'll do. Speak about, um, because that's my experience is, um, it's so much easier just to market a big brand. Everything just works better. All the ads work better or my landing pages work better. Uh, ads. I think I'm like a God because, like, look at my campaigns, right? And then you get a brand that like, like, is like a startup and I've never heard of it before. Everything is difficult. Nothing seems to work. Right.

Speaker A: Yeah. And so because, because you're primarily pulling, um, purchase availability levers, right. You're primarily doing stuff that's going to catch the people who are buying this week. And that's like getting some shelf space in a store. And that's really hard to convert that to sales. If everyone walks past it, doesn't know who you are. Uh, so as you say, when you say a big brand, you mean a uh, brand with mental.

Speaker B: A brand that.

Speaker A: When a brand's got mental availability and you give me the task of rolling out a bit more physical availability. Wow. That stuff gets a great return.

Speaker B: Right? Ah, I get it. So, uh, okay. It's like I like aha moments, they're so cool. And I'm getting some right now. But it's like the digital marketers always would judge the brand marketers. Right. But then they would love when there was a brand that they could just work with because it made everything easier. So there's this weird like marketers dichotomy, right. Where the brand marketers aren't respecting all the digital marketers or the digital markets aren't respecting all the brand marketers. But really there's one's got. Well, they're both kind of, kind of doing them both. Right.

Speaker A: It's sort of the old, um, sales and market, you know, in a, in a Procter and Gamble or something. It's the whole sales team versus the marketing team. Right.

Speaker B: You know what's interesting, I think that maybe one of the reasons we do

Speaker A: everything, we don't, you know, don't need

Speaker B: those, but it's so kind of need each other.

Speaker A: So much easier knocking on the door of a store if you've got like, and they've heard of your brand.

Speaker B: I think maybe part of the reasons that your book maybe started just to do the rounds again, is the rules in meta change. And so before top of the funnel, middle funnel and bottle of the funnel, you'd have them as separate campaigns. But then kind of meta changed how they target people and their ads and maybe because they read your book too, right. But they essentially have everything in kind of one campaign. So this kind of one campaign has the reach as the retargeting has the loyalty part. It's all in the one campaign which, okay, so matches your book now.

Speaker A: You know, availability and physical availability.

Speaker B: Yeah. And I think maybe that has been a part of it because especially for e commerce brands, um, these days the brand and the performance is one and the same. Like you can't Just say, hey, advertising, you know, uh, so it's a lawnmower for 20% off. Yeah, you can, but it doesn't really work. So now I have to do like some videos that show somebody using it. I have to do. Yeah, yeah, I have to testimonials, I have to give them different.

Speaker A: The debate, brand or performance, you can recast as saying. What you're really saying is the debate between mental availability or physical availability. And if you stop and think about it, that's incredibly stupid.

Speaker B: Right?

Speaker A: Because you're like, should, uh, I do mental availability or should I do physical availability? You've got to have both. You've got to have both. Oh, oh, yeah.

Speaker B: At the same time. At the same time.

Speaker A: Well, okay, no, you don't actually. You need your physical availability always on.

Speaker B: Of course you have to be able to buy it. Right, yeah, touche. Yeah.

Speaker A: Um, now you should have your advertising actually spread out all the time. So it's sort of the same. But if you're worried about going broke or something, you might not actually be. You know, the mental availability is an investment that's going to keep paying off for decades. But if you think you're going to be broke in three months time, you know, then, yeah, maybe you don't. You can turn, you can turn it off for a while. That's, that's the only difference. But if you turn off your physical availability, uh, your sales just stop.

Speaker B: Yeah, yeah, okay, that's a really, really, really good point.

Speaker A: But it is weird though because people do, the people still do physical availability like campaigns where they will, you know, do a burst of, uh, you know, spending on Amazon for a display or something and then stopping. You know what, that's like shutting the doors of the store. Why are you shutting the doors? It's not advertising. Advertising. You can do that. I mean, shouldn't, but you can because it works through memory and the memories keep going. But if you shut the doors of the store, uh, they're shut, those sales are going to someone else.

Speaker B: So when you make something harder to buy by, by removing an option, a payment option, platform option, you're just making it less available. So the goal, so, uh, just for the brands that are listening, if your uh, brand is accessible in more places, that's increasing the physical availability. If you accept kind of more uh, forms of payment, that increases the physical, physical availability. And if you make it, you'd love

Speaker A: to have mental availability going along with that because that is just going to make that stuff better.

Speaker B: Got it.

Speaker A: And you should be daily tweaking. And you can do this. This is, I think, why the people in the eco digital world, they understand they're doing like, you know, a B tests all the time. They're seeing, you know, like. So, yeah, uh, Google says, you know, buy this display ad and you go, well, I'll try it. And uh, you know, because it's physical availability, it'll show up in sales immediately or not. And if it's not, then I'm stopping doing it. It's exactly the same way that, I mean, I'm sure that pretty much all. If you own a coffee shop, you start off by having very long hours, probably because you're so keen. But then you start to realize we don't get any business. Like after 5 o' clock we don't get any business. In fact, we hardly get any business between four and five. All right, well we can close then between four and five and you start tweaking and learning what matters and what doesn't matter so much.

Speaker B: In that example though, would it have been better to keep it open because now there's more physical availability?

Speaker A: Of course. But it costs.

Speaker B: It's a cost return, right? It's a cost return. It's an hourly rate. How much making back of it? Yeah, yeah.

Speaker A: I mean every store m. You know, some, it's interesting. The stores that more likely to go for 24 hours are the ones that have got fantastic mental availability.

Speaker B: Right?

Speaker A: They're big brands. They're the McDonald's and things. But others go, uh, nah, if 24 hours, uh, we can't justify the costs.

Speaker B: Yeah. So Max Brenner, I believe if they set open for 24 hours, they'd have a line for 24 hours. They seem to like all the chocolate and the sugar and the yo cheese and stuff. Uh, they must have a lot of kind of mental availability because they're always full no matter the spot. Like, and they'll open up and they fall straight away. That's mental availability. Right. And now they made it more accessible with the physical availability when they open up a new store. Is that like an example of just like.

Speaker A: I'm um, noticing a lot of yochi like stores around me that uh, are. They're not very busy, so.

Speaker B: Oh, okay, cool. I must live in an area where everyone eats sugar. Um, and they love it. Um, okay, this is what a great conversation for the e commerce brands listening and for all brands listening. Actually, it's that combination of not thinking of performance versus brand. It's mental availability versus.

Speaker A: Yeah, can we get rid of all These terms that are. That non marketers, I mean even marketers confuses us marketers. Right. But the non marketers had no idea what we're talking about. And ah, it's so cluttered. Funnels and ladders and it's just. And performance and brand and activation when it's not activating, you know, I mean, yeah, okay. Uh, and going well you know, most of the time, uh, what you're really talking about is catching the people who are about to buy. That's our purchase availability and mental availability, which is usually hitting people who actually aren't buying at all now, but they're going to someday. And if we build that, it's going to make the other one work, work really well. And if you can just focus on that, it's also, um, much easier to sell to finance people. You're talking about two market based assets that are valuable and any marketer should be able to communicate that, Right. We're supposed to be quite good at. Do you think? You know, I mean, classics. If Coca Cola or all their factories burned down, do you think it would destroy the company value much? No. What is the company value? Uh, well, it's the mental availability and their distribution network. Right. It's their mental and physical availability. M. So my job is to nurture those assets for the company. The CEO can get that. Right?

Speaker B: You're not saying that you still don't track performance of each of the channels, right? Because obviously there's spending money and there has to be some kind of a return. But if I'm going for mental availability, am I still tracking it the same way that I've always tracked it?

Speaker A: No, no, no, no, no, no, no, no. Yeah, that's a very good. Yeah. Um, physical availability, you can see it in, you know, as you move it around today. It should show up in today's sales. Yeah, obviously, mental availability. Not at all. In fact, most of the mental availability is, was built, you know, five, ten years or you know, like the Coca Cola. Oh my God, it was built, you know, 100 years ago. Uh, so you have to use other metrics to, to, to evaluate. Am I doing a good job? Right.

Speaker B: What do you suggest of the metrics? A, um, few metrics or the key ones to start from. To start with.

Speaker A: Okay, well, I can tell you from the Embry Bass Institute, right, We, we focus on a few simple metrics for our mental availability, which are about things like how many people in the media are mentioning us, uh, which we can track with. You can track that with like Google, right?

Speaker B: Oh, yeah, of course you can.

Speaker A: Yes. And you can think of hundreds of other metrics that would be related to that. But the thing is, they're all related to that. So why don't we just track that one? Right, so how many times are people mentioning us in the media?

Speaker B: Uh, and do you correlate those numbers with the physical availability numbers kind of thing? Like, is that something. Is there a way? Because, like, at some point you're like, well, I'll just buy all the ads everywhere and I can't. Right. Because it's because I'm controller at that point. So then as a brand, am I just going to where there's the best chance of getting the M most reach the smartest way and then stack on top of that.

Speaker A: So we, I mean, we do other things like LinkedIn advertising and stuff. We look at the reach metrics because reach is not optional. Yeah.

Speaker B: Uh, I'm going to actually just start launching some rage campaigns in Meta. I've never launched them before because I'm like, rage, who wants rage? I want conversions. But that's, uh, different. Right, so in Meta, you actually should have some campaigns just for rage, because it's going to get in front of it.

Speaker A: Depends, obviously, where your brand is, big or small, what it's on. For us, we have how brands Grow Live, which is a executive development program. Hardly anyone in the world. There's probably about 10 million senior executives in the world who will one day you know, do a program like this, either with us or, you know, we compete with the Harvards and stuff. And so, you know, most of them don't. 99.9% don't know we offer this. And, uh, 99.9% aren't, um, in the market today.

Speaker B: Right.

Speaker A: Uh, I mean, they're probably going to do one in seven years time. We've got to build mental availability. And so which box do we tick on the LinkedIn thing? We tick reach. That's all. We just reach. As soon as we start paying for clicks, uh, or something, the cost of the reach goes skyrocketing out.

Speaker B: That's true, isn't it?

Speaker A: Fascinating. And we carefully control where that reach is going out. Because, um, if you just leave it to, uh, the algorithms, then, um, suddenly vast amounts of your money pour into, you know, Azerbaijan or something.

Speaker B: Yeah, I've seen that too. Uh, wait, so when you're targeting. Okay, let's just, um, on that one, are you just going to the country level? Are you going state level? Just country levels enough country level.

Speaker A: Sometimes city and things. But that's largely. Just stop that bleed.

Speaker B: Yeah, understand.

Speaker A: But, but we're not really trying to, you know, we, we know the only demographic. So of all the people who've come on how brands grow, probably the only common demographic is they have about 20 years marketing experience. So you'd go, right, well, we should target people who, you know, are that Senior only have 20 years marketing experience. But then you go, but wait on people who've had 10, 15 years marketing experience are going to have 20. So you'd want those as well. Right. Um, so you need to. Reach is not optional for your specific

Speaker B: situation, which is similar just to ours. Right. Because it's like, it's a B2B thing just for our. After acquisition of our clients. Um. M. Does education fit in that. Is that part of.

Speaker A: Yeah.

Speaker B: Is that mental or is that now physical? Is that hybrid between the two?

Speaker A: Like, like if you're doing someone, if someone makes an inquiry, then you. But no, but education's. Yeah, really important. Um, B2B is really particularly tough because the. We just don't have, you know, I'm talking about LinkedIn. LinkedIn's great new thing. But even it's reach, capacity to deliver reach is very limited because most people go on LinkedIn. Maybe probably the typical LinkedIn person, LinkedIn, don't say this, but, uh, you know, probably logs in about five times in their career.

Speaker B: Of course, because that's the long tail of the distribution.

Speaker A: Well, yeah, most executives will go, yeah, I've got a LinkedIn account. Yeah. And when did you last go to LinkedIn? Well, when I set up the account.

Speaker B: All right, got it, got it, yeah.

Speaker A: Oh, no, I went in because I got a promotion. So I went into LinkedIn and updated my CV. Okay.

Speaker B: That's it.

Speaker A: And then you got other people who are on every single day. They're so easy to reach.

Speaker B: Byron, this has been fantastic. I've got so many more questions, but, uh, for everyone else who's listening, um, you should buy the book. And, and can you just talk through that executive kind of program? Because we have a lot of, um, experienced marketers in our database and kind of listen to this. And so maybe there's some of, um, those older kind of more experienced people. So how does that work? Um, and yes, how did.

Speaker A: Yes, it's a three to four day program. Um, it runs in Singapore and Bordeaux and Boston next year, every year in those locations. Um, it is, um, it's a premium, you know, event, uh, where you get to, you know, like, you actually spend days with me and Jenny Romanick and Justin Cohen and others. So you get to network with other people. But, um, you know, you can't ask a book questions. Uh, you can't. Like, this forces you to do exercises on, you know, your brand and others. And it's a, I mean, people love it.

Speaker B: Yeah. So what is somebody going to get from attending? Yeah. So say, for example, uh, they've heard this podcast and they're like, oh my God, this guy's amazing. I haven't thought about that. My whole budgets are all messed up now. I have to change everything. Right. So come along.

Speaker A: Okay.

Speaker B: Like 1 6.

Speaker A: Sort of like, it's like, yeah, sort of like consulting on the thing. But, um, I would say that because we have a lot of even CEOs who come and uh, I think a common thing is they want to get to a level in the knowledge where they can, um, inspire others, where they can stand up and make a speech about this is the way we're going as a company. This is the evidence and they know how to do it. Right. So, you know, that is, you know, if you're a kid, you know, it's like, you know, you're learning something and there's learning it to pass the exam and then forgetting it. There's learning it so that you're more sort of familiar with it. Um, but learning it to a level where you can explain it and teach it to others. Oh, that's, that's, that's a, that's a high level of understanding. And uh, that's the magic, I think, of how brands go live. Um, it gets people up to sort of that sort of level.

Speaker B: And if you've heard things in this podcast that have been eye opening in terms of how you think about your marketing budgets or your teams and so on, then you should absolutely attend this event.

Speaker A: Um, um, it's great fun too, you know.

Speaker B: And uh, and they're great locations. I was like, oh, locations where he likes to go on holidays. That's what I thought. But I was like, it's, um, but that's great. And then I also highly recommend the book and I'll put the link in, um, the show notes. But how brands grow. It's just like it's expanding on all of these points. It's excellent. Um, and it just gets you thinking in a different way in. So we stop thinking about what we thought was the case, which is not absolutely the case, and then we start thinking like this instead. And there's a lot examples and details and thinking. So it's highly recommended for every e commerce brand for sure. But. But then for every other brand is just stuck saying, why I never got more customers. I've got the best service, I've got the best product. What's the problem? Well, everything that we spoke about, how

Speaker A: come I'm doing great things to get a great ROI and we're still not growing.

Speaker B: Yeah, yeah, yeah. So, but thank you so much, Brian, for coming on the podcast. Um, is there anywhere that anyone got. I say, for example, if somebody kind of wants to inquire about, um, go

Speaker A: to the urban big best website. Uh, if you just, if you just Google Arabic. Bass.

Speaker B: I'll put it in the show notes. Yeah, yeah, yeah, I'll put in the show notes. Byron, thank you so much. Like, I do a lot of these and it's not often that I get so many aha moments in, um, in an interview. Especially after all the research I've done with you. I've done all the research. So thank you so much. I mean, this has been great and I'm sure this is going to be really helpful for our audience as well. So thank you so much today.

Speaker A: Thank you. Bye bye.

Speaker B: Thanks for listening to the Growth Manifesto podcast. If you enjoyed the episode, please give us a five star rating on iTunes. For more episodes, please visit growthmanifesto.com podcast and if you need help driving growth for your company, please get in touch with us at, uh, Webprofits IO.