Frequency versus Penetration

In a recent Admap article, Tom Lloyd of Metametricsmakes an argument for not following a ‘frequency/loyalty/weight-of-purchase’ brand-building strategy but argues instead that brand marketers should focus on growing a brand through increased penetration – though he qualifies this by saying that ‘most of our growth in penetration will come from lapsed users.’

To illustrate his argument, he has a table showing penetration and annual purchase frequency of UK detergents. What this shows is that brands vary in terms of penetration but that most have very similar purchase frequency (generally ranging from 4.1 times a year to 2.3 on the TNS Panel.)

Two thoughts:

- the difference between 2.3 and 4 is almost x2…so it’s perfectly possible to double this brands volume by increasing loyalty.

- how do you define a lapsed users? That is over what time period does someone qualify to be lapsed as opposed to being a serial repertoire purchaser. If they’re the latter (which is often the case) the task is to then get them to be less repertoire and more loyal.

However, looking at different and much bigger data source – in this instance washing powders in the UK - some interesting new insights emerge:

- purchase frequency shows a similar variation to the TNS data but when looked at by SKUs within a brand, it becomes immediately clear that a brand doesn’t have a purchase frequency per se but SKU’s do. And surprise surprise this is mostly driven by pack size. So a 950g pack might have a purchase frequency of 3 whereas a 4.75kg pack is 2. Ergo, brand purchase frequency is a largely meaningless number.

- on one SKU (a 950g size), annual sales went from £0.9m to £1.8m by increasing the frequency of purchase from 1.78 to 2.74, whilst customer penetration remained flat

- repeat purchase rates are also significant. On another leading brand, the repeat purchase rate declined by just 1 percentage point but this led to a sales decline of close on £500K (and at a time when the average cost per pack went up marginally.)

So it would seem that repeat purchase and frequency perhaps have a bigger role to play than Tom suggests.