We get small business owners telling us all the time – “My customers are different.” “We carved our market because of the niche we created.” “The reason our customers are different is that they want X more and we got it.” “We created this product to service our X buyers.” “We sell to more female buyers than our competitors.”
The truth is, the biggest difference between your buyer and your competition’s buyer in the same category is nothing.
Said another way, your customer base is the same as all the companies within your category. Don’t believe me? Let’s explore this phenomenon. This law is called “Users Bases Seldom Vary,” and this law will make you money.
This law was first introduced by Singh, Goodhart, and Enrenberg. They were looking at types of fabric conditioners in the U.S.
What they found was that the dominant type of fabric conditioner was the regular run-of-the-mill kind. It possessed 72% of the market share and penetrated the market the most in a given year compared to the other brands.
When we think about a niche fabric conditioner, we could think of a hypoallergenic and unscented kind for people who need those kinds of products. We might think that this brand carved out a strong niche within the category, therefore their purchase frequency should be higher than a non-niche brand of fabric conditioner. Well, according to the loyalty metrics found in table 5.12 on the far right, they lose to the regular fabric conditioner. Why?
A couple of things are going on. For one, the law of double jeopardy presents its hairy head. The double jeopardy law states that brands with less market share have far fewer buyers and these buyers are slightly less loyal. Fewer buyers and less loyalty, double jeopardy.
Secondly, the unscented fabric conditioner brands mainly sell to normal fabric conditioner buyers who occasionally will purchase an unscented fabric conditioner. There may be a few unscented low-allergy “loyalty” customers who aren’t loyal to the brand but rather require it by necessity. However, they make up such a small percentage that it isn’t even projected in the loyalty metrics. Wouldn’t they buy it more frequently?
The unscented fabric company might be better off targeting the entire market but position themselves against the “smell” of the other guys. At least then they would have a benefit they could stake their flag on.
Marketing gurus tell us that you need to see the differences between your customers and others. That is simply not the case. There are major differences between people, as we are all created in a unique and special way, but how we buy and what we buy are quite similar. Can you imagine each individual human having a unique framework for buying? That is not how it works.
Here’s the golden nugget that will help avoid wasting money and instead make you more money: if the customers of your competition are of the same type as your customers – they could be yours.
Another chilling truth: your competition could take your customers. What is your marketing strategy to acquire those customers and to defend the ones you have?
Let’s create a clear marketing strategy together. Book an assessment today with McWilliam & Powell.