“There are a number of common misconceptions and they are often surprisingly damaging to marketing effectiveness – sometimes catastrophically so. Too many marketers, and market researchers, fall for what I call ‘marketing’s attitude problem’. This is where problems about buying behaviour – that is, not enough sales – are recast as brand image problems. So if the problem is ‘how do we encourage more recycling of rubbish?’ it’s recast as ‘how do we get people to care about the environment?’ Many brand plans argue that the reason sales growth hasn’t been as robust as desired is that the brand image is ‘not strong’ – whatever that means – or needs to be ‘updated’, ‘modernised’. The idea is that if we can just get people to see us differently, then sales will go through the roof. In reality, what’s holding back sales is that people hardly think of the brand; it’s seldom noticed, and not fast enough, and it’s difficult to buy. The need for differentiation is a related myth, as is the idea that brands sell to distinctive groups of people, or that it’s beneficial or necessary to target a particular group – and therefore not speak to other buyers.”
The leaky bucket theory suggests that companies are always losing customers, so to maintain share, you have to win an equal number of new customers to keep the bucket full, so to speak. To grow share, you have to be especially good at new customer acquisition, or you have to slow the leak.
The idea of plugging the leak became popular with theorists who sold the idea to practical marketers, who believed, without any evidence, that retention is cheaper than acquisition. The most extreme, and fanciful, example was from a 1990 Harvard Business Review article, “Zero Defections: Quality Comes to Services,” which alleged that the leak could be plugged for huge gains in profitability. Again, there was no empirical evidence.
In my book, How Brands Grow, I emphasize a move toward customer acquisition. Many up-to-date marketers now accept the idea that gains in penetration are required for growth, so customer acquisition should be the emphasis of growth-oriented marketers. In terms of the leaky bucket theory, the emphasis has shifted from plugging the leak to accepting it. All brands lose customers, so the strategy is to work hard to fill the bucket with new customers at a faster rate than it leaks
“Recently, I spoke at a How Brands Grow event and chatted with Professor Byron Sharp. He got a few questions about media allocation and (paraphrasing) gave a simple answer: buy the largest amount of the highest-quality exposures against all category buyers for the lowest price (in that order). Quality involves viewability (a non-viewable impression is an oxymoron) but also attention level and context, which have been dismantled by audience buying.”