Leaky bucket theory

Byron Sharp writing for the Ehrenberg-Bass Institute:

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

Media buying priorities

Faris Yakob writing for WARC:

“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.”