With a background in consumer-packaged goods brand management and marketing, I am strongly biased towards a “consumer is boss” philosophy. This phrase was coined by former Proctor & Gamble CEO A.G. Lafley during my 11 years at P&G and served to focus the organization on the true boss that we were striving to serve and delight. Now, as a consultant at Denneen & Company, a firm specializing in growth strategy, I often apply this consumer is boss mentality when discussing potential growth options with clients. When broken down into its simplest components, consumer growth comes from one of four drivers. Understanding these four drivers, calculating what each is worth, and determining the role they play in a strategic growth plan can help companies focus externally, simplify and clarify the way they intend to grow, and determine what needs to be true from a consumer perspective in order to achieve the growth targets. Outlined below are these four consumer (or customer, in a B2B context) building blocks, also known as the “FOUR MORES”:
Building Block #1: MORE PEOPLE. An obvious way to grow your business is gain more consumers or customers. This can be done by attracting more consumers to the category, capturing consumers from competition, and even creating a category. Gillette successfully gained more consumers by targeting young men who were turning 18 and sending them a razor on their birthday. This way, they were able to gain more than their fair share of new category entrants. Relatedly, Dollar Shave Club specifically targeted Gillette users who, frustrated by what they perceived as high-priced razor blades, ended up switching brands, giving Dollar Shave Club more consumers. Billions are spent each year in insurance advertising in an effort to get consumers to switch from their current brands to Progressive or GEICO (and a long list of many others) with the promise of saving money. To understand a “more” consumers opportunity, consider how many new consumers your brand can access, how many might you be able to convert, and what a new consumer is worth to your business?
Building Block #1 quantification: What is the incremental value that one new consumer adds to the business?
Building Block #2: MORE PROFITABLY. Trading consumers up into higher margin products and/or raising prices represents another possible building block for growth. A campaign by DeBeers, a global jeweler, emphasizes that two months’ salary should be spent on an engagement ring, providing guidance to consumers to potentially spend more than they would have and driving higher expenditures on DeBeers rings. BMW has a clear trade-up strategy where they target potential first time BWM buyers with the 1 or 3 series, and work to keep them in the brand, eventually trading them up to a 5 or 7 series. This approach results in ongoing trade-up and high lifetime value. And identifying this significant lifetime value helps to direct BMW marketing spending and activities with the understanding that the payout will come over time as the consumer trades up. While Gillette rarely ever raises prices on razor handles, razor blade prices were historically raised on an annual basis. And when a new technology platform, such as MACH3 or Fusion was launched, the majority of volume was sourced from current Gillette users trading up into the new, more profitable (for Gillette) technology. To identify “more profitable” opportunities, understand what it’s worth to trade up one consumer into a more profitable product, what will it take to trade them up, and your product’s price elasticity curve. Building Block #2 quantification: What is the incremental value of trading one consumer up to a more profitable product or service?
Building Block #3: MORE COMPLETELY. Many brands have the opportunity to fulfill a greater percentage of a consumer’s category needs, especially in categories where overall brand loyalty is low. Marriott’s Bonvoy rewards program allows hotel guests to earn points and rewards for stays across any Marriot or Starwood property. Similarly, airline loyalty programs encourage consumers to fly on one brand of airline to earn status, travel perks, and free flights. And numerous product centric B2B companies have migrated up the value chain into services to meet a broader set of category needs for their customers. Another element of “more completely” is the opportunity to trade current consumers across into other brands in your portfolio (if you have them), fulfilling more of multiple category needs. P&G’s Brandsaver (a monthly coupon insert) is an example of how P&G seeks to trade across consumers into more of its brands. The accompanying multi-brand in-store support and merchandising that P&G often receives in conjunction with the Brandsaver further encourages consumers to trade across from, for example, Pantene to Olay. To assess your brands’ ability to meet consumer needs “more completely”, understand consumer switching behaviors and identify opportunities to drive greater brand loyalty, and look for way to drive trial of one brand through another.
Building Block #3 quantification: What is the incremental value of a specific increase in percentage of share of wallet? What is the incremental value of a consumer adding one more product from the company’s portfolio into their basket?
Building Block #4: MORE OFTEN. Accelerating replacement cycles, repositioning brands for additional uses, and establishing new usage occasions can be a successful approach to growth. The lubrication strip on Gillette’s razor blades turns from blue to white, indicating it’s time to replace the blade, and discouraging consumers from continuing to use it. Offering larger packs of blades (8 or 16 count) encourages consumers to replace their blade more often, as they know that they have numerous blades left still to use. Similarly, larger bags of Tostitos and 2-liter bottles of Coke (vs. 12oz cans) encourages increased consumption, as does advertising around major sporting events to remind consumers of these usage occasions for which they should purchase snacks and drinks. Snickers expanded their positioning beyond candy bars and into energy bars and hunger-curbing snacks with their “You’re not you when you’re hungry” campaign. Velveeta, after unsuccessfully trying to grow by bringing in more consumers, realized that there was a small group of Velveeta lovers who, when given recipes and other ideas as to how to use Velveeta, would use significantly more. Arm & Hammer sells packs of baking soda specifically positioned to deodorize your refrigerator and freezer (two different products, same baking soda), and Clorox’s Hidden Valley Ranch isn’t just salad dressing – it’s used for dips, marinades, and sauces. Industrial battery manufacturers offer battery monitoring technology to ensure batteries in, for example, data centers, are optimally replaced, resulting in more frequent purchases. Finding “more often” growth opportunities often come from uncovering the non-obvious are the other ways that consumers are using your products and understanding if consumers using your products longer than they should be?
Building Block #4 quantification: What is the incremental value of one more usage occasion?
Finally, one of the key benefits of the FOUR MORE approach to thinking about and identifying growth opportunities from a consumer standpoint is that it is all quantifiable. Knowing what one more consumer is worth vs. the value of trading up a consumer, and the cost and effort it might take to achieve is extremely valuable data that can help drive strategic choices. Understanding what has to be true (how many more new consumers, how much trade up, how much more loyalty, how much more usage) to realize your growth targets assesses the feasibility of the objectives, helps focus the organization on the most critical and impactful building blocks, and can be instrumental in gaining management support and funding. Because, at the end of the day, there are only so many ways you can grow when the consumer is boss.
While the “Four Mores” is a useful and straightforward framework to start a consumer-focused growth strategy conversation, the actual path from insights to strategy to tactics can be challenging and complex. And making bold strategic choices can be risky without a deep understanding of the internal and external environment. At Denneen & Company we’ve utilized the Four More building blocks concept and approach with numerous clients to help better dimensionalize and quantify growth opportunities, while driving key choices with regard to what the company is trying to achieve from a consumer/customer perspective. If you find this idea interesting or relevant to your organization or would like to have a conversation about the challenges and opportunities facing your organization, we’d love to hear from you.