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Run With Foxes

Make better marketing decisions

Paul Dervan

Thank you to my beautiful and wonderfully patient wife Marta. And also to my mum for putting up with talk of foxes and hedgehogs for the past year. To my brilliant twin boys, Alex and Max – my genuine hope is that you grow up to be foxes, like your grandad.

Contents

About the Author

Preface

I didn’t wear a seat belt

We are hedgehogs

A hedgehog that believes in being a fox

The first thing I’d do

Differentiate, or die trying

Serial killer

“Only a desperate, insecure idiot would buy a Vespa these days.” (I own two)

I’m breaking up with Tesco

Loyal. Just not faithful

I’m just not going to buy six large coffees a day

Good enough

Firstly, Paul, that’s not even legal

When we needed less efficiency

Thieves

The surest way to lose your budget

Brand marketers have a brand problem

So brand campaigns sell. Who knew, eh?

We need to eat today

A rather unfortunate truth

What we carry in our heads

What is brand salience, anyway?

Not just the pipes

My narrative fallacy

Perhaps we do buy from clowns

Spectacularly untargeted

I wish my son had cancer

Swing for the fences occasionally

There was fear in the room

So we made a TV ad in Japanese, for Ireland

We need to talk about monkeys

Paul, you know that’s not a test, right?

Must we grab their attention?

Sciency marketing

Teenagers don’t talk on the phone. They text. Right?

My hunch was wrong. Damn

No wins this quarter. Again

Bake failure into the process

All generalisations are false. Including this one

The first draft of anything is shit

Seek out people who don’t like your work

They are not rules

The memory-making business

I’ve killed a hell of a lot of people to get to this point

Publishing details

About the Author

Paul Dervan currently consults with marketing teams on their decision-making. Previously he was the Global Brand Director at Indeed, the world’s largest and fastest growing job site, with over 250 million visitors every month. There, he was tasked with growing the brand in multiple markets, managing a global team of 80 people, and was responsible for investment of hundreds of millions of advertising dollars. He also started a Marketing Campaign Lab, where he created and tested hundreds of marketing experiments in America, Europe, Australia and Asia.

Before that, Paul was with PokerStars, the world’s largest online poker brand, as Creative Director for their Full Tilt brand. He was responsible for repositioning and relaunching the brand as part of their brand portfolio, targeting new mobile audiences.

Prior to this Paul worked for Telefonica, in various roles. He was Brand Director in their Digital Unit in London, focusing on launching youth brands in Ireland and Latin America. He was Head of Brand for O2 in Ireland during the brand’s most successful period, becoming market leader of postpaid segments, with 35% market share.

Preface

I was in a client-agency meeting several months ago where I was referred to as the ‘numbers guy’. While somewhat amusing, it was a little worrying. I’m not the numbers guy. I was the only marketer in my MBA class, where colleagues called me the ‘colouring-in guy’.

As long as I can remember, I’ve been fascinated with how brands and marketing communications work. Measurement is not really what excites me. Doing better work excites me. And if I really wanted to get better at this marketing gig, I needed to understand this effectiveness stuff. As it turns out, the numbers are the easy bit. Persuading people to believe them is far harder.

I’m not the same marketer I was 15, or even ten, years ago. There are things I believed then that I do not now. And things I believe now that I too quickly dismissed back then. Truth be told, I’m far less certain in my decisions, less sure about what works, and far happier to be this way.

I wrote this book for client-side marketers. Folks like me. The goal is to offer up some humble views that may help your own decision-making. The decisions we face year in, year out. I write here about brand positioning, about acquiring new customers and about keeping them. I dip into the complexity of advertising decisions. Making ads. Getting ads approved. There is arguably a very fine line between bravery and unnecessary risk. I dig into the evidence of what works, and try to answer honestly why, at times, I ignored it.

This is not a book of answers. Mostly because, more often than not, the best answer is ‘it depends’. That said, I do believe that some bets are better than others. I’ve placed my fair share of wrong bets and reflect on them here. I’ve tried to write a book that I believe would have helped me 15 years ago. I’d like to believe that I would have made fewer mistakes if I had. Who knows. While writing this, I interviewed and quizzed about 40 marketers, many of whom are global experts and authorities. These interactions forced me to go back and challenge some of the beliefs I held as gospel. It was genuinely painful at times.

The chapters are only a few pages each. “Keep them short” was the advice I received from the talented marketer, and my close friend, Conor Byrne. “And none of your usual meandering shite” he added. I do have a structure and loose narrative throughout the book, and some chapters start when the previous one finished. But you don’t need to rigidly follow this. You may not even notice it.

A final note. Many of my stories involve advertising. The simple reason for this is that much of my experience, my mistakes and learnings included advertising or communications of some sort. But marketing and advertising are not the same. I would hate for this book to add to this misunderstanding. Advertising is just one piece of this. And a far smaller piece perhaps, than I once believed. Even if advertising is not part of your marketing world, I’m hoping you see this as a specialist book that offers up nuggets of general wisdom.

I didn’t wear a seat belt

I spent seven months working on a new, global, multi-million-euro marketing campaign. Too long – I know. It was full on. A passionate, smart, hard-working team sweated the details to create something of which we could be proud.

Internally, there was a strong reaction to the campaign. Many loved it. Some didn’t. I’d have preferred it if everybody loved it, but could live with polarised views. Beats indifference, I told myself.

After the normal last-minute panics, edits and challenges, we launched. We saw an initial uptick in our metrics in the first week. Then a small gradual decline, after which it levelled out – back to where we had started.

And I had predicted great things. Stupid. Stupid.

So, did I fail? Yes, of course. It still pains me to say it, but it was a failure. My failure. The temptation is to skirt around failure. Call it something else. Talk about unforeseen competitor activity. Or simply move the goalposts – easy to do in marketing.

But the fact was that I had predicted we’d hit certain goals within a time frame and this hadn’t happened.

Was it a bad decision? Or just a poor outcome? I’ve subsequently learned that it is better to evaluate decisions based on the actual decision-making process you use – not the outcome. A decision to drive a car without a seat belt is a bad one. Just because you didn’t crash this time, doesn’t change this. It is possible to make a good decision and the outcome still not go your way. One way to think about this is to ask if, given the opportunity to make this decision again, would I? With this campaign, I would not. It was a bad decision.

While I am not 100% certain, I believe I made a tactical marketing error. A rookie error. But I wasn’t a rookie. Nor were the people working with me. I’ll get to this specific marketing mistake later. I’ve a full chapter on it. But the more interesting question is: how did I make it?

Professor James Reason writes about human error. He distinguishes between slips, violations and mistakes.1 Slips are execution errors. You did something by accident. Violations are when someone deliberately does the wrong thing. Such as fraud.

And then there are mistakes. Mistakes sound innocuous. But they are dangerous – because they’re difficult to spot. Mistakes are things you do on purpose but which end with unintended consequences. Your mental model of the world was wrong. The problem is, we often don’t know we’ve made them. So we don’t improve next time.

That is what happened to me: my mental model was wrong. Several years earlier, I launched a campaign that was very successful. Don’t worry, you’ll hear all about it. This success partly shaped my views about advertising. Because the results were so good, I assumed that the decisions I made were good ones. Some were. But others were not. I had missed the other possible reasons that might have contributed to this success. I was guilty of what is known as a narrative fallacy.2 This is where we use flawed stories of the past to shape our views of the world and our expectations for the future.

My success led to a later failure. I didn’t wear a seat belt all those years ago. And because I didn’t crash, I stopped wearing one.

Then I crashed.

We are hedgehogs

This is a book about decision-making. Specifically marketing decisions. I’ve spent 20 years in marketing. Every year I discover new things that make me seriously question the beliefs I’ve held and the decisions I’ve made along the way. It’s pretty humbling.

I’ve been lucky, though. I’ve been tasked to manage some truly wonderful brands. To create new ones. To take a stab at troubled ones. I was even given the opportunity to build a marketing lab – to create hundreds of experiments. To test theories. And I got up-and-close with some of the world’s finest marketers, incredible people who challenged and changed how I think.

I’ve had some successes and failures. While I’ve enjoyed the pleasure the successes brought, the failures are more interesting. To be absolutely clear on this – I’d rather not fail. Nobody wants to. I don’t care what they say. But we do fail. More than we admit. Often more than we even know.

I’m convinced that our failures teach us more about our own decision-making than our successes do… if we let them.

If I were pushed to offer just one way to improve decision-making, it would be this: focus on how you react to discovering you are wrong. I believe this is the critical distinction between what I call ‘fox marketers’ and the rest of us.

If you genuinely enjoy understanding why something didn’t work and why your mental model was wrong, you will improve your decision-making. If you find it threatening, I’m betting you won’t.

Here’s the rub. Knowing why we make mistakes doesn’t always stop us from making them. As you’ll see. But I believe you’ll improve your odds. Improving our odds is what decision-making is about.

In 1951, the philosopher Isaiah Berlin wrote The Hedgehog and the Fox. The book divided the great thinkers of the world into hedgehogs and foxes. Hedgehogs believed in having a big unifying idea that explained everything. They have a single lens through which they see the world. They can explain everything through their ideology. Foxes, on the other hand, pursue many different ideas. Scattered. Often unrelated. Even contradictory. They have no single ideology or theory on how things work. Berlin told us that, “The fox knows many things, but the hedgehog knows one big thing”.

Dante was a hedgehog. Plato, Pascal, Dostoevsky, Nietzsche and Proust – all hedgehogs. Foxes include Shakespeare, Aristotle, Montaigne and Joyce. Tolstoy was, according to Berlin, a fox by nature, but believed in being a hedgehog.

I’ll pause here to clarify that I can add absolutely nothing to Berlin’s categorisation of the world’s big thinkers. I’d struggle to even pronounce half of these names. My interest in Berlin’s categorisation is due to a man called Philip Tetlock, a political forecaster and author. When it comes to understanding prediction and better decision-making, all roads lead to Professor Tetlock.

Tetlock analysed the characteristics of political forecaster experts. He found that they fall into two groups. One group of experts tended to organise their thinking around big ideas or ideologies. Some were socialists. Others in favour of a free market. Others still favoured state control. But the common thread was that their thinking was ideological. They would always find a way to explain what happened or what would happen through their ideology. Things that their theory couldn’t explain, they discarded as irrelevant distractions. Tetlock dubbed this group the ‘hedgehogs’ (of course).

The other group were more pragmatic experts. The ‘foxes’. These experts relied more on observation than theory. They had multiple unrelated ideas and approaches, used many different analytical tools. They chose the appropriate tool depending on the specific challenge, and gathered as much information from as many sources as they could. They talked in possibilities and probabilities. Not certainties. And – hugely important – they changed their minds when the data conflicted with their initial view.

What Tetlock found was that foxes were better forecasters.3

Predicting how people will respond to our marketing initiatives is difficult. Ideally, we are trying to accurately predict what will happen. I’d wager a bet that much of the time we don’t even know afterwards. Isolating and measuring the full effect of our activity is not easy. We often move on without truly knowing. Or worse – we move on, thinking that the decisions we made were effective, when they were not. And when we’re making the decision – the right answer isn’t always intuitive. Not to ourselves and especially not to our non-marketing colleagues. This marketing stuff is messy.

It is easy enough to measure how people respond to our marketing in the short term. It is far more difficult to measure how our marketing is influencing people’s behaviour over the long term. Because every situation is different in some way, we don’t have many hard and fast rules. So we base our decisions on theories. We hypothesise what we think will happen.

There’s nothing wrong with having marketing theories. We need them. The problem is that we fall in love with unsubstantiated theories. We see all results through our preferred theory of choice. And we are not good at changing our minds, even when the evidence starts to stack up.

What I’m getting to is – we are hedgehogs.

A hedgehog that believes in being a fox

My dad was a doctor. A professor of pathology, a man of science and a teacher. He was a humble, quiet-spoken man, despite his reputation as one of the world’s most respected pathologists. Whenever I met his students, they would corner me for hours telling me how much they adored him. A year after he died, University College Dublin created a student award: the Peter Dervan Memorial Medal for Excellence in Cancer Pathology.

He was my hero.

If there is a polar opposite profession to my dad’s, it is advertising. He told me I used to quiz him about the press ads in his Sunday newspapers when I was as young as ten or 11. Some years later, he bought me my first advertising book, Ogilvy On Advertising. Not a bad choice for a man with no marketing experience or knowledge himself.

Medicine and marketing are miles away from each other, but both rely on decision-making. As a pathologist, my dad had to make high-stress decisions on a regular basis. I remember one story where he had to recommend treatment for a young boy who had discovered a tumour in his arm. It was growing rapidly. Do you amputate to stop it spreading, but lose the arm? Or do you treat it and wait, but risk that the cancer spreads? Two of the world’s most famous pathologists advised the parents that they should amputate. My dad disagreed. He recommended they wait. He believed that the cancer was benign and would stop growing. The boy’s father bet on my dad and didn’t amputate. The tumour continued to grow. But then it stopped, and started to shrink. The young boy recovered fully, and went on to live a healthy life.

Decisions like this are not just about facts and knowledge. Doctors are human. It is less risky to recommend amputation. If you amputate, you lose the arm, and perhaps save a life – but you wouldn’t know for sure if it were the right decision. If you wait – you find out, but it may be too late. I often wondered, many years later, how he made these decisions under such pressure, week in, week out. How can you become confident in your prediction, while not becoming overconfident? How do you push for the decision you think is correct, when it is personally less risky to go in the other direction? I think the answer is that he had all the characteristics of an effective decision-maker. He was a fox.

“Study the past,” he’d tell me over and over. He’d remind me that any fool could learn from his own mistakes. The wise man learns from mistakes of others. But Dad was only partly right here, at least when it comes to marketing. We often don’t even make fool status. We do not learn from our own mistakes. We make them over and over. We get blinded by our views about how marketing works. We trip ourselves up with simple schoolboy errors. We believe things without questioning them. And we won’t open the door to the possibility that our beliefs are flawed. Ego plays a role. As does fear. And pain.

But we can learn to make fewer mistakes. We can learn to make better decisions over time. I’ve been lucky to work with, and learn from, people who think and behave in ways similar to what Professor Tetlock described. Fox marketers. They study the past. They challenge assumptions. They have theories, but look for the evidence. They understand that human behaviour is messy and communications are nuanced. They are sceptical but not cynical. They have strong opinions, but these are loosely held. They are open to discovering that they are wrong. They think, not in certainties, but in probabilities. Which is why they experiment.

While I suspect they were born foxes, I do believe that these characteristics can be learned. I say this, because I am a hedgehog. A hedgehog that believes in being a fox.

The first thing I’d do

In every role I’ve had in the past decade, the first thing I’ve done is set out to do better work. Try to understand what most needed attention, and address that. Sometimes it was brand positioning. Sometimes media planning. Very often the creative.

But that is not what I would do now. The first thing I would do is get a definitive number on what the payback is on marketing spend. So how much profit do we get back for every dollar, pound or euro spent? I won’t expect this process to be easy, fast or straightforward. But my initial hiring, focus and resource prioritisation would be on this.

Without a number, we can’t make progress. We can’t improve on the number. We can’t go asking for more money even if we believe we have a tremendous opportunity to grow market share, or launch new products, or whatever. The urge is to go fix some creative or media planning, or other low-hanging fruit. No doubt they can be fixed in parallel, but they would not be my priority.

Marketers tend to shy away from metrics. I see eyes glaze over when I start to ask about measurement. I suspect that when marketers signed up to their wonderful, interesting and creative marketing careers, they didn’t have things like negative binomial distribution or double jeopardy in mind. I most definitely did not.

There is probably some truth in the accusation that we just prefer to make ads.

Professor Tim Ambler, who I interviewed for this book, once said that marketers prefer to “make the runs than keep the score”.4 He added that “perhaps this is how it should be”. Of course, making ads is more fun than spreadsheets. But Tim is right – ‘making the runs’ is what creates real value for companies. This is what we’re paid to do. Marketers are just not great at proving it. So we end up with situations where it takes longer to get an ad signed off than it did to write it.

Almost two thirds of CMOs do not successfully demonstrate their marketing return on investment.5 This does not go down so well with the board.

Professor Patrick Barwise, another expert I quizzed for the book, once reminded an audience that CEOs and CFOs have a similar mindset to Ed Deming – “In God we trust, all others must bring data.”

Lack of metrics is not the problem. We’ve buckets of measures. Too many. A mistake we make is bundling them all in together. Not all metrics are equal. Don’t talk about the sales figures data and your fans or followers in the same sentence. And presenting them as equal is going to worry some senior execs that you don’t understand the difference.

Our role model here must be Direct Line Group in the UK, the company responsible for three brands – Direct Line, Churchill and Privilege. They set up a marketing effectiveness team that analysed what factors drove sales at each brand, measuring the contribution of brand and acquisition activity over the short and long term. Ultimately the team was able to show with confidence that their marketing had contributed £46m profit to its home and motor insurance businesses.

They explained that if they had made budget decisions on a purely short-term basis, they would have disinvested their Churchill brand at this point. When just measuring the short-term profit contribution, the ROI of their brand marketing was contributing just £0.45 for every £1 invested. So, a negative ROI. But they were able to measure the long-term contribution, too, which gave them an additional ROI of £0.63 – bringing them to a positive contribution of £1.08. This was a number that was commercially sustainable to continue supporting the brand with marketing.6

Mark Evans, managing director, marketing and digital for the Direct Line Group, also kindly agreed to answer some of my questions. He told me that building credibility is critical. This is about managing stakeholders in a diligent way and consistently demonstrating a strong sense of commerciality. Marketing lives in a world of many unknowns. This is why having credibility is so important; so that the function can be trusted to balance what’s right for customers and shareholders alike. He explained that “With research showing that 80% of CEOs trust their CFO compared to just 10% trusting their CMO, more needs to be done to build this trust”.

In their gold-winning IPA Effectiveness case study, Mark explained that when recently responding to a cost challenge, they were not panicking since finance were saying that marketing “is the last place we want to have to take from”. He noted that there has been no greater accolade for the team than moving from the front of the cuts queue three years ago to the back of the queue today. Invaluably, their decisions carried as much standing as anyone else’s, which may not always be the case.

So, effectiveness may not be an area of expertise for most marketers. Not the thing that helped you get to where you are today. But don’t put it on the long finger. Make it a priority to find out what the number is, so that you can get on with the hard work of making the runs that will improve that number.

Fox lesson: Get a definitive number on what the payback is on marketing spend. Make this the first thing you do.

Differentiate, or die trying

Around 2009, when working for O2 in Ireland, I attended hundreds of focus groups on the hugely successful mobile phone network. The groups usually had a mix of customers and non-customers. The moderator would get their views on various mobile phone networks. Why are you with O2? Why are you with Vodafone? Why did you choose them? What is different about each? “How would you describe the brands?” The response: “O2 is blue. Vodafone is red”.

Most mentioned O2’s sponsorships. People struggled to remember the details of the advertising. But they all knew what the ads looked like. And sounded like. They knew what an ‘O2’ ad would be like. Everybody spontaneously mentioned the O2 bubbles. Since day one, the advertising has featured bubbles. These tend to generate a bit of lively banter in focus groups. Always happened. “What’s up with those bubbles? They don’t make any sense.”

Generally we’d find several people in the groups that had switched brand at some point in the past four or five years. Why? Coverage was patchy in their new house. Or they got a new work phone with their job and O2 was the network the company used. Or they lost their phone at the weekend, tried a few stores and ended up with Vodafone. Their offers were better that particular day.

The brand personalities were quite different for sure. You’d never mistake O2 for Vodafone. O2 was visually very distinctive. No question about that. Tonally it was somewhat distinctive too. But the actual services were pretty much the same. Neither was the cheapest option in the market. Both had good network coverage in Ireland. Vodafone had a slight advantage here in people’s minds, but not a meaningful one I believed. Both had retail stores across the country. Both had a similar range of phone handsets. Our customers told us how much they liked O2’s customer service. O2 might have had a slight edge on that. But again, only slight.

How frustrating. If my job was to differentiate the brand, I was failing miserably. Never enjoyed bumping into our CEO after a focus group. In fairness to her, she bought into the importance of long-term brand building. And had always supported it.

The assumption I never challenged was whether we needed to differentiate ourselves to win. At least, not until How Brands Grow. The possibility genuinely never crossed my mind that we might not need to differentiate ourselves. There are few ideas in business as ingrained as differentiation. From Michael Porter’s ‘Five Forces framework’ to Jack Trout’s book, Differentiate Or Die.

The rarely-challenged view is that, in order to sell, brands must be differentiated. Consumers must have a reason to buy them. This is a compelling, and intuitive concept. Makes sense. No reason to suspect that it might not be true. Except that some of the marketers best-known for empirical findings are not big fans of it.

Andrew Ehrenberg, Byron Sharp and others have said that the concept lacks empirical evidence.7 Peter Field told me that within his effectiveness research using the IPA database, he too found that “differentiation turns out to be actually a relatively weak driver of success. It is rare to find brands that have functional differentiation that is very significant. So if you pursue the route of seeking out points of difference which you then maximise, and then talk about in your advertising, you inevitably get driven to what are often peripheral or perhaps even irrelevant kind of points of difference.”

So there may be a subtle difference between advancing a theory like Porter’s, which advocates for a business to differentiate itself, and one that recommends talking about how we’re different in our advertising and marketing communications. I don’t think the debate is whether or not it is a solid business strategy. Although executing this over the long term is difficult. The debate tends to be about whether it is an effective advertising one.

Why might it not be effective? Well, it seems that people don’t really believe that one brand’s products are very different from another’s. The experts point to data that shows that we regularly buy a handful of brands. And we switch seamlessly between them. In my own situation, the argument was that if people believed O2 to be a pretty good substitute for Vodafone, then the brands are more similar than they are different. Not differentiated.

The argument is that differentiation does exist. But it happens within, not between, brands. For example, a two-door sports car is different to a five-door family car. However, most competing brands sell both. But brands differentiating from each other is difficult. Mostly because they copy each other. Successful ideas and innovations are quickly imitated.

But differentiation can exist. I saw that first hand too. In the UK and Ireland, O2 had exclusivity to sell the original iPhone for two years before other mobile networks could. The iPhone was very different to every other brand of mobile phone at the time. Clearly the difference was valued. Thus, the price premium. And, for those two years at least, O2 was different – it was the only network that sold the iPhone. This was temporary differentiation of course. Peter Thiel, the co-founder of PayPal, believes in differentiation. Although he points out in his book, Zero to One, that you need genuine difference. Ten times better. Not trivial differentiation.

Does any of this actually matter? Or is it just an academic argument? It does generate some good debate among the academics.8 A debate worth having. But are we just mincing words when we say differentiate versus distinctive?

From a practical perspective, I think it matters. This is about making better marketing decisions. If we have a powerful differentiator that customers will value and desire, great. Let’s shout about it. I’m working with a brand at the moment that I think has, at least for now, something differentiated and valued enough that people will pay more for it. They’re going to advertise their point of difference and see what happens.

But if we don’t have meaningful differentiation, it does seem feasible that we could still win customers without it. Brands that we are familiar with, or that are popular, have done so. Knowing this, we might save ourselves hundreds of hours, headaches, fights and agency fees trying to invent a weak form of differentiation that lacks credibility. All because we believe differentiation is essential. Professor Patrick Barwise told me that this “undue obsession with differentiation based on trivial USPs” is one of the biggest mistakes marketers make.

While the subject of differentiation is important, the bigger lesson I learned was to challenge marketing ‘truths’ and their underlying assumptions.

Fox lesson: Challenge long held marketing truths and beliefs.

Serial killer

Of all the tactical mistakes we make, there is one that crops up in many guises. It is the serial killer of good decisions. It is the mistake of assuming causation.

A common example is when we assume our advertising is effective because sales are up. We don’t consider other possible explanations that may have contributed to sales. Such as improved distribution. Or increased media spend. Or a price promotion. Or decreased competitor activity. Or the possibility that the entire market is up. Or the weather.

Granted, this specific example feels like schoolboy-error stuff. But it is quite common. Even now, I have to work hard not to trip over it. Another expert that I got to quiz was Professor Jenni Romaniuk, one of the best-known experts on branding in advertising. She is an Ehrenberg-Bass Institute Professor, a co-author of How Brands Grow (Part 2) and author of the more recent Building Distinctive Brand Assets.

I asked her views about a famous advertising campaign widely deemed to be successful. Within just a few minutes, Jenni discovered a piece of information I had missed. Before the new campaign, the brand had paused advertising for a long period due to a product recall. She explained that, “if this is the case then anything put on air would have lifted the brand”.

Her point was that in this situation, we could not say that increased sales were due to effective advertising. Instead, it was likely the impact of having advertising versus nothing, which is not that helpful for understanding what type of advertising works, or how well it works.

The opposite is also true. If your market share does not increase, folks might jump to the conclusion that your advertising isn’t working. But it is, of course, quite plausible that your market share could erode far quicker without your wonderfully effective ads.

Causation mistakes can turn up in more subtle ways. For example, what would you think if I told you that, in the UK, people prefer Costa Coffee to Starbucks? That’s probably not a fun piece of trivia if you’re the Starbucks marketing team. People in charge will want answers. The question on their minds would be whether or not Starbucks have an underlying brand health problem? And, if so, will this impact customer footfall or sales in the near future?

We might hypothesise that more people prefer Costa and we need to do something about it. Maybe because it is British? If so, perhaps we might decide to increase local brand advertising to drive up preference scores. Fear not – there is a less worrying explanation. Costa Coffee have about twice the number of coffee shops than Starbucks. The very fact that they have more stores means that more people drink Costa coffee. And when people are asked in surveys what coffee they like, most will name the coffee they buy and drink. Since more buy Costa, more say Costa. And so… more prefer it.

We tend to assume that preference drives sales. This feels right. We like something more, so we buy that product. In that sequential order. Preference first – then sales. But for Starbucks, according to them,9 it was the other way round. Sales – then preference. Their brand tracking data showed that the size of the business correlates with both usage and preference. If they open more stores, their preference scores will go up.

The unchallenged assumption we make is that advertising changes attitudes – which then leads to sales. It can. But it might not. The causation might be the other way around. The Starbucks team know this, of course. They understand that metrics such as preference, trust and brand consideration simply reflect that the brand has grown in a previous period, rather than the effect of communications.

Identifying cause and effect can be difficult. About a decade ago, when I was working for O2, we saw that our Google advertising was more effective than other advertising channels for driving our online store sales. We moved budget from our daily newspaper press ads to Google. But, when speaking to customers, we realised that the press ads were often what got them first interested. They would stumble across O2 ads for new phones while commuting to work on buses and trains. These days, we’d whip out our phones and search for more information or even buy immediately. But this was ten years ago. So, what they did was go online when in work or back home that evening. They’d search Google, and click. The press ads were creating the sales. Google was capturing them. We needed both.

You may have heard of something called the Rosser Reeves Fallacy.10 In research, we often find that people who notice our ads are more likely to buy from us. This may lead us to conclude that higher advertising recall will lead to more sales. However, the causation is probably the other way round. If you buy a brand, you’re two-to-three times more likely to remember its advertising than non-customers would.

Last year, when doing some work in the pet food category, I noticed that one brand had the fastest growing consideration and penetration measures. I assumed that pet owners must like this food more. And that this was the reason more people were considering it and buying it. But, after about 30 hours of in-depth interviews with pet owners, and some store visits, another possibility emerged. This brand had been very successful in increasing its distribution. It was possible that, because it was available in more stores, more people were finding and trying it. And this trialling was leading to higher consideration.

It so happens that I was introduced to the differences between causation and correlation quite young. I was about 12. Perhaps my dad thought I’d find this interesting. I didn’t. I do now.

Fox lesson: Whenever you see relationships, hold off on concluding what is driving what. It could be either. It might be neither. Look for a third variable that might be driving both.

“Only a desperate, insecure idiot would buy a Vespa these days.” (I own two)

I love Vespa scooters. Adore them. Have done since I was 18, when my neighbour first suggested that I might want to buy his Vespa PK50. Truth be told, I’m partly sharing this on the off-chance that the CEO of Piaggio reads this book and asks for some marketing help in return for a 1977 vintage PX model.

Piaggio Vespa scooters cost about €4,000. I could pick up a replica scooter from a brand called LML for just under €3,000. Exactly the same. Same chassis. Same engine. Everything. Except the badge. Even up close, you wouldn’t notice the difference. At 25% cheaper, LML scooters are selling just fine, according to a local scooter dealer. “Honestly, only a desperate, insecure idiot would buy a Vespa these days”, he tells me. I own two.

I won’t even try to defend why I continue to pay a price premium for a Vespa. I’m too busy defending the fact that I’m in my mid-40s and am still driving a scooter at all. But make no mistake, I am a devoted, loyal customer of the Vespa brand. The words ‘brand loyalty’ cause mass confusion inside the walls of companies. A meeting to discuss loyalty makes for puzzling, unproductive, but potentially quite entertaining meetings. If you’re having a tough week, and need a pick-up, put yourself down for the next cross-departmental loyalty session.

Many non-marketers assume loyalty is about feelings. Feelings of loyalty. How loyal are our customers? How strongly do they feel about us? An emotional attachment of some sort. And in fairness, there is something in this. Agencies do measure things like ‘attitudinal loyalty’.

So when we talk about loyalty strategies, do we mean strategies to get people to become more attached to us emotionally?

Well, not exactly. We might have an emotional attachment. Like me and my gorgeous scooters. But we might not. I’m guessing the evidence will show I’m an outlier for Vespa. Part of a minority. More than a handful, but still a minority. Most Vespa drivers are not that attached to the brand. If they were, they would stop driving those new, automatic bikes and get hold of a proper vintage, PX model instead.

It appears that most customers of most brands are not that emotionally attached to them. When we talk about loyalty, we’re generally not talking about feelings of loyalty. We mean sales. Purchases. Yep – money. Feelings may well have a role in this, but, when measuring loyalty, we are referring to how much of a brand we buy. So, the starting point for measuring loyalty is not in feelings or attitudes, but in repeat business.

All is not lost though. Because, while we might not be emotionally attached to most brands that we buy, we are loyal. We’re loyal in the sense that we repeat buy. Yes, customer loyalty is alive and well. There’s buckets of evidence on this.11

Repeat buying is critical for most brands. We don’t expend much of our brain-processing energy when picking up a product from the shelf, but it is not a random decision either. When we’re buying, we have in our minds a handful of brands that we feel can do the job.

Fox lesson: We are loyal to brands, even if not emotionally attached to them.

I’m breaking up with Tesco

I don’t have any emotional attachment to Tesco, the retail chain. But I think even Tesco would admit that I have been a pretty loyal customer. It has been getting a good chunk of my family’s weekly food shopping for the past three years. We must be in the place two or three times a week. And we use their online delivery service too.

Now that I think about it, though, it is entirely plausible that my twin boys do have an emotional attachment to the place. Tesco was one of the first words they learned. Tesco and Apple. Not the fruit – the trillion-dollar brand. They genuinely appreciate all that Sir Jony Ive has done.

So, we are a very Tesco-loyal household. But this is all going to end. I’m breaking up with Tesco in a few weeks. I’m sure the marketing folks in Tesco headquarters would rather we stay together. Everybody knows that it is far cheaper to keep a customer than to acquire a new one. Right? Well maybe. But hold that thought.

Advertising is expensive. Surely the better strategy for Tesco and others would be to move its advertising budget into customer experience and loyalty initiatives. Improve the customer experience. Really look after them. Contact them more often. Make them happy. In a nutshell – invest in them instead of blowing a rake of cash on chasing new customers. Do right by our customers and they will be customers for life.

Except they won’t. They won’t stay. Tesco was good to me. They even just revamped my local store with a lovely bakery. So why am I done with them? Did they did piss us off? Did we have a bad customer experience? Too expensive? Nope. Nope. Nope. Nothing as dramatic. We’re moving house. Tesco was an eight-minute walk from my home. It will soon be a 60-minute drive. So, in a few weeks, our local supermarket will be Dunnes Stores, a well-known, national store.

Sure, Tesco may get the occasional scrap I throw their way, if I’m passing by. But, scraps aside, it is losing me as a customer. Well, for the next ten or 20 years anyway. Unless they are willing to move closer to my new house.

Tesco – it’s been good, but I’m moving on. I’ve already started correcting my boys when they say Tesco. Dunnes, boys. Dunnes.

I’ll also be ending my loyal relationships with my local pub and local coffee shop – the wonderful Butler’s Pantry and Browne’s, a lovely little restaurant in Sandymount, where I’m sitting right now tap-tapping away. If my new local pub does not stock Brewdog’s Punk IPA beer, it is quite possible I’ll be ending that relationship too. Reluctantly, I admit. They have all treated me exceptionally well. I’ve no complaints and would recommend them all. But I won’t be a customer of theirs for life, unfortunately.

Now, I accept that not every Tesco customer is moving house every year. But there is a more common reason why brands can’t rely on customers for life. It’s known as the leaky bucket.12 I asked the wise and wonderful Peter Field about this bucket. He explained that the leaky bucket is a fact of life for any brand. It needs to be replenished all the time. He advised me that, “if we just rely on selling back to our existing customers, we are going to be dealing with a dwindling customer base, and ultimately this is not a recipe for growth”.

So, I’m breaking up with Tesco, but what about my favourite retailer – Amazon? I’m a loyal Amazon customer. I buy almost all my books there. I just checked when I bought my first book from Amazon. February 2005. It was, Cracking the GMAT with sample tests on CD-ROM. A classic, I assure you.

So, 15 years of loyalty. And I suspect that unless Amazon closes down or stops making Kindles, I’ll be buying my books there for the next while. Jeff Bezos is, by all accounts, genuinely customer-obsessed. But Amazon seem to know about this damn leaky bucket too, given the amount of mass advertising it does now.13 This suggests that not even Amazon can rely solely on existing customers for growth.

Fox lesson: Don’t rely on existing customers for growth. Keep filling the leaky bucket.

Loyal. Just not faithful

So the leaky bucket is a reality for brands. But why? Why are we losing customers? Well, the answer is competition. Yep, our pesky competitors. We are always stealing from each other.

Actually, losing them is possibly misleading for most categories. Brands are sharing them. “Your customers are really other people’s customers who occasionally buy from you”, is how Andrew Ehrenberg explained it.

We are loyal to brands. We’re just not 100% faithful. We are polygamous, loyal shoppers.14 Essentially, your customers are sneaking around, behind your back, giving their business to your competitors too. We don’t buy the same shampoo, deodorant or soap brand on every shopping trip. In many categories, the top brand often gets bought no more than 30% of the time. No doubt Starbucks would love it if their customers bought coffee only from them every time, but this doesn’t happen.

Why don’t we buy the same brand every time? Depends on the category. One reason is we want variety. I saw this when working in online poker. Poker players like to mix it up and play in a few places. Try their luck at a different table. Meet a different group of players. So it was not unusual for customers to have a couple of poker apps on their laptops or phones.

Kevin Gray, a data scientist and marketing research expert, articulates consumer shopping behaviour with wonderful clarity. He explains, “I might buy a brand most often simply because it’s usually available where I shop. Or, I might buy it because I’m asked to, or because I’m shopping for someone else and know they like the brand. Things such as flavour and pack size matter too. My daughter loves green tea flavour ice cream – she doesn’t care about the brand. I prefer Pepsi to Coke, but size (500ml) matters more than brand. Because I buy it most often doesn’t mean it’s the brand I like most. Another brand might be my favourite, or I’m just the shopper and not the consumer. Some people decide mainly on price – brand doesn’t really matter to them.”15

This leads us to the famous law-like principle known as double jeopardy. We don’t have many laws in marketing, but this is perhaps as close as it gets.

I first discovered double jeopardy in 2010, when Professor Byron Sharp’s newly published How Brands Grow caused me some mild panic. Marketers have known about double jeopardy since 1969, and I was just learning about it in 2010. Clearly, I was late to the game. I blame my dad, of course. He was responsible for the reading list in my early years. Surely among all his correlation-causation bed time stories, he might have chucked in a few nuggets on the NBD-Dirichlet theory of repeat purchases. By 2010, I had been making marketing decisions for a good decade. And if you’d asked me about double jeopardy, my best guess would have been that it was some sort of legal loophole where you cannot be tried again for murder if found not guilty the first-time round.

Broadly, this principle tells us that brands in a category tend to have similar levels of loyalty. Behavioural loyalty. What this means in plain English, is that Starbucks customers visit Starbucks approximately as many times as Costa Coffee customers visit Costa. And Sure deodorant customers buy similar amounts of Sure as Nivea customers buy Nivea.

I’m simplifying it a little, I suspect, but the practical implications of double jeopardy are easy enough to understand. While repeat sales from existing customers are critical for most brands, what double jeopardy tells us is that we cannot vastly improve how much our customers buy from us, at least compared to the category average. The amount your customers will spend with you has a ceiling. In fact, you can often forecast it with reasonable accuracy.

If the average customer in our category buys their favourite brand, say, 12 times a year, this is approximately what we can hope for. Maybe we can improve on this. Maybe 14 purchases. Perhaps even 16. But we are not going to double the category average. Our customers won’t be buying our brand 24 times, no matter how customer-focused we are. It’s just not happening. This is a characteristic of many markets. Not much we can do about it apparently. If we are writing up marketing plans that are dependent on far higher levels of purchase loyalty than the category norm, we may be setting ourselves up for failure.

If this is depressing – unless you are the market leader – it gets worse. It’s called double jeopardy for a reason. Smaller brands get a double whammy. They are hurt twice. So, while the number of times customers buy the various brands tends to be about the same – the larger brands actually get bought slightly more often. So, if the brand leader is getting 12 purchases a year, chances are, you’re not even notching up 12. Sorry.

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