Tuesday, May 22, 2012

Whiteboard: The Negative Binomial Distribution of consumer purchase rates

It's not just a good idea. It's the law. On the left is a little measurement I did with a class yesterday. How many cups of coffee did you have over the weekend? Fifteen zeros, two ones, four threes etc.

All brands are subject to it. Even brands or categories that are bought by huge numbers of people (such as toilet paper) have a similar pattern. Just a few less zeroes.

And if you wish to grow a brand from small to large it's about increasing everybody's purchase rates a little. That will move some of the zeroes into the one purchase domain, increasing penetration.

It's like a meditation riddle. But underlying most of it is the fact that pursuing loyalty or intense brand love is a little fallacious. Most customers don't mind you, but don't think of you much, either.

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