More than 20 years ago, I developed a general theory of commitment and conversion. Although I was studying religious commitment at the time, the theory turned out to work just as well when applied to personal relationships, political ideologies and brands. It became the basis for a marketing research approach I developed called the Conversion Model™. It is also the basis for the more complete approach to brand management that I developed for Synovate called the Brand Value Creator.

At its heart lies a very simple formula: in any relationship, whether with a person, product or brand, commitment will be strong as long as the person, product or brand is rated better than all others and the relationship matters. It’s as simple as that.

Marketers strive to achieve this committed state among their customers because many business benefits flow from commitment. Committed people tend to devote most of their category spending to the brand to which they’re committed. They tend to ignore competitive discounting. They pay more for the brand. And they tend to be forgiving when the brand “makes a mistake.” And so it is not surprising that researchers and marketers spend millions of dollars trying to work out how to make people committed. The benefits seem obvious. Why shouldn’t it be a worthy goal?
Well, let’s see…

Myths of commitment
Myth One: Making people more committed makes you more money

There may have been a time when we, as marketers, could hope that people would give us all of their business all the time. But that was long ago in a simpler world when switching was difficult or costly. Nowadays, switching is easy. And people do switch. This doesn’t mean that they’re uncommitted. Far from it.

On the one hand, while there are almost no “100% loyals” in any market, most people in most markets have at least one brand to which they’re committed. In my experience, the ratio is something like 70:30. In other words, up to 70% of people in most markets are committed to a brand, even if they sometimes use others.

The point is how much you profit for making more people more committed depends on how much it costs. And as in all things natural, it appears to be a game of diminishing returns. There is both a limit to how many committed customers you can expect to have and as to how much business you can expect to get from them. Trying to push people beyond these limits does not generate a payback.

Myth Two: You make the most money from people with money

This myth is usually expressed in slightly more formal language such as: spend money on your high-value customers because they’re worth it. Now I’m not suggesting that marketers should not pay attention to high-value customers. But how much you spend and in what way should be determined by how much you expect to get. The problem with high-value individuals is that they tend to be fussy shoppers.

High-value people tend to be better educated. They tend to be self-confident, critical and demanding. And most of all, they tend to be less loyal in the first place. Why would you want to chase them?

As in all things, balance is key. Whether a customer is high-value or low-value, loyal or disloyal, customer support costs should be optimised rather than matched to value or loyalty in some uncritical, linear way.

Profiting from the one night stand

And so, while commitment is a natural state to which people aspire (it makes life simpler), some level of promiscuity is natural. We like to find the product, service, brand (or person, job, career, country) that is best for us. But we also like to have options to explore and change if necessary. Our tendency to “wander” is so entirely natural that it’s one of the main reasons social organisations invest so much effort into trying to keep people from defecting, whether they be employees of a company, members of a political party, particular religion or just some “other” organisation, a couple or whatever.

Even marketers try to tie people down. They give people loyalty cards, make them sign contracts, pester them with so-called special offers, call them on the telephone just as they’re about to sit down to an evening meal and other horrible things.

What if we simply recognised that it is human nature to be both committed to one brand or one group, but to want to wander from time to time? How would that affect our approach to marketing? Might we make more money by marketing appropriately to both those who are more loyal and those who “belong to someone else” but who have dropped in for a visit? Should we not be glad of the casual business we pick up from the committed customers of our competitors, even if we know they are unlikely to stay? Is there money to be made from the one-night stand?

Myth Three: Eighty percent of your profits come from 20 percent of your customers
I have worked with many marketers and looked at many data sets and I’ve come to the following conclusion: In marketing the 80:20 principle is wrong, or at the very least, almost completely untested. Why do I say that? For two simple reasons. First, I’ve very seldom found a marketer, even one with a relatively well-organised database, who knew just how profitable each customer was. Second, to the extent that we can assign aggregate revenues and costs to our customers, the ratio is more like 50:20 than 80:20.

Consider what this means: At least half of your money is coming from people who are not regular customers. In fact, as far back as the late 1960s, Andrew Ehrenburg, a well-known marketing analyst, pointed out from an analysis of panel data that most of any packaged goods brands’ customers, are disloyal. It’s not just a matter of “can you profit from the one-night stand?” It’s a matter of “if you can’t, then you might not even make a profit.”

Relax and make money
In our personal relationships we generally think twice before taking on a one-night stand, no matter how attractive. There are good reasons for this: we don’t want to hurt those we love, we don’t like to let people down, it’s not right. But brands and services aren’t people. And so we happily try “something else” even when we have “the one” that gets most of our attention.

As marketers, we should welcome the casual visitor. Ehrenburg  demonstrated a long time ago that for many brands, they constitute most of the visitors. They contribute most of the revenue. And, if managed appropriately, they will be a healthy, ongoing source of profit.

The key is to recognise that they don’t need attention and they probably don’t want too much attention. They just dropped in and as long as your brand delivered a good experience, they’ll be back. Who knows when? But then, who cares? Just be ready with a welcome when they drop in again.