The Ten Fundamental Truths of Differential Marketing

1. All consumers are not created equal.
A relatively small group of consumers controls the overwhelming majority of volume and profit in every category - the high-profit segment.

2. All brand buyers are not created equal.
A relatively small group of high-profit brand buyers controls the overwhelming majority of volume and profit for every brand.

3. All high-profit brand buyers are not created equal.
Some have far greater current value than others, others far greater potential value.

4. A brand's best customers are often the brand's best prospects.
Because high-profit buyers tend to spread their purchases or their purchase interest across many brands, increasing their emotional loyalty - as measured by increased "share of customer" - results in significant sales growth.

5. A brand's best customers are often the brand's biggest problem.
Declines in brand purchases by the most loyal high-profit buyers, and outright defection, often cost a brand 20% of its total annual sales.

6. The cost of excessive price-promotion is often the loyalty of high-profit buyers.
A brand that spends twice as much in promotion as in advertising is likely to be spending ten to twenty times more in promotion against the high-profit buyers who buy the brand.

7. All consumer perceptions are not created equal.
High-profit category buyers often have sharply different needs and perceptions about the category than less valuable consumers. High-profit brand buyers provide the greatest insights about the true essence of the brand.

8. All increases in emotional loyalty are not created equal.
How consumers feel about a brand — how much they like it — determines how much they buy. The largest gains in brand sales are only achieved when consumers reach the highest level of emotional loyalty.

9. The high-profit segment is the key to market leadership.
The brand with the most high-profit category buyers - and the most loyal - is the brand leader in virtually every category. The margin of leadership is often the additional sales provided by loyal high-profit buyers.

10. All consumers should not be treated equally.
Conventional advertising tends to reach all consumers with the same number of impressions and the same message, irrespective of their value. Marketers need to supplement their traditional efforts by communicating more directly and more relevantly with high-profit buyers to make them feel special and build or retain their loyalty.