Byron Sharp is a pugnacious writer. He outlines what he describes as the empirical laws of marketing. This allows him to talk about those who give bad advice. Basically, this is anyone who gives a recommendation that does not follow the empirical laws he describes. I appreciate the forthrightness. Too many academics aren’t willing to disagree with other academics. It is hard to make progress if no one is entirely sure what a recommendation is when it is couched in deliberately vague terms so as not to contradict colleagues. Sharp doesn’t mind contradicting. I like that.
Marketing And Medicine
Sharp notes that marketing is like medicine in that it needs to go through a period of progress. We are a bit in the leaches stage. According to Sharp, marketers are doing a lot of things that might be making the patients/firm worse. I totally agree marketing has a lot to learn. Things happen and we often don’t really know why. To be honest, medicine still has a fair amount of advancing to do — not least dentistry. Why is chiseling out teeth something we still do in the 21st century? I’m not saying medicine hasn’t progressed amazingly but it is pretty easy to imagine doing better. Marketing is a newer discipline and (for obvious excellent reasons) has received less attention than medicine. It isn’t surprising we still have a way to go in our knowledge.
Sharp worries that lots of people are too theoretical. They rely on incorrect, untested ideas about the world. Like when people thought unbalanced humors caused illness. Sharp throws differentiation in with the humor theory. He says it is untested and doesn’t work in the real world. This is bold and radical.
Sharp discusses the loyalty industry. There are, as he says, certainly a lot of zombie statistics in loyalty discussions. It is helpful to note the need to check if claims are actually something we see in the real world.
No doubt you have heard the old maxim that it costs five times as much to win a new customer as it does to stop one from leaving. There is no empirical support for this idea.Sharp, 2014, page 62
I once did try to see whether there was data behind this claim and like Sharp I couldn’t find it. It always seemed a bit bizarre. There are complications comparing retention and acquisition costs but even if you could show this in a dataset why would this be a general rule? It just didn’t make sense. Sharp does us all a favor by calling this out.
Where I depart from Sharp a bit is that I am nervous of all bold claims. (Maybe this makes me a bit of a coward). The problem is that it is really hard to create an empirical law as Sharp does. My nervousness about acquisition being five times more expensive than retention is that surely this doesn’t hold everywhere, at all times. Yet, in advancing empirical laws, and being suspicious of theory, Sharp is in danger of doing the same thing. (To be fair with better data).
Which can be summed up in Professor Gerald Goodhardt’s 20:30:50 law, which states that the 20% heaviest buyers account for 50% of purchases (proved true in Sharp & Romaniuk 2007)…Sharp, 2014, page 82
Why Do I Worry About Empirical Laws?
My concern is that I can see no way that this can be ‘proved true’. Partly I’m falling back on the old academic adage of using data to support an idea rather than proving it true.
There is a good reason to avoid the language of proof. The point is that the world is big. You can show support for this law in the data you have. But do you have data about the entire world? No, of course, you don’t. Sharp has an impressive collection of data. This can provide good support but does the data represent all marketing? No. If I understand correctly a lot of it is from CPGs (consumer packaged goods firms). These are important but they aren’t the entirety of marketing. Surely Fox News has thrived through differentiation? If a law of marketing is broken a little when does it stop being a law?
With this caveat in mind, I do want to recommend Sharp’s book because it does contain a wealth of useful ideas and examples. There are also interesting technical points about how to understand tables and the need to better understand the role of time. Note that over longer time periods consumers are much more likely to defect and buy another product. Even the most committed Coke lover might buy a Pepsi once in a couple of years if they really couldn’t find a Coke.
I also thought Sharp was spot on when he criticized recommendations to managers in a lot of academic research. Too often the recommendation isn’t wrong but it either says nothing of meaning, is vague, or is completely mom and apple pie.
It is great that Sharp is doing the work he does. And I even value the fact that he is willing to attack firmly held beliefs. We need more of that.
Read: Byron Sharp (2014) How Brands Grow: what marketers don’t know, Oxford