Purchase brands vs Usage brands: What works?

Studies have shown that brands take one of two general approaches to engage with customers; in this article, we’ll look at the pros and cons of each, and then make suggestions on how to pick your lane (but use the best of both worlds).

Companies looking to maximise the benefits unlocked by core digital technologies need to make the shift in their engagement with customers – from purchase to usage. In this article, we’ll explain the core difference between the two, why we believe you should focus on usage, and what you should avoid. In the US, multiple consultancy-branding agencies (SAP, Siegel+Gale and Shift Thinking) teamed up to carry a comprehensive study into the differences and commonalities shared between over 50 brands.

Disclaimer: Normally, I try to base my insights on research that has been carried out in the EU because it’s more relevant to Maltese businesses, but for this article I will be referring to a joint study that has produced insights I strongly believe are relevant to the European (and Maltese) market as well.

Back to the point: Through this study, two broad types of brands emerged:

The purchase brands that focus on positioning their brands in the minds of their customers and generally – but not always – tend to be “older”, and more traditional in their approach.

The usage brands that focus on positioning their brands in the lives of their customers and generally – but not always – tend to be newer brands, and tend to prioritise digital.

Purchase brands focus on creating demand.
Usage brands focus on creating resources.

Consider the makeup department of a department store. Most stores will focus on getting you to buy the product with samples, offers and FOMO-driven adverts. By contrast, Sephora (a French multinational retailer featuring over 330 beauty and care brands) focus heavily on providing instruction, community and aimed at helping people feel confident in being able to use the makeup themselves when they get home. This includes having make-up artists inside the store who teach the basics; articles and videos that guide people on how to use different kinds of products; as well as a comprehensive range of quizzes designed to assist people in choosing what products are best for them.

Purchase brands emphasize promotion.
Usage brands emphasize advocates.

“Shot on iPhone” was a very low-cost and high-return campaign by Apple. The brand asked its customers to click photos from their iPhones and share them on social media with relevant hashtags. An enormous number of people got on the bandwagon; after all, who would not like their photograph to be featured by Apple? The smartphone giant picked selected photos and used them on billboards and other marketing campaigns.

This simple technique provided the brand with a whole bunch of advertising material for free. The brand also attracted advocates who took part in the campaign and showcased iPhone’s picture quality along with the selected few. Other good examples are the Cisco’s influencer program “Cisco Champions”; “Share a Coke” by Coca

Purchase brands focus on the pre-transaction.
Usage brands focus on what happens after the transaction.

Purchase brands focus on the “moments of truth” that happen before the transaction, such as researching, shopping, and buying the product. By contrast, usage brands focus on the moments of truth that happen after the transaction, whether in delivery, service, education, or sharing.
A great example of this is Absolut Vodka. Absolut has a broad range of clear and well-produced video tutorials that show people how to mix their favourite drinks by using several common bartender tools. Even if the customers don’t end up using Absolut products every time, Absolut banks on the good will it earns by providing useful resources for free – and their strategy pays off.

On this note, I must also mention Jamie Oliver’s YouTube channel, which is a dream for anyone who wants to simplify and improve their cooking. In his one-minute tips series, Jamie and his colleagues explain everything from how to cook vegetable broth to how to sharpen your kitchen knife.

Purchase brands vs. usage brands: What wins?

Both advertising data and surveys within the study strongly suggest that usage brands perform better. When it came to usage brands, respondents were more likely to:

  • spontaneously recommend the brand to a friend
  • pay a premium price for the brand (that’s higher than competitors despite similar features)
  • return to make another purchase
  • engage and interact (by participating in surveys, reacting to content, leaving comments and sharing)
  • less likely to switch, even in the case of a negative event (such as someone leaving a negative review)

The key lesson: Think of customers less as one-time buyers and more as users or members with an ongoing relationship.

Even if your customer isn’t likely to need to buy another product from you anytime soon (say, they purchased a house, vehicle, digital device, ), and even if your product isn’t subscription based, these people can and do exert tremendous influence on the way other people think about your brand. They don’t need to leave a review, conversations between friends and relatives can make an incredible impact down the line. Remember: People talk.

Research shows that people are 90% more likely to trust and buy from a brand recommended by a friend. In addition, word-of-mouth, whether in the form of a video by an influencer, a chat with friends, or a review, is considerably more effective than paid ads, resulting in five times more sales.

Becoming a usage brand:

First, and most importantly, understand that marketing and product development are two sides of the same coin. Brands who seek to become more usage-oriented must make serious investments towards

  1. Providing valuable, free resources to customers that inform, entertain and invite interaction.
  2. Gathering feedback from customers and acting upon it.
  3. Giving gifts to customers in order to encourage reviews and referrals without creating conditions (gift is given whether customer leaves a referral or not, and the gift can take many forms, from branded merchandise to digital guides and tutorials.)
  4. Rewarding customers who post reviews or refer to others (in addition, not instead, of gifts.)

A usage-first brand delivers this message: “Look how we can make your life better now, before you’ve even spent any money with us. Just think how much more we can do if you become a customer and use our product or service.”

Two last notes to keep in mind:

• Digital adverts promoting your products and services are still fundamental, but your overall marketing efforts will be dramatically more effective if they include a serious effort towards educating, entertaining, empowering and learning from your audience.

• Investing in word-of-mouth marketing doesn’t necessarily translate to hiring the most expensive, followed influencer in Malta. Any person who uses your product has the potential of becoming an advocate for your brand. Authenticity beats number of followers every time, and your money may be better spent platforming people who are already using your product (rather than paying an arm and a leg to an influencer to pretend that they use your brand).

As an agency of specialists in branding, marketing and web development, inviting our clients to become usage-first is often the first and most important hurdle to surpass. Of course, it’s easy to understand the hesitation: The returns of shifting to a usage-first approach are not immediate, and the costs are not insignificant. A shift to usage-first requires a meaningful prioritisation of the long-run over the short-run.

When your brand shares meaningful advice, resources; sponsors, elevates and features its users; and actively asks for feedback from customers – it builds community, and more importantly – loyalty.

From our end, we first realised the power of usage-first branding (well before we actually became familiar with the term) when we won the 2016 award for best Social Media campaign for eCabs, aimed at creating better visibility of the company. Since then, we continued to put a usage-first approach front, first and centre with some of the most successful brands in Malta, and the results have only encouraged us to go further.

If you’d like to find out how your brand can make this move, let us know.

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