Breaking the Known Buyer Bias

Ms. Chan

Welcome to Loyalty Unlocked. We're continuing on our theme of loyalty communications so if you've missed previous episodes, feel free to listen back to catchup!

Ms. Chan

For full transparency, this podcast is totally AI driven, based on chapters from the forthcoming book on loyalty marketing by my co-host, Mark Sage.

Ms. Chan

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Ms. Chan

Okay, so Known Buyer Bias.

Ms. Chan

I’ve been thinking about it, and isn’t it basically like we’re… you know, rewarding ourselves for already knowing what we know? Like, isn’t that kind of pointless?

Mark Sage

That’s a good way to start, actually. It’s a bias marketers fall into all too often. We get laser-focused on existing customer behaviors—the things we can measure. And sure, we optimise those, but we completely miss the larger opportunity. Honestly, it’s... it’s like looking at a map with half of the picture missing.

Ms. Chan

Oh, wait—like Abraham Wald's World War 2 thing!

Mark Sage

Exactly. During the war, they were studying planes that came back with bullet holes. And their first instinct was to reinforce those areas—but Wald, being the genius he was, questioned it.

Mark Sage

What about the planes that didn’t return? The ones they never saw?

Ms. Chan

Oh, totally. Like, maybe they were hit in places no one thought to look?

Mark Sage

Right, and that’s the critical insight. The real vulnerabilities weren’t where the bullet holes were but the places they weren’t. It’s the same in marketing. We optimise for what we see—like returning customers or redeemed offers—and we forget about the ones we’ve never captured, or even worse, we kid ourselves into believing they don’t exist.

Ms. Chan

Wow, so this is like... I mean, do you think this is why some campaigns just... stall out? They focus all their efforts on the same loyal customer set. And, like, they hit a wall. No growth, nothing.

Mark Sage

That’s a really classic outcome. You end up just reinforcing the same patterns over and over. It’s efficient, sure, but it’s not growth. This is where Facebook's findings come into play. They found broad-reach campaigns outperform narrow targeting because targeting alone often reinforces the gaps in the data rather than expanding reach.

Ms. Chan

Broad-reach? Like kind of just throwing the net wide, then?

Mark Sage

More or less. Facebook showed that the top 25% of campaigns with the highest reach outperformed others in incremental sales by over 100%. It’s proof that being too precise can actually hold you back. And it’s not just Facebook. P and G, Spotify, they’ve all recognized this issue.

Ms. Chan

So crazy! I mean, I get it—like with yuu Rewards and their IKEA 45th Anniversary campaign. They smashed it by going broad, right?

Mark Sage

Exactly. That campaign combined loyalty marketing with paid media to drive engagement from brand-new customers—even people who’d never walked into an IKEA before. Over half the activity came from first-time visitors. It’s a prime example of balancing loyalty strategies with broader reach to create true growth.

Ms. Chan

Hmmm... okay, but how do you, like... balance both?

Mark Sage

It’s all about merging the strengths of loyalty marketing with the broader goals of brand growth. You can’t just focus on holding onto what you have—you’ve got to invite new buyers, uncover unmet needs, and address headroom in your strategy.

Ms. Chan

Headroom—that's such a cool term!

Mark Sage

It’s crucial, and we’ll get into the details of that soon. But first, imagine this—what if, instead of obsessing over past behavior with measures like Customer Lifetime Value, we shifted to metrics like Potential Value? Where instead of asking "What do I already have?" we asked what am I missing.

Ms. Chan

Wait, so you’re saying we should stop obsessing over Customer Lifetime Value and switch to Customer Potential Value instead? How does that even work?

Mark Sage

Great question. Customer Lifetime Value, or CLV, looks back. It calculates value based on what a customer has already done, the spending patterns we can see. But CPV—Customer Potential Value—asks a different question: "What are we missing?"

Mark Sage

Basically, it’s about identifying gaps and figuring out where their wallet could go, instead of just focusing on where it’s already been.

Ms. Chan

Ooooh, so you're saying there’s like this hidden layer of opportunity we just... overlook?

Mark Sage

Exactly. Let me share a quick example. At DFS, the luxury retailer, we used CPV to zoom in on headroom—those missing purchase behaviors. We ran a campaign targeting beauty products where our data suggested customers might be buying elsewhere.

Ms. Chan

So, targeting the gaps?

Mark Sage

Right! And the results were staggering. The campaign led to a four hundred and forty six percent lift in sales versus a random beauty segment. But here’s the catch—it was only a 38% improvement when compared to our control group. Why? Because our precise targeting also included customers who were likely to buy anyway.

Ms. Chan

Okay, so it worked, but like, not as well as you hoped?

Mark Sage

Yep. That’s the risk with hyper-targeting. It narrows the focus so much that it reinforces existing behaviors while missing out on the true incremental opportunities. This ties in with the WARC study. They highlight how vital it is to balance short-term demand—like what we aimed for at DFS—with long-term growth strategies.

Ms. Chan

Wait, long-term as in, like branding stuff?

Mark Sage

Yes! Brand building is part of it. WARC calls it the distinction between current and future demand. Advertising—whether performance-driven or brand-led—needs to work in unison across the marketing funnel. Think of it as managing both the immediate sale and creating lasting customer connections.

Ms. Chan

Oh, that’s so interesting. And they even tie it to the 4Ps of marketing, right? Promotion and all that?

Mark Sage

They do. When WARC speaks about advertising, they mean all forms of promotion. It's about thinking holistically. For example, their study reveals that when you integrate strategies for both current and future demand, overall revenue ROI can improve by up to 100%.

Ms. Chan

Wow, that's truly massive.

Ms. Chan

Okay, so tell me how do we, uh, actually do this? Like, what does targeting for CPV look like in real life?

Mark Sage

Think of CPV as a mindset shift.

Mark Sage

It’s about identifying unmet needs, untapped missions, or even the reasons why a customer isn’t spending more with you. It's also about harmonizing these metrics with long-term strategies that help foster deeper connections.

Ms. Chan

Okay, so you mentioned harmonizing strategies with CPV to foster deeper connections. How do we balance that with immediate tactics like driving sales? Is it possible to make these short-term and long-term goals work together?

Mark Sage

Great question. It’s actually one of the biggest challenges marketers face. On the surface, they might seem opposed—immediate tactics are about quick wins, while long-term branding builds deeper, enduring customer connections. But the truth is, one strengthens the other. It’s about integration, not separation.

Ms. Chan

Ooh, like... give me an example. Something super practical.

Mark Sage

Well, let’s take M and S. They’re famous for merging branding with trade-driving offers. Their “Dine in for two for 10 pound” campaign is a classic case. On the surface, it’s a trade-driving activity—getting people into the store. But beyond that, it ties into their brand image as a go-to place for high-quality, affordable meal solutions. Leveraging their brand positioning of "It's not just food, it's M and S food", it’s a perfect combination of short-term sales and long-term brand positioning.

Ms. Chan

Oh, totally! And it’s still such a thing, right? I think it’s 15 pound now—thanks, inflation!

Mark Sage

Ha, yes. But the point is, campaigns like that provide what WARC calls a full-funnel strategy. They nudge immediate purchases while reinforcing the brand in customers’ minds for future occasions. It’s smart because they're really addressing the now and the later simultaneously.

Ms. Chan

Okay, so why don’t more marketers do that? I mean, it sounds like a no-brainer.

Mark Sage

It should be a no-brainer, but it’s not always easy. The issue often comes down to mindset. Many marketers get stuck in traditional targeting techniques—methods that focus a little too narrowly on what’s measurable, like immediate conversion rates. It’s safer but limits growth. To really break free, they need to embrace potential value, uncover unmet needs, and think beyond current habits.

Ms. Chan

Ah, back to that "Known Buyer Bias," huh?

Mark Sage

So true. If you’re only targeting what you already know, you’re missing where growth actually lives. And that’s why expanding your reach to include new audiences or unmet needs is so critical. It’s uncomfortable—sure—but that’s where the magic happens.

Ms. Chan

That’s kinda inspiring, honestly. I mean, marketing’s not just about selling—it’s about, like, creating real connections, right?

Mark Sage

It is. Marketing done right builds mental availability, fosters loyalty beyond transactions, and ensures your brand stays relevant for years to come. So, we have to ask ourselves—are we willing to evolve and align those short-term efforts with long-term vision?

Ms. Chan

And that’s the challenge, isn’t it? Making the leap to try something new.

Mark Sage

Exactly. Marketing isn’t about staying comfortable. It’s about challenging norms, looking for what you’re missing, and balancing both the now and the future. That’s the real balancing act.

Ms. Chan

Alright, I love it. Let’s make a pact, Mark—target the gaps, reach the potential, and rethink what marketing can do.

Mark Sage

Ha, deal! And that’s a wrap for today. Thanks for the chat—it’s always fun to dig into these ideas.

Ms. Chan

Always a blast. And to everyone listening, thanks for sticking with us. Until next time!

Ms. Chan

And remember, you can find the full article for this podcast on the link within the show notes!