Repeat Purchase – The Only True Measure of Innovation Success
I recently came across a statistic about the average number of different meals Mums (and it does still seem to be mostly Mums) cook for their family. Apparently most households cycle just 9 different meals. I thought that was a really low number…… and then I counted up what happens at home! Add in another statistic: American families, on average, repeatedly buy the same 150 items which cover 85% of their household needs. We really do seem to be creatures of habit.
I worked on a project recently where we observed how shoppers narrow down the vast array of choice on offer in supermarkets to a few ‘favourites’ – it’s their way of navigating the huge range of options open to them. It seems there is just too much on offer – information overload, choice overload, means we develop personal strategies to simplify our options. Now, this inertia may be great for the branded marketers, but it’s not such good news for innovators. No wonder innovating is so difficult: getting something new into that set of favourites, to break through this inertia and become one of those habits is a huge challenge for any new product or service.
I’ve come across, and used, many complex methodologies to measure the potential ROI on innovation activity. But could it be that there is a far simpler success measure? Repeat purchase. Isn’t our challenge to show that our ideas drive repeat purchase, or at least to demonstrate the potential to do just that? Isn’t that, and only that, what will make them successful?
I’m sure I am not alone in having experienced early sales success with a new product launch where consumers were tempted to ‘try’ my new idea with a tasty promotional offer. We celebrated those early distribution gains, great listings figures….. only to be disappointed with long-term sales. The stats suggest that as individuals we are easy to persuade to ‘try something new’….. but it seems we’re much less inclined to let something new into that repertoire, to replace an old favourite.
The products that ‘made it’ were always the ones that had good repeat purchase rates. Even if initial sales were low, if repeat purchase figures were high they they generally made it long-term.
So, my contender for the prize of “key innovation success metric” is repeat purchase. Where’s your vote going?