Cumulative Advantage

Cumulative Advantage

Gain competitive advantage and boost sales as you start dominating competition

Today everything is a living lab, where we can watch our target markets operate in real time. Running a marketing program is more about optimization than initial insight. It is about flexibility and the ability to think quickly and recognize patterns as they begin to emerge. When you attract the right social agent, who begins to promote your business message, you get a seemingly invisible boost in sales. Social agents, also called social influences, are people who share your message with others recommending you to the market. By engaging one or many social agents, you will enable your business to scale over time taking benefits of the principle of cumulative advantage also known as “Matthew Effect”. This effect is well known and is embodied in the catchphrase “the rich get richer while the poor get poorer”.

The invisible advantage due to a boost in sales determined by the cumulative advantage, over time continues to grow. It occurs slowly at first but increase over time making more and more people aware of you and your business. Once your customers perceive your offer, you gain an advantage that begin to increase at a faster rate as you start to dominate your competition. To further understand cumulative advantage, let’s address the phenomenon of going “viral”. When you heard about or come across a video with over a million views on YouTube, there is the innate desire to see why this video has drawn so much attention. You are more compelled to watch a video like that, respect to one with 5 or 10 views. That is cumulative advantage and becoming popular is the first step in building that advantage. Get the people’s attention and the masses will follow.

bto research cumulative advantage

Humans are Creature of Habits

Enterprises first must create a product or service that makes competitors irrelevant and then the company’s offering must represent the “must-have” customers requires. All this in a more complicated business environment with a more complex purchasing process. Customers are connected in every channel, are more informed and proactive, receiving also a lot of information and commercial proposal that increase their confusion. But we are creatures of habits. Studies shows that the human brain mechanism loves automaticity. The limbic system, where emotions are located, is faster than the rational processing, more precise but slower, located in the neocortex. Facing a choice, clients prefer to buy the same product and all the time a customer buy that brand, the advantage on the products he do not choose, becomes cumulative. Its is important to create a brand building, reinforcing customers’ habits. Consumers have compulsions and the most successful marketing efforts take advantage of these compulsions. As customers we want our purchase decisions to be easy and we make most purchases automatically. We don’t need to consciously decide about routine purchases. It’s all about Cumulative Advantage. Once you gain a small advantage over the competition, it grows over time as purchasing your product or service becomes a habit to customers.

Generally, companies innovate the product and the packaging but most of the time fail doing that despite their effort and investments. All this because humans love habits and don’t want to lose energies in choosing. Innovations should represent a natural evolution coherent with the brand and not breaking with the past. Marketing must not only think about redesign the product, the packaging and the brand mark risking to weaken the client’s habits. Instead, must be interested at apply improvements that increase clients’ habits and re-purchase. With cumulative advantage, enterprises could create an initial competitive advantage in order to transform the brand in an impulsive choice for clients.