If I'm still a customer, you owe me!

One of the byproducts of the great recession is a sense of empowerment when we spend. Consumers have heard endless reports about how businesses are hurting (even though many are not), and how absolutely no one is shopping right now (even though that would hardly be accurate).

The result of all this economic hype? When we go shopping, we don’t just want to be seen as shoppers. We want to be treated like caped heroes! “If it weren’t for me,” after all, “this place might just go out of business!” (Or at least, that’s an exaggeration of what many shoppers are feeling.) “If you have precious few customers, then I want to be treated like I’m precious.”

A recent story in the Media Post Marketing Daily supports my assertion. But don’t take my word for it, or anyone else’. Just notice the swagger of bag-carrying consumers the next time you walk through the department store or shopping center.

Implications: If you have precious few customers, what are you doing to make them feel precious? I was in a furniture store the other day that had set-up an area where they were serving soft drinks and fresh-baked cookies. Not a big deal… but it made an impression. I’ve heard of a car dealership that washes your car after appraising its’ trade-in value… whether or not you actually trade it in, you’ve received value.

The consumer can get a good deal anywhere. To stand out, you have to give them a cookie… or some other form of value-added that shows you appreciate their business. Companies are getting very creative about the way they deliver value to their customers.

Are your competitors doing that, too? Are you?

Mike Anderson

"Revenue is down" is not the whole story

Once again, you can call me captain obvious… but the first question one should ask when revenue is down is, “Where did it go?” In other words, is the spending ending? Or is it simply migrating to more attractive alternatives.

I read a good Marketing Daily story, recently, which encouraged us to think about the three stages of trading down.

First: Changing Channels. An example of changing channels might be when people migrate from restaurants (out-of-home dining) back to grocery stores (to support in-home dining) as a means of saving money… or move from the grocery to the club store for select product purchases.

Second: Changing Departments. That’s when someone might stay with the same grocer, for example, but move toward more private-label goods or make their choices based on what’s on sale.

Third: Changing Stores. Perhaps the consumer still dines out-of-home, but economics influences their decision as to which restaurant they’ll go to… or when the consumer is inspired to change from the premium grocer to the EDLP supermarket.

But enough about my book report. You can read the story for yourself by clicking here (Media Post Marketing Daily, May 18, 2009).

Implications: If revenue is down, don’t just lament the loss. Figure out where it went, and why. Often, the spending didn't end... it just moved.

If you’re looking for ways of making revenue go up, ask which competitors might be vulnerable in your category. But also, consider which new categories you could compete with (just as the grocery store competes with the restaurant down the street).

Mike Anderson

DYG's view of how consumers are winding their way through the recession

In a session called “What’s Next? Navigating the Economic Crisis,” an important speaker at this year’s ACT conference was Lee Boylan, senior associate at DYG, Inc.

Citing contractions in the economy, housing, and labor markets, Boylan provided a quick review of what has brought the consumer to her current state of mind, and asserted what she described as a corresponding shift in values. These value shifts include increasing personal responsibility and self reliance, thoughtful sacrifice, “smarts” (not intelligence, so much, as cleverness, or savvy), increased caution and risk reduction, and a more populist approach to their opinions (trust the opinion of people like me, over traditional authorities/information resources). The tendency toward thrift/frugality was seen as another shift attributable to recent economic turmoil, as well as a sense of essentialism (paring down, less is more), and choosing personal priorities over materialism.

Boylan offered a number of trends and attitudes that DYG considers responsive to these changing values:

Soldiering on. Consumers are responding to the economic storm with a sense of stoicism. (No matter what you throw at me next, I can handle it.)

Suspicion and scrutiny. The economic crisis has caused consumers to begin examining everything more closely, including the news, and virtually all purchase decisions. Homework is the name of the game, including research about coupons/specials, and long-term value on major purchases. A new premium is placed on knowledgeable, credible employees… and reviews found on social sites, through word-of-mouth, etc. 64% of consumers in a DYG survey said they’re striving to reduce risk.

Sobriety. “The race is on to abandon excess and frivolity, to strip away over-abundance and over-indulgence and get back to basics. Now it is coming a badge of honor to have something that is old and dated - no need to have the newest blackberry.” Consumers almost feel embarrassed to indulge in vast excesses.

Streamlining. The economic crisis is providing the impetus (excuse) to deal with super saturation. According to Boylan, there are 120 different choices when it comes to toothpaste at Walgreen’s. People are overwhelmed by all of these choices. Streamlining helps us cut-down on choice overload.

Status from self, not stuff. As economic life grows harder and status from materialism grows elusive, consumers are finding new sources of satisfaction… including their relationships, ethics, personal well being, health and appearance. According to DYG data, the percentage of people “feeling better about family relationships” is up 4% since 2005, hitting 60% in 2008 (the heart of the recession).

One example of “Status from self, not stuff,” is a phenomenon Boylan called “Parentensity.” Whether infants or 30-year-olds, parents continue to spend on their children… and seek ways of staying involved in their children’s lives.

Rich Godwin of Google with lessons from the Obama campaign

In his “Lessons from the Obama Campaign" presentation to the recent ACT conference in San Francisco, Rich Godwin made a connection between high-tech political campaigning... and his role as the Head of Industry, CPG at Google. (You almost have to be impressed that Google even has someone that is a captain of Consumer Packaged Goods marketing.) The six lessons included:

Know what game you’re in. Using a review of the Nixon-Kennedy debates, Godwin pointed to the manner in which the Obama campaign embraced new media fully, much the way JFK’s team studied the nuances of the medium before engaging in this first-ever televised debate. Search, social media and email were not awkward extensions of primary media campaigns, but central components to the marketing plan.

Be “Always On.” Obama’s people used the web to give constituents 24/7 access to information, and as a means of delivering the complete transparency voters sought. They used the web to head controversy off at the pass, by publishing responses to character questions in a manner that the general public had no problem learning more, and dispelling myths.

Start “All Way” communication. It’s not enough to talk at your customers. You should use social sites and networking to help constituents talk amongst themselves.

Reach them where they are. The goal of online marketing was not necessarily to get people back to the Obama campaign web site. Whether through banner ads, social sites, or intuitive use of texting and email… the Obama campaign met constituents on their home turf.

Embrace change. It’s not like the campaign ignored traditional media… in fact, they used Newspaper, Television and Radio very, very well. But they allocated resources to online and search to a greater extent than the opponent. They didn’t reluctantly filter-in new media. They embraced it.

Don’t let go. Just because the election ended, didn’t mean the marketing ended. The Obama camp continues to reach-out to constituents through their online video, social network and email relationships. It has been an effective public relations tool in promoting the initiatives of the new administration.

Every day, companies campaign for customers, and departments within companies campaign to have their ideas adopted. Do any of these rules apply to you?

One trend hunter's guide to the galaxy

In a keynote presentation that was as much show business as it was social observation, Jeremy Gutche spoke at Association for Consumer Trends forum in San Francisco. Jeremy is from Trendhunter.com, and the focus of his talk was “Unlocking Cool and Exploiting Chaos.”

Jeremy pointed out that it’s not enough to be the first, or even to be the best at something. For his example, he cited a company that invented the laptop word processor, grammar checkers, built-in dictionaries and even started building PDAs in 1994: Smith Corona. They were the first to introduce many product innovations, they were among the best at their core competency, and they were bringing in $500 million in 1989. So, according to Gutche, they thought they could afford to take a “wait & see” approach to the idea of personal computing. They thought that if this new “computer thing” really took off, they could simply buy-up a computer company “down the road.” In fact, they did buy into ACER at one point… but sold their interest. A few years later, Smith Corona went bankrupt, and ACER went on to become the 4th largest computer manufacturer in the world.

Gutche used the example to warn that if you are afraid of failure, you are headed for it. Failure should be pursued, embraced, and celebrated… because failure means you’re trying new things, and new ideas lead to breakthrough products. “A decent proportions of your projects must fail. Success can often lead to complacency… and complacency will be the architecture of your downfall.” Successful organizations not only innovate to "optimize" their position on their hill… but they are also constantly looking for bigger and better hills.

Frankly, when I first visited his website (TrendHunter.com), I thought it was bit of an unorganized mess… with thousands of contributors tossing in a multitude of random observations. (Some not-so-random; a few contributors almost seem to have either an agenda or bias of some sort, and a few even appear to be more product-placement than social observation. And a few of the submissions are a bit less than tasteful.) But there’s more to the site than initially meets the eye. Jeremy has created a community in which countless observers all over the planet are submitting ideas for consideration. Later, Jeremy and his team meld these observations into something a bit more useful… sharing those more distilled components at a companion web site, JeremyGutche.com. There, you will find promotional materials selling Gutche’s services, but also some videos and slide decks that distill a diverse collection of input into something that’s easier to get your head around. I don’t find all of the material entirely useful—again, some of it is designed more to entertain than inform—but if you’re looking for a place to consider a wide range of possibilities, it’s worth a visit from time to time.

Here’s a link to the video Gutche used as the closing summary of his presentation.

This just in: The customer is in charge

Last week, I attended the Association for Consumer Trends forum in San Francisco… which focused on matters of technology, diversity, sustainability, and more. This week, I went to the Association of National Advertisers conference in New York... which was titled “Brand Building in Tough Times & Beyond.”

There was one conspicuous, common denominator to both events: Lots of companies have lost touch with who the consumer is and what they want. At the ANA conference, in particular, there seemed to be a sense of urgency to the message; that companies have overlooked the most important player in their marketing plan: The customer.

I’m not ashamed to admit that I’m suffering from a bit of information overload right now. In the past two weeks, I’ve received input from people at Charles Schwab, Google, Dunkin’ Donuts, Fender, DYG, Frito Lay, and more. Over the next several weeks, I will do my very best to (as Google would say), organize the information, and make it useful.

Mike Anderson