What's hot this holiday season? A plan.

It is important to think about what shoppers will be looking for when they hit stores this holiday season. But it's just as important to know what they might have before they arrive: A strategy.

More than ever before, consumers will be inclined to buy with cash instead of credit, on purchases that were thought-out (and researched) ahead of time, and which conform to a realistic budget.

More shoppers are “planning” this year, and looking for ways to carry their “frugal but not cheap” attitudes into the holiday buying season, according to this Research Brief story that cited a study from Information Resources, Inc.

Implications: Hindsight will be the most accurate indicator as to the prosperity or frustration retailers enjoy this holiday season. But almost anyone can guess that competition for customers will be very heated… and consumers know it. It's not like shoppers are going to skip the holiday season. But get ready for an attitude that might best be described by words like judicous, discriminating, or deliberate.

My hunch is that shoppers will have asked family and friends what kind of items they want—in advance—so they can give gifts they know will be appreciated. In other words, the consumer will do their homework. So you should, too.

• What have you done to facilitate comparison shopping, or assist customers in their effort to do product research?
  
• What have you done to “make the list” that shopper will be carrying?
  

Gift recipients, on the other hand, are likely to ask for items that they may have denied themselves… as many consumers have demonstrated restraint over the past several months. So don’t be surprised if you hear the phrase, “pent-up demand” a little more often. And don’t be surprised if functional gifts take a slight advantage over more frivolous items.

• Are your products/services perceived as over-indulgent… or could they be positioned as a long-overdue reward?
  
• If you’ve been frustrated by slow sales for a few months, how do you get prospective owners to ask for your product (your service, your store) by name?

Mike Anderson

Can't find the job you want? Make one.

I’ve written here before that a recession tends to precipitate a lot of start-up companies (see “Me, Inc.” from August 22, 2009). Well, a recent study from Pew Research suggests that folks who are self-employed are significantly more satisfied with their careers.

Earlier this month, Pew Research published another story about the changing (and aging) workforce: Fewer jobs are available for younger workers, now that older employees are less likely to give-up their positions. A number of motives contribute to this “graying” of the workforce. First, people are living longer, and that means having an income to supplement retirement savings can be important. But also, having a job—for the older employee—is a matter of fulfillment and self-actualization.

For example, just 17% of workers 65+ said they had a job because, “They need the money.” Of the remaining workforce, aged 16-64 49% said they worked because, “They need the money.”
In contrast, 20% of 16-64 year-olds said, “They want to work.” But among 65+ employees, 54% said simply, “They want to work.”

Implications: I’m wondering if a new variation on “the generation gap” might be in the offing. Could the younger pool of workforce candidates begin to resent the older, asserting that, “It’s my turn?” (This is a particularly valid question, given the high rate of teen unemployment, as reported this fall by the New York Times.)

Could the older workforce be pressured out of the labor market when the competition heats up?

Does a company like yours respect the differing motivations required to attract and retain the kind of talent you’re looking for? For some workers, the emphasis might be on service and self-actualization. For others, money talks louder than anything. I found it interesting that this study drew a generational line in the difference between the two.

And if these demographic extremes will be competing for hot jobs... how long will it be before there are changes in the appearance of the student body at your local college or university... as workers young and old seek the skill sets to compete more effectively?

Mike Anderson

The difference between recession and recovery: Customers

Today, I walked through a mall in Sacramento with Todd Storch, a colleague of mine at CSS. We were in search of something entirely different, but happened across a couple of stark observations of what a recession is or isn’t.

First, we noticed a dearth of shoppers. Fifty-foot-wide corridors, vacant but for a few isolated browsers… their solitude made more conspicuous by the sound of their shoe soles, echoing as they clicked on the hard tile floors. (I recalled how, in the 80’s and 90’s, the mall was “the place to be.” It’s where people went to shop, socialize, and spend a good share of their leisure time. Now, Facebook satisfies the social appetite, and window shopping is often done from that “window” on your desk. The mall will probably need to reinvent its’ offerings and provide a service that is less easily replicated in the virtual world.)

We walked by a very hip looking Verizon store (labeled a “premium outlet”), which was utterly empty, except for the two employees who were having a chat. I mean, empty… as in, entirely void of shoppers.

Then, we walked into the Apple Store, which had the atmosphere of being part nightclub, part arcade, part serious computer store, part attachment and gadget outlet, and part cell phone store. There were dozens of items on display—and powered-up—within easy reach of customers who couldn’t wait to get their hands on them. The place was packed. It was buzzing… with passionate fans who were selling themselves. (Authors note: It seems to me that the Apple organization must teach employees to never interrupt when peers are pitching each other Apple products. They’re very good at getting out of the way until it’s time for a transaction or for actual product knowledge that the layperson might not have.)

Implications: From my view, The Apple Store did not benefit from today’s mall traffic. On the contrary, the mall may have benefited from all of the traffic that Apple had driven to their store. Apple did not benefit from people who just happened to be walking by… the store was a destination. (Granted, I make that observation based on data that is less than scientific.)

Do you have “destination value?” Is yours the product, service or store that happens to snag a few people as they walk by? Or is yours the option that consumers seek out… even though it might not be the cheapest or most convenient?

It would seem that the recovery, for Apple, has started earlier than most (see their most recent earnings press release here). Whether for a laptop that boots-up quickly and holds the promise of a virus-free future, or for the iPhone and “apps” that add value to portable communication… Apple has offered a proposition (or many) which consumers find excitement and value in. And in so doing, they have proven that recessions and recoveries are hardly equal-opportunity events.

Mike Anderson

Déjà vu, circa 1970s: Women in the workforce

When times were great, many career women could afford to leave the workforce… opting to head home and raise a family. Now, with spouses who have either been laid off, or fear being laid off, or investment portfolios that took a beating the past few years, many of those women are headed back into the workforce… according to this story in the New York Times last weekend.

Implications: Women first hit the workforce en masse back in the 1970s (that’s not counting their jump into action during WWII, serving a critical role in the factories that supplied allied troops). And the more gender-balanced workplace gave way to accelerated growth for convenience appliances, prepared foods, and other items to help make their double-duty more manageable.

I’m wondering whether a resurgence in convenience items might soon follow (whether devices or packaged goods, such as heat-to-complete or grab-and-go foods). After all, we’re hearing a lot, lately, about more time in the kitchen, less dining out-of-home, etc. Is that reduced consumption of convenience or restaurant fare sustainable, if she’s pulling double-duty again?

Mike Anderson

Watts up?

A recent New York Times story—written in lay-person’s terms—explained the relatively insatiable appetite for electricity that is lurking behind so many of the new gadgets we have around the house. Flat screen TVs, mobile phone chargers, MP3 players. laptops and other computers… all kinds of devices that are relatively new to the American home, but sucking the kilowatts out of it.

Implications: Just as major appliances are now labeled with their estimated annual consumption of energy, I’m wondering how long it will be before manufacturers are invited to disclose the “ghost consumption” of electricity behind many of these new products. (Specifically, I’m talking about those devices whose chargers and adapters continue to drain electricity, even as they are thought to be in an “off,” or “hibernation” state.)

I bet that topic comes up about the same time that some other product begins competing for its rightful place “on the grid.” (A product like the electric car, perhaps?)

Mike Anderson

Consumers will never go back to the way it was (until they do)

I won’t argue that thrift is in fashion right now. But I find it unnerving that so many pundits are predicting that extreme frugality is "the new normal." That forecast is both huge and a bit dangerous, in my opinion; it is an assertion based more on assumption than certainty.

Think of the things so many consumers have done… that their great grandparents could not have imagined. Many consumers have:

• Gone on vacation… by jet.
  
• Owned a home that would hold two (or more) of the houses their grandparents lived in.
  
• Purchased a television that out-sizes even the painting that once hung over grandma’s sofa (one that gets hundreds of channels, and which lets you change the channel without even getting out of your chair).
  
• Bought a hamburger for six bucks. And grabbed a cup of coffee… for four dollars or more.
  
• Carried a telephone that is not only wireless… but one which has no “base station” and that works from almost any civilized place on the planet.
  
• Used a laptop that probably has more raw computational firepower than the biggest computer in the world had at the time the first satellite was launched into space.

Implications: Our rate of savings has increased, and it will likely stay higher than it was a few years ago. Our use of credit has declined, and that trend is also likely to continue at some level. Our spending might face greater scrutiny, our pre-purchase research might be more diligent, and we might continue to expect more value per dollar than we even thought about a few years ago. I agree that we have entered an age of the more strategic consumer. But for anyone to suggest that now, we’re all going to go “cold turkey” and stop spending forever…

I think that’s ridiculous.

Last week, the New York Times published a story that reflected on the aftermath of 9/11. In it, the writer helped us recall many of the predictions that were made following this terrible and tragic event. Experts asserted that nobody would ever want to live or work in a skyscraper again… the streets would be patrolled by soldiers with rifles and the harbors by military gunships… tourists would not come back… people would probably never fly on airplanes ever again…

Each of these possibilities was easy to imagine at the time. We were in the midst of a trauma, and the worst was easy to imagine. While I’d never equate the human tragedy of 9/11 to the relative inconvenience of this economic recession, there are parallels in the way predictions have been made about the aftermath of this recession. We’re still very close to the financial trauma; close enough that it can cloud our vision of the path ahead.

I believe that, as the recovery develops, you’ll see evidence that consumption is a hard habit to kick. Consumers will start to rationalize purchasing with increasingly stronger (though not always logical) arguments…

• “C’mon. We haven‘t taken a vacation in like, forever!”
  
• “Do you know how long these same clothes have been hanging in my closet?”
  
• “I realize we need to be careful, but our old one died, and we can’t just not have a _______.”
  
• “I haven’t really indulged in anything like this in quite a while… so I’m not even going to feel guilty!”
  
• “I don’t know if we should wait… the deals are awfully good right now.”

To me, consumption is not a matter of if, but when. Some consumers will justify their return to spending sooner than others (some are already underway!). Some consumers will start buying in one or two categories, but continue their restraint in areas they don’t consider to be a priority.

Your job is to help start those internal arguments in favor of spending, and make your product, service, or experience one of those “exceptions to the rule.”

Mike Anderson

D-I-Y strikes O-I-L

With the widespread presence of quick-lube auto centers in recent years, it has become almost impossible to justify the idea of doing your own oil changes. When times were good and money was easy, why would a consumer go to all that trouble to change their own oil… especially when one might only save a couple of dollars! The same mentality was applied to many other light repairs and maintenance issues, like air filters and fuse replacement.

Well, now that money is a bit tighter, those few dollars are looking pretty good… so more consumers are climbing under the hood. That’s according to a recent study conducted for Honeywell Consumer Products Group; the findings were shared in a recent Marketing Daily article.

Implications: This posting transcends the automotive category. As people strive to save, more and more consumers are adopting a “Do It Yourself” strategy… when it comes to things like vehicle maintenance, home improvement, cooking, and more. So where’s the opportunity?
Helping them do it… right.

From classes about how to lay ceramic tile, to workshops about how to replace a burned-out turn-signal bulb, more and more consumers are doing more and more things… that they haven’t done in AGES! If you have insights to share about how to do anything well (or just “get it right the first time”), then you can cater to this important and growing segment.

Think about it: If a consumer has hired a caterer for her last half-dozen home entertainment occasions, but now she’s preparing all the food on her own for the first time in three or four years… how might she feel about getting some lessons or tips on entertaining? Preparing appetizers? Choosing affordable but tasteful wines?

At times like these, expertise might be one of your most important products.

By the way, if you sell services that compete with D-I-Y alternatives, it might be time to head back-to-the-basics… of explaining the true value proposition behind your services. For instance, the cost of having it done wrong (expressed in terms of both finances and frustration)... or the time savings and expedience of hiring a project done, rather than doing it yourself over several (valuable) weekends.

Mike Anderson

Retirement, re-defined

At the time, most of us were focused on our immediate losses. But now, a long-term by-product of the stock market decline of late 2008 is getting more of our attention: A lot of soon-to-be-retirees had their nest-egg in that basket. And those boomers are reconsidering when and how to retire, now that some of those nest-eggs have cracked.

Two recent stories support that assertion. First, Marketing Daily published a story last week which included some highlights from a survey by TD Ameritrade. One of the conclusions in the study: Women have begun to re-set their retirement expectations, and have accepted the idea that they might have to live on less money than they had previously anticipated once they retire.

Second, a story in the New York Times explained that many boomers are deferring their retirement plans… which could impact the younger, emerging workforce, as fewer departing workers translates into fewer openings just as these young adults are entering the job market.

Implications: Many boomers have long suspected that Social Security would not outlast their retirement, so they created their own retirement plans, through IRAs, 401(k)s, or other investment instruments. And with a few exceptions (the dot-com bubble, the Enron age), those investments were performing as expected (or better), at least until the commencement of The Great Recession.

During those go-go years, many people envisioned a retirement location and lifestyle that may have looked more like a resort than a residence. Now, just like so many other expectations, many would-be retirees are re-setting their goals, and aligning their expectations with what they perceive to be the new financial reality.

Even as the stock market demonstrates signs of recovery and greater resilience, people now realize just how far and how fast the system can be upset. In response, one might expect all kinds of questions with regard to these and other late-stage decisions:

• “Where, how and when should I retire?”
  
• “If I’m going to continue working longer, can I at least retire from the job I’ve always had to have (for economic reasons), and take this opportunity to get the kind of job I’ve always wanted to have (for reasons of self-satisfaction and actualization)?”
  
• “During this age of “re-hirement,” might the size of my paycheck take a back-seat to benefits—most notably health care—when it comes to deciding whether a compensation package is fair?”
  
• “What does my dream job look like as I enter semi-retirement?” (For example, how many hours per week am I willing to work? Do I expect this job to provide sustaining income, or just supplemental income? And what physical limitations might I think about that weren’t a concern to me twenty or thirty years ago? How can I find a job that’s not really “work” to me… but more like getting paid for something that is more like a hobby or special interest to me?)
  

I’m certainly not the first to suggest that boomers have re-defined every life stage they have experienced, just like a proverbial pig moving through a demographic python. Don’t expect them to retire from that function, just because they’re approaching retirement.

Mike Anderson

Going for an unfair share

During volatile economic times, some companies—understandably—become a bit conservative.

Others get down-right aggressive.

In the past few days, I’ve noticed stories about two companies that are planning to stomp on the gas pedal at about the same time many others are still tapping on the brakes. In one story (MediaPost), Del Monte is reported to be increasing their marketing expenditures by up to 40% in the coming year. In another article (TIME/Yahoo Business), Wal-Mart has launched an initiative dubbed “Project Impact,” which takes aim at key competitors in a variety of categories.
Implications: One of the most prudent things a company can do is anticipate—correctly—that a recession is at hand, and preserve resources accordingly. But one of the most profitable things a company can do is anticipate—correctly—that a recovery is at hand, and make a move to gain market share where competitors are still in “caution” mode.

Nobody can predict, with absolute certainty, when it’s “the right time” to shift from recession to recovery tactics. But if you scour the major media, you’ll see that a few pretty impressive players are starting to place their bets.

Mike Anderson

Degrees of recovery

Over the past year, we’ve seen numerous studies, surveys and stories which suggest the frugality inspired by the current recession will remain, once the recession is over.

Recently, another such story appeared in the New York Times, which I thought did a great job of “connecting the dots.” Rather than simply profess gloom and doom, the piece provides some cause and effect reasoning behind the long-term changes in consumer behavior, driven by the depth and breadth of the current recession. I don’t agree with all of the assertions in the article… but some points are difficult to argue:

• Lower-income households are finding it more difficult to borrow
  


• Higher-income households no longer feel as wealthy
  


• There’s still a lot of debt out there, which throws a pall over the potential for a strong recovery

But keep reading, because I again sense there are veins of prosperity and optimism ahead.

Implications: Many pundits have compared the recession of 2007 - ______ to the Great Depression, in that the depression installed a sense of thrift which lasted for decades—indeed a generation—after the event was over. And this NY Times article points-out some of those same similarities.

But I think it’s dangerous to assume that consumer behavior will be forever altered. Recoveries will vary by region, by category of employment (or unemployment), and even by family attitudes and lifestyles. If you’ve lost a home or job or both, you’ll probably come out of this recession with a long-term sense of caution, relative to the way you spend money. If you’re employed in an industry (or region) that enjoys resilience, even through tough economic times, you might be “living large” right now, due to the deflation that has occurred in the price of so many products and services.

“Will the current sense of frugality continue after the recession?” That’s a terribly framed question, because it begs for a yes-or-no answer. This question should be a series of inquiries… and open-ended:

• “How long do you think the current sense of frugality might last, after the current recession ends?” (1 year? 2 years? 3 – 5 years? More than five years? Forever?)
  


• “Do you think that a lasting sense of frugality will be pervasive throughout the entire population? Or do you believe that some consumers (or households) might return to previous habits faster than others?”
  


• “What kinds of families/households are more likely to return to pre-recession spending/consumption habits faster? And which are less likely?”

To suggest that an entire population will alter their behavior in unison—in lock-step—might be a premature assumption. I personally do not believe that this recession, severe as it has been, measures up to the depth and breadth of the Great Depression, or other calamity seen in the 20th century. Our grandparents and great-grandparents knew, first-hand, and broadly, what it was like to do without. Whether through the scarcity of the Dust Bowl and depression, or the rationing that resulted from a World War, there was a pervasive absence of access to even the most basic of products, services and commodities. This lack of access touched an entire generation, with only isolated exceptions.

Only history will decide for sure… but I suspect that in the future, this recession will be reviewed as a stratifying event, creating a more conspicuous chasm between the haves and have-nots, giving birth to new companies (and perhaps industries) which served needs and priorities that were previously either not realized or satisfied. And I sense a consumer renaissance… where value is again defined by the customer who buys a product, rather than the company that sells it.

Mike Anderson

Generally speaking, not enough physicians

A quick check of almost any medical school will lead you to one diagnosis: We’re headed toward a shortage of general practice physicians. A recent story from Kansas (Wichita Business Journal) indicates that 86% of medical students there plan to pursue a specialty… leaving just 14% who will be content to serve as “family doctors.” A similar story from San Jose (Silicon Valley/San Jose Business Journal) warns of the same condition: There are not enough new primary care candidates in the pipeline to meet the needs of an aging population. Partly because so many medical students are electing to pursue a specialty… but also due to the fact that more than a quarter of the country’s current primary care doctors are age 55 or older, which means they’re nearing retirement.

Implications: I’m not going to join the politically-charged debate on healthcare here. But I am going to point-out that health care, like any other field, is subject to the laws of supply and demand.

Most “specialty” care providers make more money than most general-practice physicians, which is one big reason why so many students head in that direction. According to the San Jose story, salaries for a new primary care doctor start at about $150,000 a year, compared with dermatologists who make about $300,000 and orthopedists making about $400,000.
According to a specialist I spoke with today, the hours are often more stable for a specialist, too. (For example, “I accept referral appointments on M-W-F, and I do surgeries on Tuesdays and Thursdays.”)

So, the American medical consumer should prepare to have increasing difficulty getting an appointment with the family doctor in the years to come. As that supply of physicians goes down, expect the prices for services rendered to go up, further aggravating an already complex set of healthcare cost issues.

If you’re in the business of fitness, self-health, or nutrition… are you positioned as an alternative to traditional office visits?

Mike Anderson

See also: “How the debate on health care might affect you,” 7/31/09.

See also: This story from CBS News, broadcast in late July, about the emerging primary care shortage.

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A number of reasons for cautious optimism

One has to relish in the increasing frequency of good news about the economy. Three items stand out as recent signals of hope. First of all, the manufacturing sector has not only slowed its decline; it has moved into positive territory, according to this story from the New York Times. Because manufacturing creates “root employment,” from which related jobs also grow (think transportation, distribution, packaging, sales, etc.), factory production and employment growth is a very good thing.

Secondly, numerous reports seem to indicate that the consumer is feeling better about the future than they have in more than a year… with emphasis on the confidence they have in their personal financial situation. One story, which I found in Marketing Daily, suggested that only about a quarter of consumers fear their financial situation will worsen in the next twelve months (down from 30% in November), and about 32% of consumers feel their fortunes will improve in the next year (up from 29% in November). That is based on research from Synovate.

Yet another report, this one from Research Brief, cites a Harris poll that said 46% of Americans believe the economy will improve in the coming year, while 32% say it will stay the same and 22% believe it will get worse. That’s a strong improvement from a similar study in May.

Implications: Mining and manufacturing are among the first steps in a product life cycle, and purchasing/consumption represents the end of that cycle, for many products. These “bookends” of good news can only mean positive new for everything in between. As a backdrop for that optimism, let me suggest why I’m cautiously optimistic… starting with my optimism:

• Layoffs and new jobless claims have begun to moderate (consumer confidence starts with the feeling of secure employment). As a result, consumer confidence seems to have stabilized.
  
• Stocks are seeing sustainable rallies (rather than the severe swings of last fall/winter).
  
• Housing starts have remained low (which is good, because more inventory would not heal an already over-supplied real estate market).
  
• The stimulus money is beginning to show-up in the form of paychecks in pockets.
  

The reasons that, while I am very optimistic, I remain cautious:

• The pace of new hires is still a bit slow. (Some warn of slow labor rebound, aka a jobless recovery.)
  
• There could be more than one bottom to the recession; instead of looking for “the recovery,” you might be wise to expect a series of recoveries. (Due in part to low commodity prices, as I’ve written previously.)
  
• The “new attitude of frugality” could out-last the recession, and to some extent, subdue the recoveries. (A significant share of our GDP is based on consumer spending.)
  
• Technically speaking, a recovery won’t be made “official” until up to a year or more after it has begun. (As I’ve written in this space before, recessions and recoveries are determined based on historic data, and it can take that long for economists to determine when a turnaround actually started.)
  

To my way of thinking, all of this means one thing. Neither “sitting it out” or “wait and see” are smart strategies in response to the current economy. The smart money is on understanding consumer wants and needs—and how they rationalize a purchase in your category—and then marketing to those purchasing priorities.

Consumers have cut back… there’s no doubt about that. But while most of us are showing restraint, overall, each of us has “exceptions to the rule” where we still buy, even if the purchase might be thought of as indulgent. Your job is to figure out how to become one of those “exceptions to the rule.”

Mike Anderson

[Update] I'm telling on you, II

Recently, I’ve posted a couple of articles at this blog which illustrated the increasing ease in which consumers can review, recommend, reprimand, or otherwise advertise for a company they’ve done business with, and that some companies are starting to monitor blogs and social media as a way of obtaining consumer insights. (“I’m telling on you!” posted 9/2/09, and “Objective analysis of subjective content,” posted 8/31/09.)

As a matter of coincidence, Phil Lempert offered another outlook on the topic just this morning at his “Supermarket Guru” web site. It pointed out a YouTube video that has received a tremendous number of views (more than 5.3 million at this writing), which contains a country music video about the singer-songwriter’s alleged experience with United Airlines. You can watch it here:


On the other hand, I came across another story this morning—this one from Marketing Daily—which suggests that few executives believe social media has achieved enough “critical mass” to be used as a valid tool in obtaining consumer feedback. (See the story “Social media not yet core feedback tool,” published today.)

Implications: As someone who travels quite a bit, I found the music video at least a little entertaining. As a marketer, I found it at least a little unnerving. I cannot know whether the singer-songwriter had a legitimate claim, because the tune does not explain details of his experience--although a story at his web site does--nor does it offer a rebuttal with the airline’s point of view. But in the artist’s perspective, at least, this virtual retaliation was justified.

That is the point: There is little United Airlines can do to respond to the allegations of this video/viral campaign. The opportunity to reconsider (or remediate) the issue has passed, as they cannot put the proverbial toothpaste back in the tube; the song has made 5.3 million impressions.

Perhaps some marketing execs have yet to monitor blogs and social media to see what consumers are saying about their company. But I’m wondering if, someday soon, those same folks will feel as if they’ve arrived late to the gate… to learn that plane has already departed.

Mike Anderson

The jury is out...

This morning’s New York Times featured a story about the increasing difficulty various jurisdictions are having… simply seating a jury. (See “Call to Jury Duty Strikes Fear of Financial Ruin.”)

As the headline implies, the challenge in recruiting jurors has become more complicated—like almost everything—due to the volatile economy. This isn’t just a matter of people feeling like they have more important things to do than sit with their peers to render justice… a constitutional right afforded any defendant.

On the contrary, it is the byproduct of a population whose jobs, incomes and lives are in a state of upset… and whose financial survival might just depend on NOT being called to jury duty. Perhaps their company is expecting layoffs, and the potential juror is competing to keep their job (although jury duty is supposed to be immune from influencing such issues). Perhaps the candidate is working two or three jobs, just to make ends meet.

Implications: Once upon a time (and not so long ago), many of us used to joke that “we had less time than money.” Well, the recession has created an environment where we may have less money… but that doesn’t mean we have more time.

Time stress is not only a challenge if you’re trying to seat a jury for a courtroom. It’s a challenge for anyone in business... because every day, a jury of your peers (customers) will pass judgment on your company, product or service.

What are you doing to demonstrate sensitivity toward customers who have a particularly busy schedule... one made even more intense by the demands of the current economy?

In what ways might you increase the velocity—and reduce the anxiety—of buying and owning your product or service?

Mike Anderson

I'm telling on you!

[Editor's note: See also, "Objective analysis of subjective content," posted 8/31/09.]

I don’t make it a habit of citing Trendwatcher.com at this site, because people who are fanatic about trends probably already read it. But the most recent e-newsletter (available on their web site by clicking here) offered some deep and valuable perspective on the consumer’s increasing ability to review your business, and share their opinion with the masses.

Why is that important? Because that same consumer trusts 90% of the reviews and recommendations that come from people they know… and even 70% of reviews that come from people they DON’T know! (That’s according to a Nielsen study quoted in the newsletter.)

Implications: The Trendwatcher story suggests that, “Reviewing is the new advertising.” In other words, making a customer wildly satisfied (or horribly disappointed) can lead to a free viral campaign… with a trust-factor built right into it!

So, ask how you might maximize the “Review Revolution?” And no, I’m not talking about embedding fake, inauthentic reviews of your own store, product or service. I’m talking about things like…

- How can you identify the “virtual critics,” and bend-over backwards to give them a great experience (just as a restaurateur might cater to a food critic from Food and Wine or the NY Times)?

- If you can’t identify those virtual critics, do you assume every customer could be one? And do you strive to super-satisfy every consumer with whom you have contact? (Remember that satisfaction is not a matter of good company policy; satisfaction lives and breathes in the experience of your customer, in response to the execution of your customer service policy.)

- What could you do to help contain disappointment, and broadcast delight? (For example, “If you have a bad experience, please tell us (we want to make it better)! If you’ve had a great experience, please tell your friends.”) Any hot-headed customer that is allowed to vent in the store is less likely to blow-up when they leave.

- What “dirty little secrets” or flaws might exist in your customer service strategy? Today, facing those issues—and either mending them or making them totally transparent—is the safest approach. Eventually, someone will discover even a discreet flaw in your customer service pattern… and post it on their blog.

- When was the last time you used a secret shopper? Who do you know that might walk your store, "incognito" for you? (Make it someone you trust, someone who will give you useful, constructive feedback, and who can be nearly invisible, relative to other customers.)

- Remember that satisfaction is built on expectation. Scrutinize your marketing to make sure it makes no promises you can’t keep. (Sometimes, disappointment comes more from a customer that over-expects... than from a company that under-delivers.)

It’s almost impossible to please every customer, every day. But considering the influence that consumer has in the digital age… total satisfaction is a goal worth shooting for.

PS: Trendwatching.com is one of the best trend sites on the planet... along side their companion site for business, Springwise.com. But then, that's just a review of my personal opinion.

Mike Anderson

In an age where entire industries are in turmoil, it is probably safer to follow consumer desire than industry precedent

Earlier this afternoon, I posted an entry at this blog about “weaning both drivers and dealers from discounts.” Soon after, a colleague asked me to elaborate on the idea that, “…Both manufacturers and dealers must develop something new in the menu of products people buy, and the way they buy them.” I thought I’d share part of that conversation here.

First, the issues facing the auto industry right now are not as clear as black and white. There is a lot of “gray area,” and it is dangerous to over-simplify the situation. As one example, one might conclude that the auto industry is simply suffering from a situation where people are not buying enough cars. Look deeper, though, and the problem could be a matter of over-supply, rather than lack of demand. Anytime production drowns the available consumer pool, sales become a challenge.

The truth is, some people have been buying lots of cars and trucks over the past twenty years, even when they hadn’t yet used-up or paid-off the car they already had. I often cite a story that appeared in the LA Times a while back, quoting a Federal Reserve report that the average car loan term is now 64 months... that 45% of car loans are written for longer than six years. And that the average car owner still owes $4,221 against their vehicle… on the day they sell it or trade it in.

Those numbers would suggest that finding car buyers has not been the problem. Over the past couple of decades, the bigger issue might be that they indeed found buyers, and consumers have found all those discounts, financing and incentive offers irresistible. They bought, again and again, further extending the term and increasing the amount of debt on each occasion, until the burden could no longer be deferred. The credit issue, at least in part, has contributed to the quandary faced by the auto industry right now.

The Cash for Clunkers program is now officially over… and as you saw in the posting earlier today, manufacturers and trying to stem the flow of “factory sales events,” rebates, credit terms and other discount incentives. So that leaves the question: What kinds of elements might lure consumers back to the showroom, absent these gimmicks? Cash for Clunkers has helped a lot of companies move a lot of inventory. But the now-expired tactic was never intended to replace much-needed strategic change. The consumer is re-setting what they will buy, and why.

When I ask these questions, my goal is not to indict an industry, but to prompt a conversation about “what’s next.” Here are a few half-baked examples:

Innovation: What is the automotive equivalent of the i-Phone? How quickly will electric cars (or other ultra-efficiency) models hit the street? Why doesn’t my vehicle have a charging station for my laptop or cell phone, which doesn’t involve all those goofy cords plugged into the lighter socket? When (not if) gasoline hits $5/gallon again (or more than $1.30/liter), who will have created the most cost-efficient solutions… and how will consumers learn to weigh the price of the vehicle/technology, in relation to the cost of ownership?

Experience: What could dealerships do to make the process of buying a car more enjoyable? What could they do that they’re not doing now? What are they doing now that should stop doing?

Financing: Given the current debt load so many people have on their vehicles, might the future hold a different economic relationship between auto buyer, bank, and seller? (Some airlines own very few planes; instead, they lease the aircraft from a manufacturer, in a manner that both the airline and the maker have an interest in how the product is priced and depreciated.) What does a sustainable credit model look like for the auto industry?

Inventory: Will adjustments in production actually come to pass, so that supply can be more closely aligned with demand? (A flood is no time to sell water.) How close could the industry come to a “just in time” and “my size fits me” production format (like Dell, for example)? Would the consumer value that capability, if it existed?

Service: When auto sales are strong, it is easy for a dealership to be distracted from maximizing the revenue—and relationship—potential of their service department. Now, with so many quick-stop oil change stores and tune-up centers on the competitive landscape, what (besides warranty work) could be done to convert car buyers into service loyalists, thus giving the dealership greater advantage the next time that consumer is in the market?

I’m sure there are people in the automotive manufacturing and sales business who won’t enjoy this assertion, but in hindsight, the current “right-sizing” of the automotive industry seems to have been inevitable. But of course, this blog is not about the auto industry, but consumer trends. So let me conclude by circling-back:

For some companies, pricing is a strategy (i.e., Wal-Mart); price defines the strategic approach of the company, and a value proposition for the consumer. For other companies, pricing is a tactic… and one which often does not necessarily support their overall strategy (i.e., “The highest quality widgets, at the lowest price on the planet.” The consumer knows those two claims are difficult to reconcile).

A marketing strategy that is flawed—fundamentally—cannot be sustained, for the long term, by short-term tactics. A low price might buy you some time and get you through a headache. But just like aspirin, relying too heavily on tactics to compensate for a broken strategy will lead to stomach upset.

How is YOUR customer base changing? Are their wants and desires the same today as they were two years ago? Five years ago? Next year? It is a time to take comfort in the needs expressed by your consumers… rather than industry precident.

Mike Anderson

Weaning drivers and dealers from the discounting drug

In a pair of Marketing Daily stories today, one can grasp just how addicted auto manufacturers, dealerships and consumers are to “incentives.” Last month, on average, manufacturers paid out $2,475 in incentives for every vehicle sold. It’s not that number that is dramatic… but that this number represents a drop of 8.5% from the prior month, and a decline of 11.7% when compared to August 2008. (These incentive payments represent manufacturer expenses, and do not include government payments related to the Cash for Clunkers program.) See a more complete story about the Edmunds report: MD’s “Incentives drop in August,” published 9-2-09.

Speaking of incentives, Ford is claiming great success related to the Cash for Clunkers program. Sales were up 21% when comparing August 2009 to the same month in the prior year. Other leading beneficiaries: Toyota, Honda, Hyundai. See the MD story “Ford made out like a bandit,” published yesterday afternoon.

By the way, I realize that I used the word “discounting” in the headline. But whether you’re talking about manufacturer rebates, subsidized financing plans, government incentives or dealership sales events… you’re talking about discounts.

Implications: I’m eager to watch what happens next in automotive marketing. Absent a “Cash for Clunkers” campaign, what might auto manufacturers and dealerships do to lure consumers back into the showroom? An Associated Press story appearing in this morning’s Minneapolis Star Tribune suggests that the summer “Clunkers” party could result in an autumn hangover for the industry.

The re-set that is impacting the automotive industry right now isn’t just about how many vehicles they can sell; it is about how many vehicles they can sell profitably. And for many companies (both manufacturers and dealers), that means developing something new in the menu of products people buy, and the way they buy them.

If discounts and incentives are to be reduced… what might take their place—and have enough relevance and attraction—to keep traffic moving through the showroom? Only the consumer you aspire to serve holds the answer to that question... which makes talking with that consumer more important than ever.

Mike Anderson