Observation: This week, when I present an on-location workshop for a few-dozen business owners in Jacksonville, Florida, I’m going to ask people to stop calling it a recession.
We could call this economic climate a lot of things, but for the time being, at least, it is not a recession. It is a climate where people are still getting used to the effects of the recession that happened from December 2007 through June 2010. But that recession is over; consumers simply continue to reconcile their post-downturn financial situation.
They’re balancing their checking accounts, and re-working the monthly budget. They’re deciding what’s important, and what they can live without.
News flash: Apparently, a lot of them cannot live without spending lots of money on designer coffee.
Implications: It’s time to explain your value proposition. And by that I mean, “How does your company, product, or service add value to the consumer’s life?” Is that value worth the cash and inconvenience you’re asking the consumer to trade for your product or service?
There are still consumers spending plenty of cash out there. As evidence, I give you Starbucks, which just reported their first $3 billion quarter, according to this story from Marketing Daily (click to link). Gosh, if my grandmother—may she rest in peace—if my grandmother knew that I had ever spent $4 on a cup of coffee, kind and sweet as she was, she’d have smacked me up-side the head. She could not have imagined how many people would lay down a five-dollar bill for a latte, expecting only a few coins in change.
Starbucks has explained a value proposition. Part product, part experience, and part escape mechanism. It’s a small indulgence that allows them to defy a rough economy. They’re selling a lot more than coffee… and they’re charging a lot more than a quarter-a-cup.
People will spend more if you show them it’s worth it. Have you offered a value proposition—a benefit, story or experience—that helps the consumer reconcile their investment in your company, your product, or your service?
Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.