Let us be perfectly clear

75% of consumers believe “complexity” contributed to the current economic downturn, according to a recent study by Siegel+Gale. The research sampled 1,214 consumers in late December and early January.

Other portions of the report (as quoted by MediaPost) seem to suggest that a majority of these consumers see themselves as partially culpable for letting financial missteps happen: 52% of respondents admitted that they only "sometimes" or "never" read investment materials or insurance policies that they sign, with 50% acknowledging that "it's the final responsibility of the customer to make sure they understand all the risks."

Compared to a year earlier, 37% of consumers said they were less likely to trust their mortgage lender, 36% their broker or financial advisor, and 35% their bank.

Implications: Regardless of the business you’re in, there are beneficial lessons in this research. From credit card terms to mortgage documents, many consumers see life as a set of complex details often printed in a microscopic font. The sheer length and complexity of many contracts effectively defends them from the risk of ever being read. Many time-sensitive consumers began “skimming the details”… or ceased reading the documents entirely. Now, many of those consumers are paying the price.

Going forward, expect people to actually read the fine print involved with your offer… or choose an alternative so simple that no fine print is required. (84% of these survey respondents said they are more likely to trust a company that uses jargon-free communication.)

If you’re a packaged goods company, how does that impact your packaging or coupon redemption? If you’re a manufacturer, how does that impact your warranty? If you’re a retailer, how does it impact your return policy? Many consumers have re-learned: The devil is in the details.

Now… while some of you might read this as a threat, others will see it as an opportunity; I prefer the latter. The Siegel+Gale report also indicated that plain-English explanations and disclosures would give these consumers a 79% increased interest in investing in a financial product, a 73% increased interest in selecting a broker or a financial advisor, and a 63% increased interest in applying for a credit card.

Could your company use some increased consumer interest? Is there some way you could reduce the complexity cost of buying the product or service you sell?

Mike Anderson

Is it a health plan or an incentive plan?

Today’s USA Today story about employee wellness plans is yet more evidence that healthcare in America is facing change.

People are living longer, and aspire to live healthier longer. Thus, they are taking greater interest in their own well-being. But another driving force is that the impact of poor health among employees is hitting companies where it hurts: On the bottom line (due to both rising insurance premiums and employee downtime). So, some companies are offering performance-based incentives to workers who reduce their cholesterol, control blood pressure, and meet other quality-of-health targets.

Implications: While the focal point for many consumers right now is cost, healthy foods and habits continue to have gravitational pull. The advantage may go to those products which can demonstrate a proven correlation between their use and better health. After all, companies are rewarding their workers for outcomes, not just actions. Expect consumers to do the same, where “health-conscious” purchasing is concerned. A “claim” might buy you product trial. But it might take more—like actual results—to buy product loyalty.

Mike Anderson

There is no immunity in the C-suite

In an economy like this, nobody is exempt from the risk of unemployment, according to a recent story on CNBC. Including the CEO or VP.

There are a wide variety of reasons for changes at the top: Plummeting revenues, failure to adequately cut expenses, attractive single-swath payroll reductions, and that perennial favorite: Finding a scapegoat.

Implications: If you’re the chairman of a company, the over-supply of available talent might make this a good time to upgrade that leadership in your corner office. If you’re an employee, you might not need a job change to experience a changing job (and boss). If you’re a business-to-business sales rep, perhaps you should work deeper into every company you sell through; what a shame it is to lose “the one contact you had” within a major client.

Oh, and, if you’re a C- or VP-level executive… it might be smart to stay connected to old comrades, and keep your resume’ updated.

Mike Anderson

Breaking up is hard to do

The side effects of falling property values reveal some societal changes our grandparents could not have imagined. A recent story in the New York Times focused on a couple going through a divorce. Rather than fighting over who got the house, the issue was, “Who would be required to take the house!?” (Or more accurately, the houses.)

Implications: If you look at this story as a student of consumer behavior, this is interesting. If you consider it from the perspective of a divorce lawyer, you might see this story as an indication that the needs and expectations of your clientele are ever-changing; that your firm might be smart to transcend family law, and offer resources (internal or out-sourced) in bankruptcy law, real estate, and other areas.

Lots of consumers are experiencing change right now. In your attention to the obvious, don’t forget to notice the subtle or sublime. It might help if you step out of the office, and consider the issue from an entirely new point-of-view.

Mike Anderson

Think of it as Economic Natural Selection

I was once invited to stop and think about how many different variations of Chevrolet you can buy. Today, with all of the different models, colors, styles and options, there are literally thousands of combinations and permutations; your choices are virtually limitless (and some might say, “Utterly confusing”)!

But enough about cars… let’s talk about frozen pizza. Recently, I counted-off the floor tiles at my local “Everyday Low Price format” grocer... to learn they offered 84 linear feet of frozen pizza, showcased in a row of freezers that are eight feet tall. And while there were some mild price point variations—and a couple of distinctions between thick and thin crust—for the most part, it was dozens of different brands of virtually the same pepperoni, sausage or cheese flavors.

It all begs the question, “When is enough enough?” And the current recessionary economy could well demonstrate that the current “enough” is way too much. I don’t think of myself as a futurist, but this is a matter of cause and effect. A recent story in the New York Times makes a great case for the idea that in the future, car companies will be dramatically smaller… which has the likely effect of offering a smaller menu of vehicle options. Another story—a commentary published in Marketing Daily—suggests that the downturn will (or should) cause retailers to dial-down on the number of SKUs they offer, offering choices people really want, and sacrificing those products which are merely offered for the sake of creating an image for variety/selection.

And it’s not just products that could vanish from store shelves. The shelves, themselves, are likely to disappear in large numbers, according to a recent story from CNN/Money.

Implications: If you’re a packaged goods manufacturer, anticipate volatile (if not simply higher) prices for the real estate where your product is sold (the facings you receive at retail). Merchants are disenchanted with the idea of carrying products whose only distinction is a nuance… and which inspires purchases that could be called few or infrequent. You will need to offer more than a product. You’ll be increasingly expected to have ideas about how to help the retailer sell it.

If you’re a consumer (and you are), prepare for a future that could include with fewer choices, where unusual or unique products are concerned. (Again, I offer a range of options, not a set of predictions.) In fact, you might be heading for a return to the day when shopping required, well… shopping.

If you’re a retailer, you know that catering to the nuances of different consumers can be very expensive. It means you have to stock a lot of inventory… much of it interesting to only a few rare customers. As the recession makes reducing SKUs attractive, prepare to offer your customers alternatives to products they counted on you to offer. And consider what front-end (customer) services need enhancement… as a means of offering a fulfilling shopping experience amid sometimes diminished consumer choice.

Finally—and I think this goes for all of us—anticipate a roller-coaster of price fluctuations. On one hand, when supply (inventory) goes down, prices generally go up. But in a competitive environment—where so many producers and retailers are fighting for their very survival—it could be that prices get caught in the crossfire, and are forced to stay low.

We live in an economic ecosystem where not all products and purveyors will survive. It is ironic that choice is likely to be among the most obvious casualties… where economic “natural selection” is the driving force.

Mike Anderson

In with the old

Elsewhere in this blog, I've discussed the increasing propensity to repair instead of replace belongings, when doing so is an economical option. And here’s more evidence that “new” is getting old for many consumers: A story in last Sunday’s Minneapolis Star Tribune spoke of the success many used car dealerships are having right now. It is worth a read if you manufacture or sell any kind of durable goods.

Implications: If you sell durable goods, your biggest competitor may be the product you sold last year. “We can get by with the one we have now” might just be the most important thoughts and words—objections—you can teach your sales force to deal with in the near term.

Further, for as long as “pre-owned” or “now owned” demonstrates such gravitational pull, the front-end purchase experience and follow-up service and support you offer will be crucial. If the consumer sees little experiential distinction or value advantage between buying old on Craig’s List or buying new from you… cheap will carry the day.

Mike Anderson

Disposing of the disposable attitude

Remember taking your VCR to a service shop so it could be repaired after your kid shoved a Matchbox car into it? I do. (Okay, now I've dated myself, haven't I.) But until recently, except for their cars, most consumers probably can’t remember the last time they called a repair man or woman. Washing machine starting to rattle? Shop for a new one! Elements burnt-out on the toaster? Stop at Target!

That was all well and good in a world of Overwhelming Abundance. But when times are tough, expect “service and repair” to enjoy a renaissance, as consumers look for lean alternatives to spending more than necessary.

A recent story from MediaPost explained how Best Buy’s “Geek Squad” is taking advantage of this gravitation toward “repair versus replace”: A website calculator intended to help the customer decide which of the two would be most cost-effective. Simple. And brilliant.

Implications: Is yours a product that can be repaired? Do you offer factory- or factory-authorized services? Do you make consumers aware of these appreciated-more-than-ever options?

Designed obsolescence, once almost assumed, may be considered and avoided in the current economic climate. Ironically, cost-motivated consumers might not shop for the cheapest alternative… but rather, the alternative that is cheapest to own (due to durability and ease of repair).

Remember the term, “modular components?” They might be something to brag about again.

Mike Anderson

How to look away from a train wreck

In one way or another, we have all experienced scenes we thought shocking… and found ourselves tempted to take a second glance. You know what I mean. You’ve seen people “rubber-necking” or gawking on the highway. They make a conspicuous effort to resist the temptation to stare by only peeking quickly. But whether you call it innocent or morbid curiosity, a compelling force begs us to look.

Right now, the economy appears to be pretty much a train wreck, and people are having a difficult time looking away.

It is, perhaps rightfully, the focus of conversation, the headline in nearly every section of the newspaper, and the lead story on virtually all news channels and programs. But in accepting (finally) that a recession is underway, and now attempting to project its severity and length, many politicians, economists and other pundits are cautioning that at least some of the economic bad news could be called “a self-fulfilling prophecy.” (As an example, see this story from the New York Times, 12/8/08.)

Implications: It is good to be informed. But even things that are good for you can be toxic when consumed in ridiculous quantities.

There will be a time—it could be next month, next week, or this afternoon—when consumers say, “Enough already… I need a little good news.” The question is whether you, or your product, service or company… is in a position to be that bearer of good tidings. Does your service relieve stress? Does your product provide comfort? Does your organization exude a sense of optimism?

At some point, people (and companies) will drive just beyond incident on the highway they have slowed down to see. Something inside them will say, “That was a distraction, but I have to put that behind me because I have somewhere I have to be. And the only way I’m going to get there is if I look forward, keep my eyes on the road… and drive.”

Mike Anderson

You are(n't) what you drive

A few weeks ago, chief executives from the big three automakers went to Washington to ask for their share of bailout money. The $25 billion price tag was not the biggest target of pushback from Congress, the media, nor consumers. It was that the executives got to the meeting by private jet.

Almost overnight, the focal point of the conversation went from “financial crisis” to “out of touch.” And it made the three instant celebrities on a wide variety of blogs… including the Huffington Post.

People wanted to know whether the leadership of these companies really had a grip on the situation. All kinds of questions were flying around: Why should major corporations get billions in aid when families are scraping by? Wouldn’t it have been a nice gesture of their own fiscal restraint if they would have flown commercial (coach) like the rest of us, or even driven one of their own cars?

Implications: My intent is not to write about whether the big three should get aid. Sometime very soon, they probably will… and they probably should, for reasons I won’t go into here. The greater issue behind this story—the one you can use—is the reminder that a company (or its people) cannot simply Talk the Talk. They must Walk the Walk.

If you are asking employees to participate in cost reductions (cutbacks, layoffs, reduction in resources, or other attempts to increase output-per-person), has your leadership demonstrated its willingness to lead by example and share that burden? If you are asking the customer to accept a surcharge, or reduced hours or services, have you also explained steps the company will take to mitigate their inconvenience, and that you’ll return to “normal operations” as soon as possible?

That chief executives have been asking for help during this downturn is not the big story. That they initially expected that sacrifice to be one-sided is what turned into a public relations nightmare. In what ways can your company—or your department—avoid making that same mistake?

Mike Anderson

Banking on consumer confidence

To say that the banking industry has gone through some trials over the past year would be a gross understatement. But against this backdrop of turmoil, and recognizing that consumer opinions about banks and banking are shifting, a number of financial institutions are offering a message of strength, stability, security, and/or responsibility.

In a Wall Street Journal story last week (Banks Wage Rate War for Deposits, 11/14/08)—and in other trade coverage—we started to see evidence that banks were going after consumers’ savings and other deposits. The move makes a lot of sense, both because consumers’ are increasing resisting the temptation of indulging on purchasing (instead putting a few more dollars away, just in case), and because other sources of funding for financial institutions (such as interbank lending) remain somewhat stalled.

Another trend in the financial sector: Selling consumers on the idea that banking is still a good idea. In one example, Miami-based TotalBank is telling customers they can be confident in their local, community bank (see the Marketing Daily story from Monday 11/17/08).

Implications: Banking is one example of an industry that is deeply affected by the current economic climate, and I would argue that it is a matter of both cause and effect. The sector, in general, is arguably among the causes of the sub-prime and credit crisis… but it is also affected by that crisis. (Granted, there are innocent bystanders/institutions within the sector. But banking, overall, is facing some particularly delicate challenges where consumer opinion is concerned.) Consumers are asking: Is my bank safe? Is my bank trustworthy? Where should I put my money, in a world that has not been kind to my IRA, 401(k), or other investments?

Another shift that’s starting to surface: The tendency for people to exercise caution in spending, live within their means, and think about what they’ll do with the money they’re saving as a result.

Sun Trust started a new campaign, recently, focused on a return to responsibility… for consumers. Recognizing that people would increasingly prefer to be envied for spending wisely—rather than spending freely—the bank encourages people to “bank solid, with a solid bank.” (See details in a Marketing Daily story 11/18/08.)

Even if you’re not in the banking business, it might be smart to get into the business of rebuilding consumer confidence. And not just that people can be confident in your business… but also, helping consumers feel confident in themselves. Can you position your product or service as a more prudent alternative, compared to _________? Does your product or service offer attributes such as reliability, a warranty, or other security measures? Could your company offerings be seen as a long-term investment, as opposed to a short-term fix? These are comforting elements to a consumer who could use the assurance.

Mike Anderson

Pulling the cork on wine?

Rachel Litner of Rachel Litner Associates graciously submitted this observation to be explored by TrendLine: Some folks in Japan are pushing for wider distribution of wine, packaged in cans. Rachel came across the story at CScout/Japan… and the movement is actually the idea of Japan Rail. It seems that public consumption of alcohol is taboo; a notion they’d like to change. (Wine is purely for refined drinkers, right?)

Now, while the idea of wine in cans might be new to some, it has been done before (at least once, that we know of). Several years ago, the Niebaum-Coppola winery in California began marketing a sparkling wine called Sophia (named for the daughter of Francis Ford Coppola). See a 2004 MSNBC story on the product here.)

Implications: Granted, wine in cans isn't exactly commonplace. But the first several airplanes invented didn’t fly all that well, either.

If the packaging is proven to preserve the characteristics and flavor of the product inside, then why shouldn’t wine be offered in boxes, cans or cartons… if they meet the convenience and cost requirements of the consumer. Beer is sold in plastic bottles now, after all. Some wine snobs might think of the can as sacrilege, but if the masses embrace the beverage, who cares?

If you’d have told people in the 1920’s that someday, people would be served their dinner from a window in a driveway… they’d have scoffed. Has your company historically set-aside packaging options… whose time might now be right? Just because a package design (or marketing strategy) has not succeeded the first time out doesn’t mean the concept should be totally discarded. Perhaps it’s just that the consumer will accept no package design… before its’ time.

Mike Anderson

Unemployment, or OVER employment?

It’s easy to be worried about unemployment; it seems we are reminded of layoffs almost every day, either through news reports, or when we receive a note from an old friend or co-worker who’s been displaced. But there are other, perhaps less apparent byproducts to this recession.

Redeployment. The survivors of layoffs can often suffer dramatic increases in workload after their company has been “right-sized.” To make things worse, these folks often suffer from a form of Survivor’s Guilt.

Over-employment. Often, companies will reduce the hours of workers, in the hopes of avoiding (or reducing) the need for actual layoffs. Many people who’ve been cut from fulltime to part-time will seek additional part-time jobs, so as to maintain their income (lifestyle) until the world gets “back to normal.”

Hedgework. When people engage in a second job… in anticipation of future layoffs or job reductions.

Day-lighting. This is something like moonlighting, except that technology allows people to handle two jobs from one chair, “toggling back and forth” from one position to another. Read more about this observation in the most recent issue of the Iconoculture newsletter.

Implications: For years, marketers have coveted the cherished “two-income household,” assuming the target represented affluence. In the near term, you might consider adjusting your aim… to reach two-income people.

In an already time-sensitive household, can you imagine how busy these folks are? Do your products or services offer the promise of time savings that over-employed people might appreciate? And to address the obvious (but often un-noticed), is your company recruiting right now? There might be bargains out there, in terms of talent.

Mike Anderson