Net worth returns to that of early 1990s for many

Observation:   A story from the New York Times (NYTimes.com) explains that, according to the Fed, the financial meltdown of 2007-2009 cost the average American roughly two decades of prosperity; the typical household is revisiting a net worth that they haven’t seen since the early 1990s.  Click here to see that story.

Implications:  Perhaps we can expect the more careful, prudent spending that has followed the Great Recession to linger for quite a while… interrupted, perhaps, but the occasional indulgence that feels like a bit of a reward.

Are you still explaining the value behind the product or service you sell?  (And by value, I don’t just mean “cheap price.”  I’m talking about how your product, service and purchase experience add value to the consumer’s life.) 

This story has dramatic implications, also, for anyone in the financial planning or investment business.  A lot of re-building has yet to be done.  Are you messaging in a way that demonstrates how you can help?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Cheating via checkbook: Insights on Financial Infidelity

Observation:  A story in today’s Marketing Daily explains that many people in relationships have kept a financial secret from their spouse or significant other.  The article shares some fun insights, and you can read the full story by clicking here.

Implications:   Humans are fascinating people.  

Another example of financial infidelity that I’ve used over the years is when someone buys a ($500 golf club, laptop, or other) big-ticket item, and pays for it partially with cash, partially on the household bank card, and partially with a credit card.  It is, in effect, laundering the household money so that a purchase is not easily traced.  When one describes this dastardly behavior in front of a hundred people in a consumer trends workshop… it’s funny how many people in the audience start to blush!

The difficulties that many people went through a few years ago—and the slow recovery they have been experiencing since—have imposed new financial realities on a lot of households.  In what could only be called a cultural consumer shift, many folks have denied themselves the kind of indulgences that were commonplace in the pre-recession economy.  It only makes sense that eventually, people would become fatigued, act on the idea of pent-up demand, and move forward with some small (and some not-so-small) indulgences.  Even if their partner might not know about it.

Have you made a purchase, or stashed some cash, without telling your spouse or partner about it? 

Are your customers thinking about doing it as they walk through your business?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Millennials as the “unbanked” generation. (Could your category face the same fate?)

Observation:  A story from USA Today this morning builds on the body of opinion that banks are losing significant market share to check-cashing services, payday loan operations and other alternatives to traditional banking.  Click here to see the story.

Implications:   As one reviews the stories we’ve posted about banking at this site, this issue has become a frequent topic and an important focal point as the banking industry evolves.

What kinds of tools or services could banks offer to become more relevant to young adults?  While direct payroll deposit and online bill-pay services have become an important service to young adults… they’ve also reduced the face-time bankers used to get with these customers and prospects.  How could banks begin to re-build a personal relationship with their young customers?

By the way, the impact of this issue is not limited to banking.  More and more life tasks are either automated or performed online as time goes by (consider the way people research, shop and buy things like cars, plane tickets, music, personal electronics, etc.)  Is the product or service you sell subject to this same frustration within the next few years?  How will you respond?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Speaking of catering to the un-banked: Walmart.com has found a way to accept cash for online purchases

Observation:  As a follow-up to our story about banking earlier today (see immediately below), we were intrigued by this nugget from TechCrunch.  It explains that customers can “buy” items online at Walmart’s website, but then pay for that cart full of goods in-person at a Walmart store.  Click here to see the story.

Implications:   The TechCrunch story indicates that only around 15% of transactions in a Walmart store are paid for with a credit card.  If such a significant majority of purchases are paid with cash, it makes all the sense in the world to accept cash in the online channel of that store, too. 

Undoubtedly, there are folks reading this who are thinking, “This is nuts!  They’re forcing the consumer to physically visit a store to complete their online purchase!”  But undoubtedly, there are folks at Walmart who would answer, “That’s right.  And the problem is…?”

[Note:  Thanks to friend and colleague Matt Sunshine for tipping me off to the TechCrunch story.]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Financial: Banking on lower-income customers

Observation:  A recent story from the New York Times explains how some major banks are offering check cashing services, short-term loans and other services.  In addition to steep fees that allow the banks recapture revenue that was lost during post-recession banking reform, the services are often designed to help banks re-capture low-income consumers they had previously overlooked.   Click here to see the story.

Implications:   This blog has often referred to a cohort of consumers called, “the un-banked.”  Often, the people who fit into this group are simply younger consumers; those who might have an account or two with a bank, but who do not have a substantial relationship with their bank due to automatic deposit, automated or online bill paying services, etc.  (Perhaps it would be more accurate to say they have a bank, but not a bankER.) 

Another segment of the un-banked cohort was simply composed of lower-income consumers; those people who might not have the funds to invest in an IRA, money market or other investment account, those without the dollars to deposit in a significant savings instrument, and without the impressive credit history that stringent lending rules might require.  For years, banks were courting more affluent customers, and the un-banked were left to fend for their financial needs with check-cashing services and payday lenders.

It is worthwhile to note how times change.

Are there prospects and customers in your business that are being taken for granted as “secondary?”  Don’t get me wrong:  There is no rule against that, and I can make several arguments in favor of that.  But one might ask whether there is any scenario or shift that might alter the profile of your ideal target customer.  Are you continually talking with customers and monitoring industry trends so you can better anticipate such shifts?    

[Editor’s note:  For more on the un-banked, see these postings from July 2010, and April 2010.]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

De-leveraging process has made progress

Observation:  A story that will appear in tomorrow’s New York Times (available now at the NYTimes.com website) suggests that U.S. consumers and lenders have made tremendous progress in cutting debt.  A graphic illustrates just how far and fast credit liabilities and fallen, and the main story explains that while consumers deserve much of the credit for their self-imposed austerity, lenders, too, have speeded the process along with the amount debt that has been written off in the form of losses.  Click here to see the full story.

Implications:   During the recession of 12/2007 through 6/2009—or in the several months that followed—many pundits (and perhaps many families) wondered whether the U.S. economy could get out from under its considerable personal debt. 

It would appear that there is light at the end of that tunnel.  And that’s good, since the economy is fueled so heavily by consumer spending; spending that does not happen when consumers feel fear about their employment future or the pressure of outstanding debt.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Spring—and trends—give real estate sector reason to be optimistic

Observation:  An Associated Press story suggests that real estate prices have bottomed-out in many areas, started to climb in others, and that a hint of optimism is in the air for the category.  Click here to see the story as it appeared in the Dallas Morning News website.

Implications:   Housing influences so many things… from home furnishings to home improvements and repairs, and much, much more.  Even just some stability in prices could lead to stronger performance in a lot of categories.  Really glad to see this!

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Ally Bank gets behind financial literacy campaign

Observation:   I was struck by an article in today’s Marketing Daily explaining the elements of a financial literacy effort that’s been launched by Ally Bank.  Click here to see the story.

Implications:   Having had the chance to interview several banking executives over the past few years as part of our Industry Insights initiative, I know that one topic that is forefront to the banking industry is relatively sparse presence of young customers.  Here’s what I mean:

Younger customers, at worst, have learned to live and manage their finances without the (consistent) use of a traditional bank.  Banks are now competing with car dealerships for car loans, home improvement stores for home improvement loans, insurance companies and employers for long-term investment options, and check-cashing services and for those times when folks just want a little cash.  Competition is coming from everywhere.

Many younger customers, at best, have automated their banking relationship to the point where no real “relationship” actually exists.  They use direct deposit to manage their paychecks, automatic or online bill paying instead of writing checks, and ATMs as a place to grab a little cash.   The good news:  Banks have created a very cost-efficient operating model that requires little or no human intervention and overhead.  The bad news:  Banking service has become a commodity, rather than a relationship to be built on.

The reason I bring this up?  The Ally Bank effort must almost certainly be aimed at this millennial- and middle-aged consumer segment.  (At least for now, you’re not targeting seniors if you’re using Twitter.) 

Will the next generation of consumers use your company, products or services in the same way the last generation did?  What adjustments could you start making now, for consumers that have adjusted their habits when buying in your category?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The car comes first when it comes to paying bills

Observation:   An Associated Press story in today’s Minneapolis Star Tribune suggests consumers have re-prioritized the bills they pay.  The article is based on a study from TransUnion, and explains that while consumers used to pay their mortgage first, then the car loan and credit card bills… the vehicle loan has now taken the pole position over the mortgage payment.  Click here to see the story.

Implications:   There are lots of things going on in this story, in the form of lessons learned and adjustments made during the Great Recession.  First, the labor market placed a premium on transportation:  If you had a job, you needed reliable transportation to fulfill it.  If you were looking for a job, you desperately needed transportation to find it.  Even at risk of foreclosure, the car payment had to come first, because it is so directly connected to employment and thus, future prospects.

But coverage about the mortgage meltdown shed light on the whole foreclosure process, and trained many people that the “grace period” on a home loan might be more forgiving than a car loan.  The repossession process on a vehicle moves much more quickly than the foreclosure process on a home.

More than anything, this story does a great job of illustrating “Reconciliation,” the idea that after 19 months of recession—and the 32 months of recovery that have happened since—consumers have adjusted their financial behaviors to reflect their new collection of economic realities.  That’s a very personal process… and might look quite different from one home to another.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A by-product of bank stress tests: Stressful PR?

Observation:   A story from today’s New York Times explains how banks fared during the most recent round of Federal Reserve stress tests.  This systemic scrutiny was created after the banking collapse of the Great Recession, as a way to determine whether major banks were solid enough to survive another dramatic economic downturn or other difficult events.  According to the NY Times article, 15 of 19 major banks are in strong condition.  Click here to see the story.

Implications:   Think about this.  When you see a headline that indicates, “15 of 19 banks are solid,” I can’t be the only person who’s first thought is:  Who flunked?  Who’s in trouble?  Who are the four kids that had to stay after school?! 

Stories like this remind us that, just a few years ago, we were hearing many institutions described as, “too big to fail.”  And it might represent an opportunity for smaller, more local/regional institutions to present a more human side to the financial industry.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

This time, it’s different: Wells Fargo to end free checking (for some)

Observation:   Last week, a report from the Associated Press explained that Wells Fargo will roll-out a $7 monthly fee for checking accounts that were previously free… unless customers maintain a $1,500 minimum balance, or direct deposit at least $500 per month.  Click here to see the story as it appeared in Crain’s New York.

The fees will roll-out gradually beginning in May, and beginning with six states, according to this story from KSTP News in Minneapolis. 

Eventually, the rate will be in place in each of the 39 states that Wells Fargo serves.

Implications:   So why has Wells Fargo avoided the outcry of unfairness that was cast on Bank of America a few months back when they tried the same move?  I suspect it’s because Wells Fargo did a better job of explaining that the move would not affect customers across-the-board, but that it would impact folks who don’t do much business with the bank anyway.  It seems to me that Wells Fargo is thinning the customer herd.

In the story, one critic complain that the bank is being unfair to folks who are unemployed or on low fixed incomes, but I’m not sure they’re being any less fair than any business that expects to be paid for products received or services rendered.  (Most companies target consumers with incomes.)  Another critic warns that Wells Fargo will lose much more in the way of customers who walk away than from the income these new fees will generate.  I’m betting the folks at Wells Fargo have calculated that trade-off, and are at peace with their decision.

Many companies focus on customers they wish they could have.  But have you thought about those customers that could actually be costing you more than they are likely to be worth, in terms of economic return?  

In the face of rising energy and commodity costs, is it likely that you will have to raise prices on some products or services in the next few months or years?  What can you learn from the way that Wells Fargo has introduced—essentially—a price hike?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Targeting the mass affluent

Observation:   A story from yesterday’s New York Times explains how some financial institutions have turned their attention to consumers who seem to be doing well, but may not fit the description of super-rich.  Click here to see the story.

Implications:   In our on-location “Consumer DNA” workshops, we often use qualitative research to demonstrate that there are far more “emerging investors” available to most business communities than there are “blue chip investors.”  The latter group is composed of people with at least a six figure income who pay for the counsel of a financial planner, accountant or stock broker; the former group—the emerging set—is composed of people with an above-average income but who are NOT receiving the guidance of a paid professional.

Everyone wants to sell stuff to rich people.  But opportunities exist when you reach for the folks who are not quite rich, but might be on their way.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumers showing their age, report says

Observation:   Today’s Research Brief suggests that younger consumers are less likely to satisfy their service and repair needs through the conventional auto dealership service department.  Click here to see the story.

Implications:  I’ve heard similar groans coming from other categories.  Some furniture retailers and manufacturers indicate that younger consumers don’t want “rooms” full of furniture, but are more likely to buy piece-by-piece, and seek utilitarian furniture that serves more than one purpose.  Some banks have noticed a trend toward the automated customer; younger folks who automatically deposit their paychecks and then use a bill-pay system to cover their bills… making it very difficult to grow the number of highly coveted “services per household” that are a bank’s profit point.

How are younger consumers different from those you’ve served for years?  Are you responding?  Are they?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Almost 1 in 10 changed banks last year

Observation:   A recent story from USA Today suggests that 9.6% of consumers opened an account elsewhere in response to a rate increase from their current bank.  The article is based on a J.D. Power report, and you can see the full story by clicking here.

Implications:   Lots of banks are trying to figure out how to regain some of the revenue they lost during the banking reform era that walked lock-step with the Great Recession.  Many are taking flight to smaller institutions, but that begs the question: When will smaller banks be forced to make some of the very same moves?

This is an important study in marketing communication.  I’ve interviewed hundreds of consumers over the past few years, and a significant number—when prompted—admitted that an ATM card, online banking, and other services are well worth paying a few bucks for the value received.  The challenge, I’m guessing, is that too many banks simply imposed the fees, without properly explaining why they were necessary and why the relationship still represented a good value for the consumer.

Every company if faced with the need to raise prices at one time or another.  The importance of good listening is an important lessons to learn now, lest we (like the big banks) be forced to learn the hard way.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumer credit grows (a testament to increasing confidence?)

Observation:  A recent story from Bloomberg suggests that consumers may be feeling more confident about their future prospects, and therefore more comfortable with the idea of borrowing money.  Click here to see that story.

To see an interactive chart about credit trends, click here.

Implications:  If you sell big-ticket items—or loans—this is great news for your category.  Have you planned a messaging strategy that speaks to this increasing confidence (or at least, a greater willingness to borrow)?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Bank loyalty higher than thought, according to survey

Observation:  A survey conducted by TD Bank indicates that more people are loyal to their bank than wide-spread negative press might lead one to believe.  That’s according to a story in today’s Marketing Daily (click here to see it).

Implications:   This is positive news for people in the financial industry… but I bet the satisfaction level varies widely from one institution to another, depending on the extent to which a bank nurtures their relationship and refines their service to customers.

Like many consumers, my wife and I are satisfied with our primary bank due to the fact that we seldom come into contact with it, directly.  With direct deposit, automated bill pay and online services, it is rare that we actually talk with a human or walk into a bank branch. 

If the relationship that your company, product or service has with consumers is similarly automated, in what ways might you maintain an element of contact or communication with customers that is truly valued and appreciated?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Deciding where credit is due

Observation:  If it did anything at all, the Great Recession exposed flaws in the way both lenders and consumers decide how much debt they can handle.  Well, it seems that one consortium is about to expand the scope of financial behaviors that are scrutinized in the act of building a credit report.  Click here to see that story, which appeared in a recent issue of the New York Times.

Implications:   It has been suggested that many consumers have been working to shore-up their financial affairs, and be more careful with credit.  It would appear that lenders, too, will have better tools to gage their credit practices.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The impact of those who aren’t leaving the nest… on Mom, Dad, and the economy

Observation:   It turns out that when college grads return home instead of striking off on their own, it’s not just Mom and Dad’s bottom line that feels the effect.  Stalled starts are impacting the overall economy, according to this summary from today’s New York Times (click to link).

Implications:   When it comes to college grads who are returning home, or other adult offspring that never left, or boomerangs who’ve returned to the safety net of their parents after a job loss… what kinds of marketing opportunities might surface? 

From apparel that helps provide confidence for the job interview to the furniture store that can provide smaller furnishings for a more crowded house, or even the bank that can provide a plan to stash-away savings for the day when a son or daughter ultimately moves out on their own…

There are still opportunities in a world where folks don’t move away from home as early as they used to.  The opportunities just look different.  One example:  The new "age of acquisition" consumer might not be 18-34, but instead, the baby boomer, as they increasingly fund the needs of their adult children.  An example of those expenditures is found in this story from Engage:  Boomers (click to link).

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

While debit card fees have fallen (for now), many banks look to other revenue (fee) alternatives

Observation:  A recent story from the New York Times explains that while the debit-card fee battle may be finished for now, the relationship modifications between banks and consumers may be far from over.  Click here to see the story.

Implications:    I’m not convinced that consumer’s reaction to debit card fee increases was about the expense of it… or simply the shock of it.  Would consumers have tolerated a charge of $2 per month now, and slight increases every year or two until the bank reached an amount they could be happy with?  If they had marketed the reasons behind the change a little bit better, would more customers have been upset but accepting?

Some of these other new fees will give us clues about what might work, as consumers either protest or begrudgingly accept them.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Bank of America drops debit card fee

Observation:  Over the past few weeks, I’ve written on a couple of occasions about the banking industry’s effort to recoup revenues that were lost because of the new regulations that followed the financial meltdown of 2007-2009.  (See “Is your bank worth $5 a month” from 10/14, and “Banks prepare for a showdown” from 10/31.)  Well, a funny thing happened on my way to the airport this morning:  My smartphone flashed with a news release that gives the story a new twist.

According to a breaking news report from the Washington Post (released just moments ago), Bank of America will drop their policy of a $5 service fee for using the bank’s debit card services.  Click here to see the story.

Implications:   From banking to Netflix to New Coke.  Sometimes, the best way to prove the value of consumer research is to not do it... or not do it well.

Planning any changes?  Have you received input from your most valuable stakeholders? 


I wonder if these more customer-friendly positions will gain favor and forgiveness from consumers... or whether this will simply whet the appetite and aid the momentum of consumers (not just those behind Occupy Wall Street and similar groups).  Is the opportunity for smaller, local/regional banks and credit unions thwarted by this move... or simply dramatized by it?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.