Customer values and intentions have changed as business leaders shift from trying to get back to the way things were before the recession to taking the turn to a future based on they way things are now. One of the funny things that has happened on the way to the turn is the changing nature of customers, their values and intentions. Customers are expanding their sense of value beyond tradeoffs between price and performance.
Customers have always be sensitive to factors other than the stated price in making their purchasing decisions. Issues related to brand value, convenience, self image and others have figured in customer choices. But the nature of customers and their values have changed and recognizing these changes are critical to successfully navigating in the new economy.
- Customers will remember the recession
- Customers think differently than we assumed
- Customers value the sustainability of the ecosystem
- Customers are no longer isolated in the mass market
- Customers are not created equal
Here is a brief description of each of these factors.
Customers will remember the recession. They will remember their personal experiences as well as the experiences of their family, friends and community. The speed at which conspicuous consumption was replaced with fear, austerity and in many cases economic failure will sit deep in the minds of customers. They need to be sure that your offering is more than a ‘good deal’ before they will buy. The customer with a memory needs to know the value they expect and be able to see how that value fits their needs. Your offer needs to be consistent with that experience because even though its a great deal, if I do not need it, then there is no reason for me to buy it.
Customers think differently than we once assumed. The guys on the Cable TV Show Mad Men may have created the mass market, but brain science is uncovering more about how people make decisions which turns out to be anything but totally rational. Predictably Irrational and The Upside of Irrationality from Daniel Airely and How We Decide by Jonah Lehrer are books that highlight a new understanding of customers, their behaviors and how they make choices. These books are highly recommended to understand the new science behind choice and value.
Customers value the sustainability of the ecosystem. Their values extending beyond the product to the ecosystem used to create and use the product. Sustainability is a fast rising customer value across all customer segments. Sustainability refers to many things including environmental impact, economic impact (fair trade), resource consumption, among other concerns. Sustainability issues extend from individual packets of cream cheese that are created using renewable energy to requirements for product recycling. Your offer needs to do more than just its function, it has to support more than your profits.
Customers are no longer isolated in a mass market. That may sound like a contradiction but its perhaps the longest lasting change as the economy takes the turn. You see prior to the recession we thought about customers in segments and markets. Bucketing customers into consistent groups made sense when we worked in a mass market. But as I have commented elsewhere, markets are fracking into smaller and more fluid subsets. Driven by social media which amplifies personal experience and self identity, markets are no longer isolated from each other. They can meet other customers, prospects and influences outside of your branded experience or marketing messages even across time. While much as already been written about sites consumer recommendation sites like Yelp, Craig’s List and others. Customer recommendations are everywhere and research indicates that a majority of customers look at web based recommendations before making a purchase.
Customers are not created equal. That was an implicit assumption in the world before the Global Financial Crisis where mortgage debt and speculation gave everyone the potential to become a high spender and your best customer. The implosion of real estate prices and credit availability have created a customer cast system ranging from the ‘untouchables’ who are digging their way out of debt or economic difficulty to ‘Brahmins’ who have cash and resources and are largely sitting on the sidelines. It is critical to note that your ‘customer cast’ is important as those with resources are more likely to be sensitive to the trends mentioned above.
Executives looking to take the turn will face many challenges, from the changing nature of markets to the changing values and behaviors of customers. Recognizing these differences is critical to your success in the future.
You need to know who your customer is, because in the economy today the adage goes ‘if you have met one customer, then you have met one customer.” It is no longer acceptable to assume that we are all the same or that we care about the same things in the same way.