Understanding the new consumer dynamic (CD) is critical to your company’s future success. Simply explained, CD is the ongoing process of building and maintaining relationships through the exchange of information between your organization and it’s customer. This exchange of information is simplified with the word communication. Not surprisingly, media plays an important role in consumer dynamics.
Communication through media today vastly different than ever before. The relationships between a company and customer was once defined by a one-way communication model. Today, CD’s are formed by two-way communication platforms. This seemingly simple shift from one-way to two-way communication has profound changes in the way consumers and organizations build relationships. For the rest of this article, I’ll expand on the three ways (Transparency, Abundance, Attention) today’s world has changed the consumer dynamic.
Transparency is one of the most common words of the social era. It’s very usage hints of an inescapable irony – that business wasn’t transparent before. Marketers and sales people forced to twist the truth and sell what’s available today had Herb Tarlek to worship as their patron saint. Companies like Enron, Bernie Madoff and Lehman Brothers proved that while it was profitable to lie, lying is not a sustainable business strategy. Slapping a label like “organic” or “green” is more a trendy idea than a claim of substance. So here’s the rub. Customers know the truth.
With nearly unlimited access to crowd-sourced information online, consumers are able to find truth in seconds. Transparency is becoming the table stakes of new successful business models. Consumer demand for transparency is creating opportunity for businesses to become more open.
Evidence of this exists in several cultural and business shifts. In the slow food movement, consumers choose local foods with an easily identifiable source. In business management there is growing evidence of long-term success with companies like Semco and open-book management or Gore-Tex who democratize innovation using dabble time. In business marketing, we don’t have to look farther than 2012’s marketer of the year – McDonalds and their radically transparent – Our Food. Your Questions. campaign. In terms of business products, we can learn a lot from choosing to run transparent and open businesses that co-create value with both external customers. Interesting companies in this space include 99Designs, Linux, Wikipedia, TEDx talks and Google. In each case, these transparent business models are disrupting their old-school closed-model counterparts.
Transparency and openness may very well prove to be the ammunition that helps David defeat Goliath.
Today, consumers have more choice than ever before. In the 1970s, the average supermarket carried just under 10,000 SKUs. In 2010, the average supermarket carries four times as many products. This pattern of abundance exists in nearly every industry. B2B and B2C markets are both affected. An abundance of choice means that the decisions your customers face have become more confusing.
The impact of abundance is twofold. First, a business can no longer be all things to all people. There is far too much competition for this strategy to work any longer. The best way to succeed in business today is to self-select your preferred customer now. Sacrifice the less desirable customers before your competition makes this choice for you. The second major impact of abundance is decreased customer satisfaction. It turns out that increasing the amount of choice decreases the pleasure a customer has with their choice. Knowing there were multiple options to choose from, any minor dissatisfaction can lead to buyer regret.
The antidote for abundance is branding. By branding I don’t mean getting your message out there. I mean sustaining a feeling of delight in your customer’s heart.
Branding is an ongoing process of aligning your company promise and designed delightful consumer experience with a customer’s feeling about you. This is where the feedback loop of today’s communication platforms become critical. In a recent study by Bain & Company, 80% of companies surveyed said they deliver a great customer experience. This is where the old world of branding would have stopped. In the second part of this study, researchers asked customers of these companies how the experience was for them. Only 8% agreed. In today’s world we have direct access to our customers. We can use this new definition of branding to bridge this gap and really differentiate from competitors through incredible customer experiences. If you brand correctly, your customers will help you differentiate from competition.
In years gone by, attention was a commodity. With relatively little competition, companies could stand out and get attention by buying ads. As competition increased so too did the ad frequency, size and volume. In today’s world of abundant advertising, there is a clear and growing distinction between signal and noise. The more truthful the information (value), the more signal it has against the background of noise created by bad and loud advertising. The average consumer is exposed to 5,000 ads per day and has a shrinking attention span that compares to a goldfish, 8 seconds. This means that your company isn’t just competing for share of voice against your industry. You’re also competing for share of attention against every advertiser. In today’s world, attention is no longer a commodity, it is the new currency.
The key to earning attention is relevancy. To gain relevance, you’ll need to empathize with your customer. You need to understand what they want. You’ll need to listen to what’s important to them. While consumers may not always know how to verbalize what they want, you can watch their behaviour to make educated guesses about what they really need.
I recently interviewed Jonathan Wolske, Zappos Culture Evangelist and asked him about this topic. Jonathan told me a short story about Zappos’ secret weapon to getting customer’s attention. He called it creating WOW customer experiences by … listening. The story went something like this:
A customer called the Zappos customer service team to exchange a pair of shoes he’d bought online. The customer service agent did a their job of processing the exchange which typically would have taken a couple days to replace. However, the customer service person did something else that really WOWed the customer. They actually listened.
The customer service person realized this exchange wasn’t just any pair of shoes. They were a pair of football cleats for the customer’s kid. The customer’s kid was starting football tryouts in 2 days which required the cleats. Without needing permission, the customer service person overnighted the replacement shoes. The customer was blown away by Zappos’ responsiveness. Zappos got his attention and likely the attention of all his friends as he retold that story to all the other parents on his kids football team.
What is your opinion? Do you think there are other ways the consumer dynamic is changing?