I bet everyone will agree that we are in a significant economic downturn. Consumer confidence is hitting all time lows. Their net worth is declining. Their costs are increasing. They are buying less and they’re focusing on what they need instead of what they want.
This is a problem for marketers. How do you create demand when your core constituent is running for cover?
I see most marketers doing the same thing that they’ve always done – looking to the past to find solutions for now and the future. Most of them are using ideas from the last millennium to try and solve problems of today.
No wonder they’re struggling. It’s like using an analgesic (an expired one at that) to treat a patient with terminal disease.
They are trying all they can to entice customers – using the same old and tired tactics and methods – rebates, promotions, low-price offers, blow-out sales, etc., etc., etc.
If numbers are a judge, this prescription doesn’t seem to be working. Results are mostly disappointing. Why is this?
Let me offer an explanation and solution.
The times have changed. Consumers have changed. It is no longer enough to get consumers to believe you have the lowest price or the most aggressive deals or that you’re willing to give it away… because everyone else is too. Given the environment, they’re just not willing to buy what they don’t need. That said, they’re not going to buy just because it is cheaper. There is an Eastern saying “if the horse isn’t thirsty you can sweeten the water all you want, it still won’t drink,” that is the business situation today.
To make consumers consider your proposition, you need to give them a compelling reason to buy and equally important, you have to give them a compelling reason to stay. These reasons have to be more than a sale or price-offs.
I’m sure you are saying, “sounds feasible but how do I do this?”
First, you need very good information — knowledge and insight into your customer base. And you need information that has the predictive power to minimize decisional risk. You can get this from creative use of transactional and behavioral data and combine it with attitudinal research among your core audience.
Second you need to use this information in conjunction with the overall environmental factors to find and solve some of the most critical pain points that exist for your customers. I am talking a real tangible proposition that is meaningful and not just generic marketing claims.
If you can do this, you will be surprised to discover that in addition to driving loyalty among your core customer group, this same solution will work to attract a large group of your competitor’s customers to your franchise.
Does this sound too good to be true? Here’s how it can work:
Say you are marketing a car brand. You have data on customers that have bought a car from you a few years ago. You know they only get 20 miles per gallon and spend $$$ on maintenance a year. Your 2008 model cars are more fuel efficient and require low maintenance compared to the older model. Instead of only offering $$$’s off as rebates, you can use part of this money to provide a clear proposition that makes upgrading to a new car a beneficial proposition. If you own a 2004 or earlier model of car, buy this 2008 model. With this new car, you can save $$$ on gas cost per year and with zero maintenance and a low monthly lease payment, you are making a better financial decision.
Say you are a property and casualty insurer. And, say you want to increase your footprint in the home insurance market. Based on your data you can identify customers that have not had any claims, they take care of their homes and are likely to stay there for a while. Because of this they are very profitable customers but possibly vulnerable. What if you mailed them a check to invest in their homes? Would this make them more loyal? Would this be compelling for others? When was the last time an insurance company sent you a check?
Let’s consider another example. Say you are a wireless phone company. You have data on your customer usage of the various services. Based on this data you will see a group of customers who don’t use what they pay for. They buy 1,000 minutes but only use 600. What if you sent a note telling the customer that based on their usage, you are either willing to reduce their monthly charge or they can apply the difference to other services. Experience shows that most of the customers will apply it to other services and their loyalty and spend with you will increase.
There are a large number of examples on how you can use the transactional and behavioral data that exists in the bowels of every organization. Marry this with pure human insight to solve real consumer problems. By providing your customers with real solutions that are relevant to them and their needs, you can acquire and retain more customers more profitably. And, build stronger, deeper and more meaningful loyal relationship with your brand.
Given the economic environment and the increasing competitive clutter, what would you rather do? Use the old, commoditized tactics from the last millennium or the new scientific approach to fulfill your customer needs in a highly differentiated manner?
The choice is yours. Make it wisely.