Understanding the new consumer
There are two types of customers. One group is a bunch of people driven by price, motivated by a deal, unhappy about change, but excited by features and function.
The rest are turned on by the internet, quality, a great experience, design beauty, new challenges, rich information, a social conscience and the path less travelled.
Not surprisingly the first lot are Traditionals and the others are known as belonging to the new economic order (NEOs). This latter group get their economic credentials because they spend more than anyone else and they consume more frequently than anyone else. An economic powerhouse, these four million Australians account for the majority of all discretionary spending.
Managers intuitively understand Traditionals. But these valuable NEOs, covering as they do all demographics, are harder to get a bead on. But given that they are the potential leaders in the workplace and the most valuable consumers in the economy, get a bead on them we must.
In a special SmartCompany series of must-do, must-understand trends, we explore the do’s and don’ts of the new economy.
Tomorrow: Get personal or get out of business.
Individuality is power
The new economic order trusts other people and small business. They don’t trust media, big business, governments or politicians.
NEOs insist on individuality. They don’t trust large institutions that treat them as part of a large group or market segment, and it is this independence that makes them powerful.
Research in both the US and Australia shows that trust in large institutions is at a record low.
This is a fact of life in a changing world and NEOs are at the forefront of that shift.
You need to consider how important trust is in your business model. If you are in business for Traditionals, trust is less important because they have low confidence that they can influence how you deal with them. If, on the other hand, you are targeting NEOs, the role of trust in your business is an issue.
Organising NEOs, individuals with essentially different views on individual issues such as trust and corporate power, is a little like herding cats … they won’t automatically go where you want them to and certainly not as a group. NEOs draw their strength and influence not from the power of behaving in a bloc, but rather from the millions of small decisions they make for themselves.
Traditionals are much more likely to be patient with large institutions because they accept the institutional ideals and really don’t feel there’s much they can do about it anyway.
Because for decades most businesses have dealt only with Traditionals, they don’t easily grasp the concept of individuality, or for that matter personalisation, either in the way they deal with their employees or in their relationship with customers.
Most businesses still talk in mass marketing terms; the conventional language of targeting customers, selling to consumers, data mining, transactional analytics and customising products for particular markets.
For instance, airlines around the world believed they were entering the new world of customer management by calling their passengers “customers”. This was a tactic that cemented the transactional nature of the relationship between a corporation and those who, in their view, make up the market. But if airlines had recognised they were major players in the world of hospitality rather than in the transport industry, they would have understood the important relationship that exists between host and individual guest.
Take your average call centre. Even with sophisticated software to capture and track calls from a particular customer, they predominantly treat all customers alike. Think about the last time you called an airline, or a bank or telephone company. Chances are that you were automatically lumped in the queue with everyone else. This kind of behaviour is acceptable to Traditionals who are used to being treated as part of a mass market, but it fails to satisfy NEOs’ need to be treated as an individual.
The acid test: did you just grumble and bear it? Then the odds are that you’re a Traditional. Or did you grumble and start making plans to move to a new business that understands you? In which case you’re probably a NEO.
Dos and Don’ts for INDIVIDUALITY
DO revise the wording of all your sales and marketing materials to eliminate any references to global corporate reach and range.
DON’T send customers promotional material that isn’t focused on their individual needs and interests. For example, don’t spend money on promotional pieces that boast good corporate citizenship.
DON’T assume that your current frequent-buyer programs are creating loyalty. Unless your rewards allow individual flexibility, NEOs will dismiss the benefits you offer as inadequate compensation for being “stapled” to your business.
DON’T assume that because NEOs are accepting low personal service levels from you that they are satisfied. If they find a supplier of a similar product or service who really treats them like an individual they will move their business immediately to gain the improved experience.
DO think of your relationship with NEOs as one of hosting individual guests rather than supplying a group of anonymous customers with what you would like to offer.
DO change your sales and service interactions to reduce the perception that a NEO dealing with you is “just a number”. For example, never ask them for their account number unless you can also use their name in the same interaction.
DO prepare a business case for connecting NEOs with call centre personnel who are “just like them” and processes that allow them individual flexibility.
DON’T use scripts in call centres dedicated to NEOs. Discover and solve their problems as if they are friends and design and conduct customer tests for a NEO’s propensity to pay a higher price and a high margin for this level of service.
DO explore internet-only offerings for NEOs. They have a high level of comfort with this form of business relationship.
Traditionals are 50% of the population (eight million adults) but account for only 23% of all discretionary spending.
NEOs are 24% of the population (four million adults) but account for 54% of all discretionary spending.
Ross Honeywill ([email protected]) is co-founder of the privately funded consumer think-tank, the Centre for Customer Strategy, is an adviser to global brands and is co-author of NEO Power: how the new economic order is changing the way we live work and play (Scribe, Oct 2006).