Preparing for the post-recession consumer 

The recession has had a profound effect on the consumer. While the pre-recession consumer was willing to experiment with new gadgets and pay extra for socially conscious consumption, today’s customers are playing it safe and clipping coupons.

But what about after the recession? Paul Flatters and Michael Willmott of Trajectory, a consumer trends forecasting consultancy, have identified existing trends that will be substantially affected by the recession:

Demand for simplicity. Even prior to the recession, consumers were feeling overwhelmed by the profusion of choices and were starting to simplify. The recession is accelerating this maturing trend, and it’s expected that consumers will continue to buy simpler offerings with the greatest value through the recovery and well into the long term. Fewer choices, developing a trusted brand and encouraging word of mouth will best position companies for after the recovery.

Discretionary thrift. Some consumers have no choice but to be thrifty, but many affluent consumers are economizing as well. Affluent consumers are recycling more and even buying used goods as they desire a more wholesome and less wasteful life. Recoveries typically unleash pent-up demand, but the researchers believe the buying spree will be less extravagant than in the past as consumers continue to find personal and practical satisfaction in being thrifty.

Green consumerism. Environmentalism is by now deeply rooted in the consumer mind-set. Green offerings may struggle in recessions as consumers bypass expensive eco-products, but they’re ramping up cheap and discreet methods of reducing waste — switching off lights, recycling more and buying less. All forms of green consumerism should recover and accelerate post-recession.

Ethical consumerism. Fair-trade products, locally sourced produce and eggs laid by cage-free hens are often expensive compared with traditional alternatives. What’s more, ethical consumption, although it intersects with green consumption, is less embedded with consumer culture and less convincingly linked with self-interest. Expect ethical consumerism to take a backseat during the recession and rebound only slowly at first after the recovery.

Extreme experience seeking. The desire to accumulate experiences in addition to material possessions, especially leisure and extreme experiences, gained footing before the recession. Now, exotic experiences that are expensive, frivolous or risky are suffering from a recession-driven mood of seriousness and responsibility. Part of the appeal of extreme experiences is that people feel it differentiates them, but conspicuous consumption is out of favor and, as the simplicity and discretionary thrift trends suggest, is unlikely to rebound soon. 

Source: Harvard Business Review, July-August 2009 

Advertisers, consumers disagree on ads 

What makes for an effective ad? It depends on who you ask. Though advertisers and consumers agree that amusing ads are effective — and scary, guilt-inducing ads are not — they don’t see eye-to-eye on the efficacy of other advertising appeals according to a LinkedIn Research Network/Harris Poll.
 
While more than half of advertisers believe ads that make people stop and think (53%) or give people new information (51%) are very effective, just three in 10 consumers (30% and 29%, respectively) feel the same. And when it comes to ads that show before/after, 24% of advertisers say they are very effective versus only 13% of consumers.

What about addressing the economic crisis? Three in five advertisers (61%) say they are using a value proposition strategy, promoting sales, coupons and discounts. Almost three in five consumers (57%) say that this strategy is working very well or well to help them sell their products or services.

Two in five advertisers (39%) are using empathy approaches, attempting to convey that companies understand what consumers are going through. But only 24% of consumers say empathy works very or somewhat well, and 33% say it does not work at all.

Though only 18% of advertisers say they are using the “luxuries for less” proposition, 34% of consumers say these types of ads work very well or well in selling products or services

Source: MarketingVOX.com, July 27, 2009 

Virtual work results in more conflicts 

Virtual work arrangements are thought to save companies a lot of money; however, there can be unintended costs. According to a new study by VitalSmarts and the authors of Crucial Conversations, distance in the workplace does more harm than good.

Researchers found that 13 out of 14 common workplace relationship problems occur far more frequently within virtual teams, in which members are scattered across various geographies, than within teams located in the same building. The survey revealed that problems with remote colleagues are significantly more difficult to resolve and last longer than with onsite colleagues.

When people face challenges with a remote colleague, they either resort to silence or other passive coping strategies (not returning their calls or email messages, leaving them out of important decisions or avoiding them altogether) or they may verbally attack them (criticizing, dissuading others from working with them, gossiping or complaining to others or vengefully challenging the colleague’s decisions).

Avoid potential conflict by investing time up front talking about how the team will work together and setting ground rules for airing future concerns. Praise virtual team members publicly (in conference calls or emails), but raise individual concerns privately.   

Source: Workplacemag.com, August 18, 2009  

Credit card debt predicts startup failure

Startups that lean too much on credit cards are more likely to fail, according to a new report from the Kauffman Foundation. The study found that every $1,000 of credit card debt increases the probability that a new firm will close by 2.2%.

Researcher Robert Scott examined 5,000 businesses started in 2004 and tracked their progress through 2006. About 58% of these firms used credit cards to fund their business in the first year, and nearly one-third of those carried a revolving balance. The average debt for those companies with outstanding balances in 2004 was $11,000.

Most of the firms in the sample (59%) had no employees when they were founded, and only 18% had three or more employees. Therefore, it’s likely that many of the owners of these microbusinesses had their personal credit intertwined with their business finances.

The report notes that “with the recent contraction of credit markets, many new businesses will face difficulties in accessing traditional forms of credit, which likely will create greater demand for credit cards.” Currently, the top small business lenders are credit card issuers.  

Source: BusinessWeek.com, August 6, 2009 

• When selling solutions, your questions say more about you than your answers. One of the best questions to ask is “How do you know that is the problem?” Why? The best salespeople resist the urge to talk about what they will do until they understand how the client identified the problem. Most clients respect the honest skeptic. Once you accept a client’s assertion of any problem at face value, you’ve elected to place the sale above the need to solve the right problem. Asking this question will also help you develop a more accurate diagnosis.

Source: www.guerrillaconsulting.com

• Employee feedback should not always be delivered immediately. If an employee did a good job and is celebrating success, don’t rush to explain what could have been done better. Even a well-intentioned comment can destroy a sense of accomplishment in the moment. Provide feedback later, perhaps just before the person takes on a similar task again.

Source: Manager’s Edge, 1101 King St., Ste. 110, Alexandria, VA 22314

• Your list of fans who have given you permission to email them is one of your most powerful marketing tools. Gather more email addresses offline with these ideas: Ask for customers’ email addresses on receipts, just below the signature line. They just made a purchase and have a pen in hand so the timing is ideal. Also consider invoices and comment cards. Display a guest book and collect email addresses there. Or make it easy for customers to drop their business card (with email address) in a bowl near the register. Include a small sign that explains what you’ll be doing with their email address to build trust.

Source: www.damniwish.com

• If a salesperson shares a birthday or birthplace with a customer, they’re more likely to make a purchase and feel good about it, according to a new study in the Journal of Consumer Research. Revealing personal information helps service providers create connections and initiate conversations with customers. When information is provided on nametags (as Disney does with employees’ hometowns) or on websites (as many health organizations and fitness centers do), most customers react positively. Of course, faking a connection is a risky tactic that can backfire on the salesperson.

Source: www.sciencedaily.com

• Generate publicity by sponsoring an award competition. It’s a great way to create positive attention for your business and is much more likely to be covered by local media than a typical press release. For example, if you own a bookstore, you could sponsor a local essay competition among high school students with a $500 award for college tuition.

Source: www.nfib.com

• Read the indemnity provisions before signing a contract. Broadly speaking, indemnity provisions deal with the duty to make good on any loss or damage another person (usually the other party to the contract) has incurred as a result of your deal. For example, you might want to be indemnified if an outside computer support guy erases your hard drive without your permission. As a general rule, a service provider doesn’t want to indemnify someone for things beyond their control. But disclaimers can sometimes go too far, such as when they disclaim liability for negligence or even gross negligence. In this case, the other party is telling you that the level of performance they want to be held legally accountable for is very, very low. In those situations, you might want to carve out a standard of performance tied to “professional standards,” which represent a higher level of performance than expected of an ordinary, reasonable person. After all, you did hire them for their expertise.

Source: www.allbusiness.com

• Need an honest assessment when checking references of a job candidate? Former employers are often guarded in their comments due to the threat of lawsuits. Consider this tactic proposed by Pierre Mornell in his book Hiring Smart. Call references when they are unlikely to be in the office — for instance, during lunch or after hours. When you get voicemail or an assistant, leave this message: “Jane Jones is a candidate for (the position) in our company. Your name has been given as a reference. Please call me back if the candidate was outstanding.” Those with kudos will be eager to return your call, while those with less complimentary things to say will be thankful to avoid the conversation. Either way, you get the message.

Source: www.marketingprofs.com

• Have a tough decision that could easily go either way? Try flipping a coin. While you shouldn’t act solely on the results of the coin toss, note how you feel when you get your “answer.” Are you pleased? Disappointed? Observing your gut feeling can help you discover which decision you’d feel most comfortable with.

Source: Leadership Strategies, 1101 King Street, Alexandria, VA 22314

• Deliver a powerful presentation with these tips from presentation trainer, Patricia Fripp. First, streamline your thoughts. If you can’t describe what you’re talking about in one sentence, you may be guilty of fuzzy focus or trying to cover too many topics. Start with a simple idea and let that guide your whole presentation. Make it easy for your audience to follow what you’re saying by having a clear beginning, middle and end. Finally, build an emotional connection with listeners by appealing to their interests and engaging them in the conversation by using the word “you.” Rather than throwing out facts and figures, pull them into the story by showing them how they can benefit.

Source: www.fuelnet.com
 

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