Consumers with less money hold more power
In the midst of all the economic gloom, marketers – indeed – chairmen and chief executives alike should remember one thing. Consumers with less money to spend should not be seen as less powerful. The reverse is true. Consumers with less money are increasingly empowered precisely because less disposable cash means tougher choices.
People will exercise more judgement and spend only where there is real value and benefit. Adjusting your brand’s proposition in the current climate to ensure you are able to provide that extra value is not half as easy as it was in the boom times.
Right now, every brand on the planet, particularly (but not exclusively) those across the media sector where reliance on advertising has been brutally exposed, are wondering how they can claw back lost revenues. Boardrooms full of furrowed brows are staring blankly at new revenue models, suggested to them by company underlings who already know how unpopular their ideas are going to prove with consumers.
Ryanair chief executive Michael O’Leary’s suggestion that consumers should see not only travelling without baggage but paying to use the toilet while in the air as the norm, has garnered as much news coverage as any of the man’s previous hilarious utterings. But for once, O’Leary doesn’t risk coming across as a crazed loner. Evidence of searches for new revenue models that risk the ire of consumers is all around us. Facebook’s threat to go all Big Brother and retain its users’ private information, potentially for marketing purposes, compromised the previously friendly, community-facing personality of the brand.
Online brands, and particularly social networking brands such as Facebook, must work out how to monetise their vast reach across desirable audiences. Indeed, most Facebook users would appreciate and respect the need to justify such exaggerated valuations. But while it was never going to be easy to do so in a way that pleased everyone, telling users that they no longer had protection rights for their own private details was not clever. A swift U-turn calmed outraged users but founder Mark Zuckerberg still has the same problem to solve.
All online operations, in fact, are looking at their models. Newspapers and magazines everywhere will be wondering how to loosen the stranglehold of consumer expectations because, for many, the universally free online content model cannot last. Subscription models will become more common but will only work if there is something unique worth paying for.
Elsewhere, Halifax’s latest ad campaign risks leaving consumers feeling patronised rather than positive. In a bid to attract new customers, (a bold move itself, perhaps, when for most, retention is the priority), it is offering a monthly reward of 5 for every 1,000 paid in by Reward Account holders. Hmmm. It was only last month that former chief executive Andy Hornby was one of several bankers grilled by the Treasury Select Committee over mistakes that contributed to this economic mess in the first place. HBOS, which owns the Halifax brand, is now under the control of Lloyds Banking Group, which is 43% owned by the taxpayer. These people are effectively offering us our own money back to join them as customers at the slightly insulting rate of 5 a month.
I return to my opening point. Brands are operating in a climate of enhanced consumer power. As commercial strategies and financial models change, marketers must exercise scrutiny. If there is true value and quality on offer and the message is communicated properly, consumers will come with you. If your actions leave consumers feeling like they are being treated with contempt, you’ll be on your own.
