Why consumers are becoming more skeptical of brands
02/14/09 01:22 PM
The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan—whatever its details—can't possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.
So far the industry hasn't shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges.
The industry strategy all along has been to buy time and thwart regulation, financial-services lobbyists tell BusinessWeek . "We were like the Dutch boy with his finger in the dike," says one business advocate who, like several colleagues, insists on anonymity, fearing career damage. Some admit that, in retrospect, their clients, which include Bank of America (BAC), Citigroup (C), and JPMorgan Chase (JPM), would have been better off had they agreed two years ago to address foreclosures systematically rather than pin their hopes on an unlikely housing rebound.
What does this mean for marketers? More pissed off consumers who are going to be even more skeptical of brands and product claims.
If you think consumers are empowered now you haven't seen anything yet. Once the mortgage crisis starts to escalate, as many feel it will, you're going to see the media spotlight bankers who are destroying families while spending a lot of money lobbying on Capital Hill. The effects of this are far reaching for marketers because as we move deeper into this recession people are not going to believe a word you say and the word "brand" is going reflect a lot of attributes that are beyond your control like other companies within your industry.
Make no mistake about it this recession is the worst in our lifetime. While we all have to accept some responsibility consumers today want their pound of flesh and want those responsible punished in front of everyone. Stories like the planned Citibank purchase of a $50 million jet and trips to expensive Las Vegas resorts are pushing consumers to the brink. I believe we are going to see more and more consumers go online to get back at corporate America and the bad news is that even good brand could get sucked up in this trend.
Marketers need to go well above and beyond expected levels of customer service and in doing so they are going to take a hit on margins. It means sending out free product in exchange for bad, it means overnight shipping instead of ground, it means that employees are going to have to be empowered to settle customer disputes even when the brand or company is not at fault.
Even though Obama promised changed people are going to find out soon enough that change is evolutionary not revolutionary and that is going to get them more and more upset.
