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The beginning of the end of the recession maybe in sight but consumer behavior has changed forever

07/25/09 08:25 AM Filed in: Consumer lifestyles
Fewer American households appear to be falling behind on their debt payments, according to a new study and the American recession appears to be nearing an end, but only after it has become the deepest downturn in more than half a century. The index of leading indicators, which signals turning points in the economy, is rising at a rate that has accurately indicated the end of every recession since the index began to be compiled in 1959. With all this good news however marketers would be foolish to think the “good old days” of consumer spending are going to return. The fact is that consumerism as we know it has changed forever.


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This recession is the worst in we have ever experienced and in this authors opinion has left a deep psychological scar on consumer behavior. Even with the end of this recession one fact remains: the housing market that so many consumers counted on for increased net worth has not returned. Way too many homeowners still have negative equity on their mortgages and for them that means that they are stuck paying for an asset that has lost considerable value.

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The other psychological scar is caused by the realization that their jobs are not secure (they never were really). People thought that as long as they worked hard and their company did well they were going to get rewarded. They know now that corporate America is willing to shed jobs, and make other employees work harder, that they are nothing more than a number on a balance sheet. There are way too many underemployed people not to mention the people who cannot move to better jobs because relocation would cause them to lose a lot of money.


What tells me more than anything that consumers don’t trust the establishment anymore is the fact that consumers continue to pay down debt. This means that billions of dollars, that otherwise could be spent on wants, are being taken out of the economy. It tells me that consumers have a sense of fear about our economic climate that I have never seen even doing the gas shortages and lines of the 70’s.


In order to get consumers spending again two things need to happen; first, companies need to start hiring again and second, home prices need to at least start to come back to the road to recovery. The bad news of course is that home prices will never go back to the level they were before.


What should marketers do?

1. Focus on the value of your brand not on your product. What is the value of your brand and what is your long term branding strategy. Forget about measuring what you feel is important focus on what is important to your customers and prospects.


2. Forget market share focus on profitability. If you need economies of scale to make a profit you’re in trouble.


3. Solve consumer problems with products. Sounds easy but features alone won’t do it.


4. Segment infinity. Forget about one or two market segments, today it’s about the segment of one and a relevant message to each person.


5. Great customer service = great sales and profit per each customer


6. Invest in technology that gives you insights into buying behavior. You can never know enough about your customers and prospects.


7. Reward customer focused individuals. They are worth their weight in gold.


8. Speed and quality = better ROI. Implement with speed but ensure that the consumer touchpoint is executed flawlessly.


9. It’s about listening and implementing marketing programs with proven ROI.


Marketers who believe that the big budget days are going to return are sadly mistaken. Consumers are getting leaner with spending and business now has to do the same thing.

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