A couple of months ago, I posted a blog titled “Economy to Remain Sluggish” which cited a number of economic predictions.¹ Based on current economic indicators, it would seem that previous predictions of the economy remaining sluggish have proven to be quite apropos. Real estate continues to have a difficult time with more residential foreclosures expected. Meanwhile banks are extending due dates for payments on record levels of at-risk commercial real estate loans to keep them classified as “performing” in an attempt to preserve capital. A high unemployment rate remains largely unchanged–especially considering that any recent offsets were, in the main, coming from temporary jobs in the public sector such as those associated with the census. In other words, we’ve seen very little offsetting growth in the private sector.

Not surprisingly, consumers have continued to be cautious with their hard-earned money. Recent data from the Commerce Department suggests that the rate of personal savings is on the rise, now at 4%.  Historically speaking, the rate was 12% in the early 1980’s and had fallen to 1% in recent years while the 50-year average is 6.9%.  A recent survey by PricewaterhouseCoopers indicated that 13% of households are saving at least 7% of their income and, in the next five to ten years, 36% of all households can be expected to do the same.²

According to a recent study of nearly 3,000 US adults conducted by Pew Research Center and consistent with findings from economy studies Trone has conducted over the last 20 months, 71% of Americans have resorted to buying less expensive brands. Interestingly, 57% have cancelled or postponed a vacation and 49% indicated they’d loaned money to someone in need.³ Data from the Trone studies also indicated that much of the reported brand switching behavior will be permanent. On average, 59% of mothers across seven product categories indicated they’d be likely to stay with their newer, less expensive brands.

Peter Boockvar of the firm Miller Tabak summarized as follows:

“People are now going to save more. Spending decisions will be based more on stable money in the bank, not your 401(K).”

Given the cautious attitudes and behaviors of consumers – especially their willingness to switch to less expensive brands and stay with them – brands need to be on top of their game. Present circumstances represent an increase in opportunity for relatively lower-tiered, lower-priced brands. A well-developed strategy to gain market share is imperative. On the other hand, incumbent brands had best develop a strategy for maintaining market share and minimizing customer attrition. Now, more than ever, brands need to be strategically planning for their future. Now is the time for brands to be investing in their future.

Notes

1 https://intranet.trone.com/EmployeeV3/TroneWebsite/index.php/our-culture/blog/page/2/

2 http://www.minyanville.com/investing/articles/savings-pricewaterhousecoopers-us-savings-rate-saving/7/7/2010/id/29060

3 http://online.wsj.com/article/SB10001424052748703374104575337120086218434.html

According to Trone’s last two economy surveys, most Americans (well over 80%) were worried about the state of the economy.  A solid majority (over 60%) also expected it would take at least three years for the economy to recover.  In fact, over a quarter of all Americans thought recovery would take 5 years or even longer.

A survey of leading economists recently released by the Associated Press may well explain why Americans view the economy as mentioned above.  According to the article summarizing the survey:

The pillars of Americans’ financial security — jobs and home values — will stay shaky well into 2011.

http://news.yahoo.com/s/ap/20100412/ap_on_bi_ge/us_ap_economy_survey

Among the key predictions of these economists were:

• The unemployment rate will stay stubbornly high the next two years. It will inch down to 9.3 percent by the end of this year and to 8.4 percent by the end of 2011. The rate has been 9.7 percent since January. When the recession started in December 2007, unemployment was 5 percent.
• Home prices will remain almost flat for the next two years.
• The economy will grow 3 percent this year, which is less than usual during the early phase of a recovery and the reason unemployment will stay high. It takes growth of 5 percent for a year to lower the jobless rate by 1 percentage point.
• Sales of previously occupied homes, the biggest chunk of the market, will tick up to 5.4 million this year and to 5.9 million in 2011. That would mark continued improvement from the low of 4.9 million in 2008 and be in line with sales in a healthy economy.  But there’s a catch.  Sales are forecast to rise in part because of another anticipated wave of foreclosures. That will keep prices from rising — and consumers from spending freely.

Given the expectations of these economists and the related financial uncertainty among consumers, the market is going to become increasingly competitive.  Engaging the consumer at every point along the purchase cycle will be essential to winning purchases.  To these ends, a fully integrated and seamlessly executed market communications strategy is indispensible.

Just as people are beginning to learn about location-based tools, Foursquare announces that it has reached 40 million checkins. Within five weeks, Foursquare’s checkins have doubled showing its increased popularity. But is the quick growth about to come to an abrupt end?

Facebook has announced that later this month, it will launch its own location-based features.  Leveraging all of Facebook’s users, this might be enough to crush the growth of Foursquare and the other emerging location-based tools such as Gowalla, Whrrl and TriOut. In late April, Trone launched an online usage study that  measured the popularity of these tools. The study showed that the tools mentioned above each had 6% top two box response when asked “how often do you use the following location-based tools on your mobile phone”.  The data will serve as a great benchmark when understanding the impact of the Facebook features launch.

As the penetration of internet-based phones increases, one thing that we can expect is that the popularity of location-based tools will grow.  In the upcoming months, it will be interesting to see how each fights for its own niche market position in combating the Facebook giant.

Companies that use databases and name lists to target their message are at risk of getting a negative reaction from consumers. Well, that’s a pretty broad statement; what exactly does that mean? It means that if you are pushing out communications using a database, whether online or via direct mail, your list had better be up to date. The older the list becomes, the more likely that some of the names are no longer viable as targets.

This may sound obvious, but what you may have missed is consumer expectations of getting the message right has significantly increased over the past 12 months. You may have gotten away with an intrusive and poorly timed communication in the past, but not anymore. In fact, from a recent Trone Online Consumer survey, 4 out of 5 moms said advertisers don’t understand me.

Let’s say you are a pregnant woman and you receive an email for infant products. Perfect targeting. The email is relevant to your life, and likely you will have a positive impression of the product or company reaching out to you. And if it’s a deal, you might even pass it along to a friend in a similar life stage.

Now, four years later, your child is now three years old. If now you get a message from that same company, telling you about deals on diapers, what reaction would you have? If it were me, I would react a couple of ways. First, I would think, “This company knows me, don’t they know I have a 3-year-old? Are they just not paying attention?” Second, I would get annoyed, maybe even mad, at the obviously uninformed intrusion.

We assumed there would be intrusions in the old model of advertising. But today, marketers that intrude, and do it with ignorance, don’t simply get ignored. They get a negative reaction. A simple but telling example, if a friend on Facebook asks me to be a fan of a company or brand, the natural assumption these days is that the friend is on their payroll somehow, or is at least getting something out of it. I’ll immediately say no, and if the friend continues such behavior, might un-friend them.

So, back to the formerly pregnant woman. It’s six years later and she’s expecting again. But that company with the infant products was crossed off her list. They annoyed her just enough, and some other marketer got there with a relevant, engaging and timely offer, and she switched to that brand instead. And it was more like a divorce with the old brand, because she will never go back. This scenario happens all the time, because marketers let their lists grow old and outdated.
Don’t let your customer’s un-friend or divorce you, because at the end of the day, the brand with the most friends wins!

Back in February of 2008, Trone conducted a segmentation study of over 2,500 U.S. dog and cat owners.  One of the key findings to emerge from this study was that 44% of all dog owners and 34% of all cat owners have a pronounced tendency to rely on their veterinarians when making product-related decisions as well as in proactively maintaining their pets’ physical well-being.

A study Trone conducted just this past month (2,553 U.S. dog and cat owners) confirmed 1) the propensity for this segment of pet owners to engage their vets to a much greater degree than other pet owners and consequently 2) the considerable influence that vets have on these pet owners.  Here are some noteworthy facts unveiled in the current study:

When comparing vet dependent dog owners to other dog owners*…

• % visiting their vet at least twice per year: 58% vs. 15%
• % who consult with their vet on dog food: 86% vs. 11%
• % who consult with their vet on dog treats: 67% vs. 3%
• Of those who changed a basic product for their dog in the past two years, the % who did so based on advice from their vet: 69% vs. 2%
• % who would spend over $2,000 to treat a terminal illness during the last two or three years of their pet’s normal life expectancy if the vet told them the problem could be cured: 53% vs. 27%; More than $5,000: 26% vs. 12%
• % who indicated their spending on products for their dog has actually increased during the past year: 34% vs. 18%
• % who anticipate spending more than $5,000 on veterinary services over the lifetime of their dog: 53% vs. 27%

Considering the large market share represented by vet dependent pet owners as well as their greater per capita spending on their pets, they are simply too valuable to be overlooked.  Given the importance they place on “finding the right product,” pet products companies looking to advance in the marketplace should consider how to best turn these pet owners into brand advocates.  Previous research conducted by Trone demonstrated the relative “online savviness” of vet dependent pet owners, so a well thought-out social media strategy should be an integral part of building brand advocacy.

Taking into account the size of the constituency it serves as well as the influence it wields, the veterinary channel is an indispensible link in connecting brands to pet owners as well as in maintaining brand loyalty.  Manufacturers of pet products would be well-advised to incorporate the veterinary channel into their overall brand strategy.

*Similar trends were found among cat owners.

 What is it that separates brand leaders from others? Is it spending?  I believe that myth has been disproven many times over – how many brands have spent millions, only to fail (Pontiac, anyone?).  Perhaps it’s time/longevity?  Again, that hypothesis is easy to disprove.  How long did it take the iPhone to become the leader in the mobile device market, one week? 

The reality is that no one thing creates a brand leader.  Such status cannot be bought, but neither is it free.  Last month Trone updated our consumer study on brands and the economy, and the news was indeed grim .  Consumers have made serious changes in their shopping behaviors and for the most part, brands have suffered and will continue to do so.  However, there are brands that consumers are going to stick with, even when money is tight.  Kraft was mentioned by an astonishing 13% of all respondents (N = 1,638) to the open-ended question, “What 3 brands won’t you give up, no matter what?”  To be sure, Kraft spends money on it’s brands, and it’s been around a long time.  But how do you explain brands like Fisher Price making the top 20?

Brand leaders follow several key strategies:
1) They invest in their brands – note to marketers, this isn’t code for “advertising.”  Rather, they seek to understand their consumer and work to meet their needs.  This is not about “selling” products.  It’s about giving your customer what they want. 

2) They know who they are.  A favorite quote of mine is “A principle isn’t a principle until it costs you money.”  Brand leaders know who they are and what they stand for.   Brand leaders not only delight their consumers, they also don’t confuse them.  Whether through product, price, distribution or promotion, they stay true to themselves. 

 In today’s economic climate it’s all to tempting to abandon your core brand principles, or to stop communicating with your consumers.  But brand leaders, the brands with staying power, know who they are, what their consumers want and nuture those relationships, even in times like these.

Are families as loyal to their favorite brands as they used to be? WGHP-TV FOX8 turned to Trone insights for the basis of this story.

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Given the very tough economy, many customers are willing to look for new brands. We recently did a study of over 3000 consumers using our Trone Brand Connections Panel and determined that over 40% of all adult consumers are ready to switch to new brands.  Of course, there are many strategies brands are using to gain share.  Just look at Walmart, who is upgrading their stores, adding new brands,  and attracting Target and Kohls customers (which is all working).

On the other hand, there are many other companies that are blindly losing customers by cutting costs, cutting their front line employees, and praying that when the economy turns around, they will be in good shape. But will they?  Are those customers lost for good? Have you eroded your brand by just trying to stay alive?

Let me offer some simple advice, continue to invest in customer relationships or fold up the mats, because they will not come back.

If you want to keep your customers, don’t give them an easy reason to leave you, especially in today’s economy.  Rarely do any divorces, even brand divorces, result in reconcilliation.

Here is an important insight that many companies miss – A customer’s most recent point of contact is the most important and the most memorable so it MUST be a positive experience.

What not to do? 

I recently walked into a wireless cell phone company because my phone was not working properly.  I explained why is was not working and, of course, they did not listen to me and immediately opened the cell phone assuming it must have been under water and was my fault.  Since they did not find the deadly red dot,  they were finally interested in what I had to say. After about 30 minutes of  back and forth conversation, they finally determined I needed a new phone.

Now here is the shocking part.  I was handed a new phone from the front line employee,  and then he proceeded to take the old scratched back plate off my current phone and attach it to the new phone.  I asked why he could not just give me the new back plate that came with the new phone, and he stated “you never mentioned there was a problem with your back plate, so we will not replace that part.”  Though we debated back and forth, he refused to let me keep the new back plate which was very cheap and short sighted.  You can image that this really ticked me off, but I went on my way because I had an important business trip.  During my business trip, the back of my phone kept on falling off  and reminded me how pissed off I was over this situation.

Yes, this was my very last experience with that brand although I was a very high value customer. I had three family members with the same company.  Thankfully I only had about 3 months left on my contract, and when it was up, I was out the door and they never knew why I divorced the brand forever. Just another blindly lost customer. Now they need to find 4 new cusomters to replace me.  And,  to find a new customer in this industry it costs about $300 per individual.  If you do the math, they exchanged the cost of a back plate for the $1200 to acquire 4 new customers and the revenue our account generated.  Not a smart decision on their part and certainly not the experience I am sure their corporate management wanted me to have.

So, if you want to do something simple during these tough economic times, treat your current customers right to ensure that when the economy turns around, you will still have them.  And if you are lucky, they may even tell their friends how they were treated.