Customer Value Perceptions in a Sagging Economy

The sagging U.S. economy is creating additional dimensions of customer need that may well force many companies to re-think their value propositions. Here’s a good case in point:

My husband decided to take a road trip with our 17 year old this summer. With gas at a national average of $4.10 a gallon, our SUV with a V8 engine would prove to be far from economical to drive. Our pickup truck would be equally fuel efficient and even less comfortable. Our ’67 Camaro Pro Street Racecar with 750 horsepower wasn’t a practical option (although they would have gotten there fast!). Finally, our daughter’s car, while very fuel efficient, was probably not reliable enough for a hot, 14 hour journey.

So! We decided to rent a car with better fuel economy. Based on our calculations, even with the cost of the rental we’d save $150 in gas - a respectable amount. Since my hubby loves a road trip…he reserved a mid-sized sedan with 35-40 MPG and cruise control from Enterprise Rental Car several weeks in advance.

When my husband went to pick it up Thursday morning, the smiling attendant apologetically told him they were out of the car he'd reserved and handed him the keys to another car in the same “rental class.” Evidently, this was one tiny car… complete with 13 inch tires, no CD player and no cruise control. While it was fuel efficient, my husband stands over six feet and more than 250 lbs… so he was not happy with the tiny, gutless, box on wheels...especially for a 14 hour journey. He handed them back the keys and asked them what they could do for him.

The Enterprise people were very kind, offering him a complimentary “upgrade”… to a lovely SUV. He explained that he already owned an SUV -- and had rented the sedan for the fuel economy. The representatives were perplexed. Evidently no one had turned down an “upgrade” before. After looking around a bit, they found a suitable sedan at another location – only without cruise control - and offered to drive him out to pick it up.

It wasn't a big deal. He and our daughter were on the road within a few short hours… However, as they left in the dark blue sedan, this incident got me thinking...

As a road warrior, in the past, I always wanted the upgrade…to the convertible, the SUV… anything but the car I’d reserved, usually! Today, however, I might think a bit more practically when offered the “upgrade”… especially if the expenditure isn't a tax writeoff...

As for tomorrow? It is likely that we'll be looking at an entirely different ballgame. Pundits predict the price of gas will escalate to $6 - $7 per gallon as early as this fall… a number that makes even me queasy and I don't have a work commute...

This isn't just about rental cars... it's about everything. Fuel prices and food shortages are going to impact the price of everything else… and as this hits our wallets, we’re going to see more changes in every day consumer spending.... and in our perceptions of "value."

Just last night, we went to get ice cream and saw an apologetic, hand-written note about price increases on the drive-through sign. This is happening everywhere -- in nickels, dimes, and dollars -- but it all adds up. While it may take longer to hit the thicker wallet, signs say it will impact most of us at some point.

As a result of these economic changes, the everyday consumer’s perceptions of value are likely to shift and change. What we have justified as "need" at yesterday's price, just may become a luxury tomorrow.

An $6 per day Starbucks habit may dissolve against costs like $500 per month for gas, $400 per month for heating and $4 per pound for chicken breast. Unfortunately, as far as Starbucks goes, developing an active customer listening website or an extensive program to retrain baristas my not help the company with this reality, as evidenced by the recent closure of 600 stores.

And Starbucks, which I love, is just an example of one company getting hit by a changing economy.

The point is this: As business owners and marketers we can stick our heads in the sand… or we can think practically about how we’re going to address consumers in this new economy. We need to consider new dimensions of "value" that will shape customer behavior. We need to develop plans that address:

  • How we’re going to create value, foster goodwill and preserve (and expand!) brand affinity when there’s just less “love” (time, money, attention) to go around…

  • How we’re going to prioritize and optimize our activities around the customer…doing fewer things more efficiently and responsibly, rather than doing more.

  • How we’re going to keep our biggest asset (good staff) employed, adequately rewarded and motivated during tougher times.

    Some assert this economic rough patch will last 18 months, and others assert our current state is merely a symptom of a coming global economic collapse. I'm no economist, so I'll save my opinion for family dinner debates.

    Whatever the scenario, this is not a “future” thing – it’s here, now.

    Beyond thinking greener and contemplating the myriad of ways we can incorporate social media tools into our marketing plans, I think it's wise to start thinking leaner, smarter and with more vision around how to proactively plan for and manage the next-generation customer experience.

    It’s also time to ask tough, but practical questions, such as whether or not our current value propositions can weather this economic storm.... Many of us may need to adjust sails!

    Please let me know your thoughts here or on the Marketing Profs daily fix.
  • 1 comments:

    Anonymous said...

    Good points, Leigh-- Although I would have taken the Camaro...just for the thrill ride! Dang! Drive that baby while you can!

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    LEIGH DURST

    LEIGH DURST
    I’m Leigh Durst, a 20 year veteran in business, operations, customer strategy, ecommerce, digital & social media and marketing. Simply put, I’m a strategist that helps companies (start-up to blue chip) achieve business shift, create more compelling online and offline experiences. I also write, speak and teach about experience design and next-generation business. I’m a futurist, visionary, strategist, doer and connector with a passion for people and helping others. When I’m not on the road, you’ll find me in the San Francisco bay area, working, beaching it and hanging out with my family and dog.

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