Over the past several weeks, at least a half a dozen people have called to ask for my views on why customers have become so mysterious. And “mysterious” is the very word several used.
Callers told me how research is less dependable, direct mail response rates are down, advertising is not pulling like it used to, and customers are doing the unpredictable more often and the predictable less often.
Some talked about how customer relationship management (CRM) has failed to deliver on promises made by CRM software producers. CRM software producers seem to be making more money from CRM than many companies they have sold software to. Some companies are throwing in the towel. Wells Fargo recently abandoned CRM after spending $38 million trying to make it work.
So, it does indeed seem that customers have been acting very mysteriously.
But that is not the case. Customers haven’t gotten more mysterious. They’ve simply outgrown the old marketing paradigm.
Consumer research and marketing are largely based on knowledge of consumers gained in markets dominated by the values and behaviors of youth. Markets are no longer youth-dominated. In 1989, adults 40 and older became the New Customer Majority. Today, the media age of adults is 43.
If you are in your 40s or older and look back to when you were 25 or 30, you can easily see how much different you are. You no longer see things in black and white, but in shades of gray. You’re not as easily influenced by other people or by advertising. Because you’re more comfortable with “gut feelings”, you don’t need to reason out things like you used to. Novelty for novelty’s sake is not as thrilling and you find increasing comfort in the familiar. Beyond having the basics that are compatible with your lifestyle, experiences have become more important than things. In fact, you may be looking for ways to simplify your life by weeding out things.
Customers are not acting more mysterious. The average customer is now in midlife older and is thinking and acting the way people in midlife and older have always thought and acted.
Forget the idea that boomers are all that different. They now comprise nearly 90 percent of the total population in the midlife adult years ages 40 to 60. Their worldviews are like those that were common in their parents’ generation at the same age. The term worldview does not refer to what people believe, but how they cognitively and emotionally connect to the world. Aging boomers are cognitively and emotionally connecting to the world in the same way their parents did at the same age.
The Yankelovich Monitor charges companies handsomely for up-to-date intelligence on consumers’ worldviews, thinking and behavior. Abraham Maslow, who died in 1971, would have looked at a current Monitor report and said, “Of course.”
Monitor has recently been telling subscribers that consumers are more paradoxical, want less “stuff”, are reprioritizing their lives, are more self-reliant, and are seeking balance in their lives. Those are worldview issues.
In Toward a Psychology of Being (1969), Maslow described how people at higher stages of psychological maturation reflect “polarities and oppositions” in their behavior (Monitor’s “paradoxical behavior’); strive to simplify their lives (Monitor’s less “stuff”); experience changes in values (Monitor’s “reprioritizing”); become more autonomous (Monitor’s “self-reliant”), and avoid extremes (Monitor’s “seeking balance”).
If your research is less dependable, your direct marketing response rates have fallen, and you’re advertising is not working as well as it used to, don’t blame it on customers acting more mysteriously. It’s your research and marketing paradigms that are the problem. You’re trying to force a youth based research and marketing paradigm to work in a marketplace that is no longer youth dominated.
Research. Consumer research is mostly designed for rational input. Young minds operate more rationally than do the minds that make up the New Customer Majority. Young minds comfortably give researchers absolute answers that can be neatly processed according to the rules of statistical analysis. Older minds are more context sensitive. When presented with a question that seeks a Yes or No answer, or that seeks an opinion rating from Strongly Agree to Strongly Disagree, older minds often falter. They want the opportunity to say It Depends or Sometimes. So, being cooperative a more common disposition of older minds older respondents are forced to give answers that distort the truth.
Direct Marketing. The style of most consumer direct marketing is best suited for the more rational young mind (or underdeveloped older minds often found in lower socioeconomic segments). The focus on urgency, product features, functional benefits and price that is characteristic of most direct marketing provides grist for the mills of youthful reasoning. Direct marketing tends to be weaker in emotional stimuli than is necessary to get strong responses from members of the New Customer Majority. Time urgency, product features, functional benefits, and price tend to be more reason provoking than emotion provoking.
“But most of my customers are still under the age of 40,” you might say, “So I don’t have to worry about figuring out how older minds work differently.” The strange thing is that members of Generation X and Generation Y are acting remarkably like the New Customer Majority. And why not? The majority rules in a free society. The New Customer Majority is shaping the leading values and behaviors of all of society. (Refer back to the Yankelovich Monitor’s report on the leading values and behaviors in today’s marketplace.)
Advertising. The style of most consumer advertising is best suited for young minds. That should not be surprising for two reasons. First, marketers generally lack an understanding of the differences in how young minds and older minds work. So, most marketers keep doing what worked in the past when young minds were the majority.
Secondly, most consumer marketing is still best suited for young minds because young minds create most advertising without an understanding of season-of-life differences between how young minds and older minds react to advertising.
Richard Lee, head of High-Yield Marketing, Minneapolis, addressed this in a survey of advertising agencies designed to assess attitudes towards older customers in ad agencies. He observed:
Most advertising is created by people who see the world as an extension of themselves rather than seeing themselves in the context of an “outside” world that molded and shaped them. Therefore, most advertising is really about the people who create it not about the consumers who actually buy the products being advertised. If the target audience happens to be younger consumers, that works. If the target audience happens to be older consumers, it doesn't work. (Italics by Lee.)
The old marketing paradigm is strongly rooted in numbers. Markets are segmented by purchase histories and demographic profiles, and by psychographic data that have been statistically analyzed. This worked pretty well in youth dominated markets because the young tend to move in tandem with their peers. When you know the “average” behavior of the group, you have a good fix on the “average” behavior of the one.
The values and behavior of the New Customer Majority cannot so easily be reduced to numbers. Attempts to do so are the number one reason why traditional research is less dependable than it used to be. It is also the number one reason why customers more often seem to be doing the unpredictable and less often doing the predictable.
The traditional ways of predicting customer behavior are based on averaging data gathered on groups of customers. This doesn't yield as accurate results in a marketplace dominated by the older customer population that makes up the New Customer Majority.
So if the old paradigms of research and marketing are the source of the illusion that customers have become more mysterious, how can the veil of mysteriousness be lifted?
The answer presents a challenge that I frankly think most will simply push aside until there is clearly no alternative but to take it on. That is what happens when old paradigms begin to fray. At first, supporters of the old paradigm experience shock over the fact that the old paradigm is breaking down. Many are now nearing the end of the shock stage and entering the denial stage: “There really isn't anything wrong how things have always been done. We’re just in a cycle. Things always go back to where they have been.” However, in time, the laws of the survival of the fittest come into play and most people embrace the new paradigm.
The new paradigm for research and marketing practice is behavior based, not numbers based. Numbers based analytics will continue to play a role, but not the determinative role they played in the past. Processing consumer data without regard to tenets of human behavior yields greater error in today’s more individuated, autonomously acting consumer population.
Information technology has given us the ability to capture a range and depth of customer information unimaginable a decade ago. Yet, who could argue that we understand customers better now than we did before the age of the ubiquitous computer? If we did, no one would be saying that customers have become more mysterious.
Only by becoming more familiar with the landscapes and workings of customers minds by season of life will the riddle of the mysterious customer be solved.
Ciao,
David
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