Thriving In The New Frugality

A new survey by Booz & Company confirms that a “new frugality,” characterized by a strong preference for value has become the dominant mind-set among consumers and businesses in the United States.  Born out of a prolonged recession that has left an unemployment rate north of 10% and an “under-employed” rate approaching twice that number, this trend is not likely to change no matter what the pace of economic recovery.

In short, the Great Recession has forced consumers – and businesses – to shift their behaviors, and there is surprisingly little difference in the expenditure reductions across demographic segments.  So if business spending is destined to remain soft during a prolonged recovery, and consumer behavior has changed in perhaps permanent ways, waiting for a return to a pre-recession mind-set is not a productive strategy. Instead, we need to adapt to the new realities of frugal behavior and spending.

What to do…

The foundation of doing that is making sure we have a very clear understanding of what is important to our customers and prospects. 

The first thing we do when working with a new client is to invest time in determining, from an internal perspective, what the driving factors are in building the confidence needed to buy their product or service.  This, of course, is a challenge in any economy and only exacerbated in an environment that can literally take one’s breath away.  That’s why it is critical to revisit past assumptions, and the strategies and tactics developed for them. 

Next is the need to revisit how best customers feel about their situation.  What shifts have taken place, or are in the process of changing?  What do people need to know?  Where do they get their information now, and how do they want to be informed going forward?  We have helped many clients discover that they were spending a considerable amount of their budget on communicating an off-target message through an inefficient medium.

Finally, the need to embrace technology to leverage the multiple touch points required today by customers and prospects is absolutely critical.  In today’s world, people require and demand more information – when and where they want it.  At the same time, the cost of delivering that message demands a ROI analysis that is measurable and quantifiable.

So…what’s the benefit?

We hear over and over again from companies, “If I do this, what impact can I expect to realize on my bottom-line?”  Or, “I think my company already knows/does this.”  Or, “I hired people to do this.”  Or the feeling that, “Our marketing department should be doing this.”

Another question is, “How can I tell if I could benefit?”  We can tell you with confidence that in every situation there are always opportunities to make improvements that will have a significant impact on the success of your business.  And as people are so busy today, or they have a very different expertise and experience, the result can be a loss of objectivity and fresh ideas.  

It can be very productive to have marketing, sales, operations and technology areas looked at periodically by an independent source to ensure consistent and measurable results are achieved year after year.  And, as one of our current clients recently said, “We accomplished more in one year working with Harden than we could have accomplished in seven years – if ever – by ourselves.” 

The Greek philosopher Heraclitus said that the only thing constant is change.  So, while the speed of change has increased, this thing we call change has been with us for awhile – and will be.  The key is to stay on our toes, listen carefully to our customers and their shifting priorities and needs, and do a better job of meeting those needs and delivering our message with consistency and impact. 

Posted by John Harden  April 1st, 2010

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