Wholesome Marketing Ideas, Bite Size

Wholesome marketing ideas, bite size

Sunday, August 14, 2011

The myth of the empowered consumer - I

Quick, is the consumer more empowered today than, say, 20 years ago?

More, of course. Right?

The consumer as shopper is armed with the mighty mouse. At the click of that mouse, she can call up competitors’ pricing information, and with another click she switches brands, and is gone. Brand loyalty that you spend years earning disappears in a trail of cookies signaling a price promotion by a competitor.

As a group, consumers are even more powerful. They can prevent The Gap from changing its logo, and they can bash and trash brands over Twitter to bend them to their will, and they can band together to get unbelievable deals through Groupon.

That makes consumers pretty powerful, doesn’t it?

But here’s a question: if consumers are so powerful, how come they get treated so poorly?

For example, how is it that companies have off-loaded so much of the tedious work of the last mile to consumers? Consider what companies now expect their time-starved consumers to do:
-       Fill their own gas tank, and scan in their own credit card and complete the payment.
-       Find all their groceries from giant stores that seem to grow a couple of thousand square feet every year. Put the groceries in a basket, pass them through a checkout and bag them, and drive them home.
-       Do their own price checks in-store.
-       Do all the data entry required to manage bank accounts; research the best alternative investments and loans; manage their own portfolio.
-       Understand and compare mortgages, and pick the best one for the economic and personal circumstances (we all know how that went).
-       Arrange their own travel, compare Hotwire, Expedia, Priceline, Hotels.com and so on.
-       Print their own boarding passes, check themselves in at the airport
-       Walk around a furniture store, write down the stock number of the items they want, go find them in a vast warehouse, carry them to the car, take them home and build them.
-       Specify and ‘build’ their own computer on the seller’s website
-       Create their own music lists; manage the music lists; synchronize music storage.
-       Spend time on the phone speaking to computers and listening to elevator music, waiting to be directed to the right answering machine where they hope (often in vain) to get an answer to their query.
-       Install and customize their own software, and upgrades. Synchronize data with their smartphone.
-       Inventory and manage the connecting cables, adaptors, and accessories for the products bought.
-       Troubleshoot the inevitable compatibility issues between the printer and the computer, the camera and the printer, the wireless router and the smartphone…. And feel free to add more in the comments section.
Does that sound like an empowered consumer to you?

Well, you say, as long as the consumer is willing to do the last mile, and as long as they’re unwilling to pay a premium for the ‘full-serve’ option, businesses are going to do the simple cost-benefit calculation and continue off-loading the last mile.

The problem is not that any one company or industry is off-loading work on to the consumer. The problem is that they’re all doing it at the same time. And each of the tasks off-loaded is independently trivial, but together they spell death by a thousand cuts. A classic example of the tragedy of the commons,

“where unrestricted access to a resource such as a pasture ultimately dooms the resource because of over-exploitation. This occurs because the benefits of exploitation accrue to individuals, while the costs of exploitation are distributed between all those exploiting the resource.”

The resource in question here is, of course, consumers’ time.  The number of last miles that can be dumped on the consumer is essentially infinite, but their available time is most definitely finite.

The wake-up call for companies that continue to seek to replace their own headcount with consumer labor will arrive when they inevitably encounter diminishing returns. As consumers’ time availability decreases, they will be much more demanding of the benefits they require in return for giving up even a minute. 
Is there a business opportunity here? What can companies do to recognize and avert the tragedy of the commons?

Start with two things. 

First, recognize the full cost to the consumer of stuff they buy from you – both the price they pay, and the cost of their time and effort. Often these hidden costs far exceed the dollar price that consumers pay for what they buy from you. 

Second, focus your innovation efforts on reducing the time and effort that the consumer spends extracting the benefits they seek from your products. If they consume a product chilled, sell it chilled. If they store it before consuming it, make it easy to store. If they assemble it with other products before they consume it, consider selling it pre-assembled.

In other words, if you really want to empower your consumers, stop fretting so much about what you sell and worry about how your customer buys and consumes. For more on this topic.

This is the first of a two part piece on the myth of the empowered consumer. Read the  second part here.


Jaime Eagles said...

I love the idea of inovating where customer & product intersect - make our life easier. I am amazed and dismayed at how thoroughly business has isolated itself from the comsumer.
I just tried to complete a survey fo for an insulation company-too long, too complex, poor choices of motivation. No feel for consumer.

Jill said...

I am thinking whether some consumers are happy to do the last mile of things themselves not despite the time they need to spend on it bur rather because of it? Imagine that in a mundane day and a person achieved not much at work, doing something such as finding out the best deals of all cell-phone plans makes the person feel good about himself/herself. A recent paper (not sure if it was by Dan Ariely)finds that in many occasions people do things not because they are interested in doing so, but rather because they want to be occupied and feel that they have achieved something, anything.

Second, doing the last mile of things ourselves does save time sometimes. For example, instead of calling the service center and explaining to them what you travel plan is and getting the full service, you can book the whole trip online yourself in 10 minutes.

Another thought is whether consumers, especially young consumers, have become more and more used to emails, chats, and other forms of non-personal contacts rather than face to face interactions even just phone calls. This trend might have made the "do it yourself" model of business more popular in the current marketplace.

S said...

If I as a consumer am made to feel like I am getting a discounted price for the additional work I have to put in, then it's worth it for me. If I pay 5cts less for bananas for having to scan them, I want to scan them! Offer full service but be open about the charge - give cheapos like me the option :)

Deanne Sinclair said...

I think Jill raises some great points.

As our standard of living in North America is steadily improving, the large majority want to save and channel their finances into even more, bigger, and better purchases.

I think there is also a convenience factor associated with consumers completing the "last mile." For example, I'd much rather make my own travel arrangements at my own convenience, as opposed to having to make them during 9-5 work hours when a local travel agency is open.

Furthermore, I think that a lot of the examples stated have a positive side to them as well. For example, I think it's a beautiful thing that Dell allows you to customize your own computer. That way you can pay, and receive exactly what you want. I also love the convenience of printing my own boarding pass prior to arriving at the airport. What now takes me ten minutes at home used to take me thirty minutes at the airport.

Of course there is a lot of truth to the examples as well. Overall, I think that the consumer completing the last mile is a great thing, and I'm happy that our purchasing behaviour has evolved this way.

Niraj Dawar said...

From the comments, it sounds like once you get used to the "self-serve" world, there's a lot to like about it: you're in control, you can do things on your own time, it's faster, it's cheaper, and you may even enjoy doing some of the last mile tasks. The next post on the myth of the empowered consumer will be up on Sunday August 28th. I'll look forward to your comments on that one too. In the meantime, August 21st: "What the heck is a brand anyway?"

Anonymous said...

If you're a consumer that has flown recently, you know you're anyting but empowered. From the groping at the airport that the TSA subjects you to, through the lousy service, plastic food sold at high prices in flight, to the late and lost baggage. I certainly don't feel empowered at the other end of a coast to coast flight.

EJ Park said...

In nearly every case you mention, the consumer gains in the most valuable way and that is saving time.

And while few can remember how travel agents worked and were compensated, or how expensive it would be to have "full-service" gas station attendants (there are a few in Beverley Hills and the prices reflect the extra cost) - there is no doubt that the savings in both dollars and time more than justify the effort.

Do you really remember the last time you tried to have a PERSON track your package at UPS or FedEx - how long you were on hold and inevitably how they got it wrong?

How many of us really want to talk to a "customer service" agent? Or an even better question, "How many of us want to wait to talk to a customer service agent?"

The realities are that the consumer IS in fact more empowered by the instant communication and ability to reach millions of consumers at virtually no cost.

The power of communication more than the power of information is what empowers consumers today.