Customers in Control?

Spooked by the recession, consumers are looking for ways to take back the reins from institutions and brands alike. I've labeled this macro trend "control freaks."Falling consumer confidence is driving Americans towards greater self-reliance. The ABC News Consumer Comfort Index has remained below minus 40 for more than 100 weeks -- the worst levels on record. A recent Gallup poll for the Better Business Bureau found nearly half the consumers surveyed have just "some, very little or no trust at all" in the companies with which they do business. To limit the influence of institutions and brands, customers are taking greater charge over what, when, how and where they purchase or consume, wresting control from those they previously relied on. They're also exercising greater self-control, as they survey the problems their spending and borrowing levels have created.Additionally, they demand to browse, purchase from and communicate with brands using any channel that suits them, any time of day or night, and, thanks to the "media me" trend, are becoming their own program schedulers, news editors able to aggregate stories online and radio DJs via sources such as iTunes and Last FM.At the same time, the self-health trend sees more consumers determining their own well-being. More Americans now go online for medical advice on any given day than visit health professionals, according to the American Medical Association. Consequently the fastest-growing grocery brands are increasingly those perceived as healthy. Sales of self-diagnostics and books on topics like nutrition are rising. Retail sales of prescription drugs have soared: up 250 percent from 1995-2006, according to Census Bureau figures.Meanwhile, consumers are looking to limit their spending and borrowing. Today, 90 percent of Americans recognize the need to save more and spend less, up from less than three-quarters in 2008, according to research firm Technomic. Many under-35s I've spoken to recently are setting budgets and making financial to-do lists for the first time. High-end impulse purchasing seems in terminal decline.As well as helping themselves, consumers are helping each other. While trust in corporations is falling, trust among citizens is rising. According to an Econsultancy study last year, 90 percent of consumers online trust recommendations from people they know and 70 percent trust the opinions of unknown fellow users. The influence of peer-to-peer advice may overtake that of one-to-many marketing, from Amazon's reader reviews to travel recommendation sites like IGoUGo. Already 70 percent of Americans consult product reviews or consumer ratings before making a purchase, according to researchers Penn, Schoen & Berland Associates.The control freaks trend is set to grow. The more information consumers have at their fingertips, the greater their power. The Internet is a huge enabler, and increased Web access and the growth of mobile computing will empower them further. Nielsen says a quarter of Americans already own a smartphone, and sales will outstrip standard cell phones by late 2011. Add augmented reality and iPads, and the "consumer is king" trend seems increasingly like an understatement.There are no easy solutions for advertisers, but solutions will need to be found. The answer may lie in partnering with consumers via new permission marketing and socially networked models, and/or encouraging them to accept brands into their lives, by increasing incentivising, loyalty and smart targeting. One thing's for sure: able to access data and control purchasing like never before, American consumers will not return to the passive, top-down, brand-led model lovingly recreated in Mad Men and now increasingly looking like a distant fairy tale. William Higham is founder of market research and trend consultancy The Next Big Thing. He can be reached at william@next-big-thing.net.

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Customers in Control?

William Higham

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William Higham