There’s a revolution underway, and it’s changing what your customers want from you.
The great recession ignited a profound and pervasive cultural shift that’s transforming buyer behavior, returning the country to old-fashioned values, and remaking capitalism for the better. So says social theorist, brand research maven, and best-selling business author John Gerzema, executive chairman of Young & Rubicam’s Brand Aset Valuator (BAV) Consulting Group.
Gerzema lays out the case in his second book, “Spend Shift: How the post-crisis values revolution is changing the way we buy, sell and live,” co-authored with Pulitzer-Prize winner Michael D’Antonio. The book includes interviews with business leaders from more than 50 countries who understand and have retooled company strategy in response to what Gerzema describes as a new “values-driven consumerism.”
First published in 2010, it landed on Wall Street Journal and Washington Post best-seller lists and was identified by Fast Company and Inc. as one of the best business books of the year. The research in it has been updated regularly and the findings are holding fast. That, Gerzema says, means this is a long-term movement, not a passing fad.
While Gerzema is a pioneer in the use of data to identify social change, he is not just a numbers guy. A good chunk of his career has been spent helping companies apply that data to the intricate world of commerce in order to adapt to new customer interests and demands. He’s worked on developing brand strategies for many household names, including McDonald's, BMW, Coca-Cola, United Airlines and Holiday Inn.
Travel Weekly PLUS spoke with Gerzema to explain the changes and shed some light on what they mean for companies in the travel industry.
Tell us a little about the work you do and the research we’re going to discuss.
I oversee the Brand Asset Valuator, which is the largest database of consumer attitudes and behavior. In the U.S. we track about 17,000 consumers every quarter in a nationally representative sample. We also have data in 17 countries that represents just a little under 80% of global GDP. So, what we’ve been doing since 1993 is tracking consumer sentiment to try and understand how people feel about companies, about shopping patterns, about their own financial security, and about the reputation of brands that enter the marketplace.
What’s changed the most since the economic meltdown in 2008?
We started to uncover these profound shifts, where we were moving from a consumer focused on quantity to one focused on quality. Of course that was partially because people had less disposable income. But we also started to see a pattern in spending where people were rewarding companies whose values were similar to their own.
One of the founders of Pimco coined a phrase, which I think is terrific, called ‘the new normal’. I’m a big fan of those guys, but my argument is that it’s the old normal. So many of the patterns we saw in people’s behaviors were tying back to old-fashioned American values — the sense of self-reliance, the sense of community, integrity and trust. A lot of those things were evident in the new business models of the people we interviewed and in a lot of the answers we got back from people about what they expected their lives to be in terms of consumption.
Did that lead you to writing your second book, “Spend Shift”?
The origins of the book came through trying to determine how consumers may or may not have changed as a result of the great recession. The book came out at the end of 2010, and we tracked the data in it over the previous three years, including right at the apex of the crisis in the fall of 2008 through all of 2009 and 2010.
One Minute, One Thing: John Gerzema
In the book you describe a broad-based movement that cuts across demographics and income brackets.
Yes, definitely. We tracked that 55 percent of Americans were part of this movement, and there was another 25-26 percent who had literally the same beliefs and behaviors. So you had nearly three-quarters of the country on some level practicing this more values-driven consumerism.
It’s much more an attitudinal rather than a demographic movement. You were just as likely to be a Democrat as a Republican or an Independent. And the two biggest leaders of the movement per capita by their population were millennials and seniors. The millennials were a little bit better on the technology side, but they had these remarkably interesting values about self-reliance, community, respect and integrity that were aligned with seniors.
A lot has changed in the last two years. How can you be sure this is not just a short-lived trend stemming from reaction to the economic meltdown?
The data is current, we refresh it regularly, and the numbers have held within 2 or 3 percentage points on all the questions, which suggests that a long-term shift has happened. We believe that we’re returning to values that anchored American culture and society all the way up until the 1980s, and that for the next 30 years after that what we had was an anomaly based on debt-fueled consumption.
The term consumer and the entire idea of consumerism have come under fire in some quarters. Are you still comfortable with that word?
I can’t stand the word. I use it to explain things to people who kind of expect to hear it. One of the big arguments we make at the end of the book is that there are no longer consumers — there are only customers. The problem with the term consumer is that it sort of equates to a mindless gobbling beast of indifference, somebody who is just going to buy whatever you put out there. In a world of social media, in a world of transparency and all the sophistication that our customers have today, we have to treat them with more respect.
The term consumer also suggests it’s a one-way exchange, that we are manufacturers and we put ideas and products out there and people are going to sort of gobble them up. It’s just not that way. What we saw was a direct connection between the integrity of companies and the products and services they provide with the customer’s willingness to pay for those products and services.
Your research identified some really interesting changes in what customers wanted from a brand before and after the crisis.
We looked at what attributes were more important to people today in selecting a brand versus the things they valued before the crisis. The things that were important before the crisis were more outward — being trendy and being glamorous, looking good with a product. The internal ones became more important after the crisis. The really interesting thing is the single biggest increase we saw in one attribute was in kindness and empathy. We were fascinated by that.
Editor’s Note: In the BAV survey, kindness and empathy increased 391% as the most important attribute companies and brands can offer their customers, after product quality.
Why was there such a big increase in people wanting kindness and empathy from the companies they buy from?
We found that it was very much related to a lack of trust people have in companies. This happened in the three years since the global financial crisis. In our survey (“Trust and the rise of a citizen marketplace”, Young & Rubicam), we asked a very straightforward question: ‘Do you trust the following brands or companies?’ It was literally asked that simply, and we saw these remarkable declines in trust — down almost 50% — and where we sit today is that people trust only one in four brands, on average. There is a ‘trust virus’ out there, not only in banking and automotive, but in a lot of different categories.
That includes travel. The survey identified an average 8% drop in trust in travel and entertainment brands. That’s a lot better than some other categories (finance, down 58%; auto, down 19%; distribution and retail, down 17%). So is that a somewhat positive finding for travel?
There were lower levels of decline in travel because people like it more, and there was less scandal associated with it. The way we look at it is we measure all brands against each other. So when we measure a travel brand like Hilton we are also measuring it against Apple and Coca Cola and Disney and Google.
People have different category interests based on things that are just more interesting to them personally. So we tend to see a lower level of interest in automotive insurance and paper towels than we do in consumer electronics or travel and leisure, which are just more emotionally interesting to people. They get a little bit of an artificial lift, and I believe that’s what’s happening here with travel. Travel is a category that consumers have a greater interest in and forgiveness toward versus financial services and automotive.
Editor’s Note: The Y&R survey on trust included 120 travel and entertainment brands (parent companies) across all travel industry verticals. The category also includes major restaurants and loyalty programs, and proportionately includes more hotel brands than other verticals.
What’s are the implications of the ‘trust virus’ for leaders in the travel industry?
It’s really important for the travel industry to realize that there is a whole heap of frustration out there in the consumer marketplace. People are moving from mindless to mindful consumption, and they are placing a much greater emphasis on brands and companies they can rely on — and that reliance isn’t handed out generously. Right now trust is what differentiates a brand. It’s a huge component.
Is there some bigger message in all of this?
The big thing is that capitalism now has to be about better instead of just more. So much of business was driven on quantity, on moving stuff. People now are saying we want quality — quality of products and quality of interactions, quality of sincerity and quality of the integrity of the companies we are dealing with.
NEXT ISSUE: More from John Gerzema on aligning with, and marketing to, the post-recession values-driven customer.