Wednesday, October 22, 2008

How We Pay

Buyer Behaviour USA

USA Today report people are using their credit cards "dramatically less" either because they are maxed out, or are worried about the cost of their credit card debt.  The customers of Wall Mart are also buying their baby milk formula early in the month, presumably when they are relatively cash rich compared to the mid month or end of month. People are also buying fewer brand names, and are decreasing the frequency of their shopping trips. Offering different payment options or times to pay might be a great way to overcoming being the "last bill of the month".

HT Pistachio and PKedrosky

Other take away's from this story:

- If your business is built on one known shopping pattern, think again. It might have changed. Specifically I am thinking about how customers weigh up categories (Food vs Travel; Car vs Bus, etc.)

- Broad based "scale competitors" like Tesco may have insights into the recession mega-trends. Maybe by following some of their announcements, add on's, technology adoptions, they might add as bell weathers for what other companies should do?

- Focus: there is lots of talk out there around the need to understand what you do as a business, and what core "benefits" you deliver. You probably don't need one more feature. But there is another element to Focus, and that is "strategic focus". If you are a higher end fashion store, selling "more economic lines" could blur your focus. Wall Mart is a cost leader, so these mega-trends expand its addressable base.

Break The Current Value or Activity Chain?

- If your customers are now increasingly cost conscious, how about making them a re-designed offer? Get 10% off if you buy completely online and NEVER call us :)

- Strip out the product offering until you are left with the core utility, and then give the customer option to re-bundle features "on demand"?

- Make some products "services" (i.e. buy the 24/7 totally connected office for $40/month, not a laptop, printer, and desktop?).

For sure I think that this is a market where the individual and the enterprise will go through their expenditures and those that are fixed, and with a big enough number next to them, will be asked to re-quote, re-justify, "get out or get real". How?

Creating Real New Value That Matters To People?

Umair gives an example of how Starbucks selling music and mouse mats is a classic example of selling product into adjacent segments (I'd argue that its a case of not knowing if its a product pusher/ service provider/ or meeting platform, but that's for another day). More importantly he points out that Starbucks has to become meaningful (again). The 'leap' Umair makes is that "being meaningful" has a social basis, in that it is a social meaning. We do not become socially meaningful  by "pushing crap" on customers.

I think it is probably a dangerous game to "tell customers"(sic) what is "meaningful" to them ("here have a freetrade coffee"), or even ("here, meet Paul, your overpriced coffee paid for his school"). I think it is going to involve

(1) extreme customer empowerment to define how, when and where they wish to interact with you;

(2) total customisation of the offer/product/service in a genuine atmosphere of co-creation;

(3) network orchestration not network ownership (by this I mean "be the go-to-guy", not the guy who said "we don't have it today, but we will have it tomorrow. The go-to-guy delivers you the solution, no matter who has supplied it, even a competitor).

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