The tables have turned. Empowered by technology and each other, today’s consumers have declared, “It’s not you, it’s me.”
It’s becoming clearer than ever that power has permanently transferred from brands to consumers – but equally clear that many companies have not fully realized the extent of this shift. Consumers now have almost unlimited access to information and products, which makes loyalty hard to earn and easy to lose. They can easily find a different product they prefer or a similar product at a price they prefer at a different brand or retailer – or even from the manufacturer directly.
More importantly, social platforms have given consumers megaphones, enabling them to discover new products, read and write peer reviews, identify with communities of shared interests, and buy only what aligns with their personal brand. They make choices about what they want to buy based on information from sources that transcend, and upend, traditional company marketing efforts. The simplest way to think about this is the absolute democratization of consumerism. Consumers always had agency, but never power. Now they have both.
We see this shift in our annual holiday survey where consumers say they ever less forgiving of missteps. Three in four consumers would be less loyal or less likely to buy again from a retailer if they experienced product unavailability. They also value convenience. Accelerated by the pandemic, 40% of U.S. consumers have tried a new shopping method, such as curbside pickup, buy-online-pickup-in-store, or delivery over the past year, and nearly three-quarters of them want to keep using these services.
The point is this: Consumers now operate outside of the carefully controlled customer experience zones where consumer companies have felt most comfortable for essentially all of time.
These highly empowered and individualized me-centric consumers are explained in rich detail in The Metail Economy, an upcoming book by Joel Bines, the co-head of the AlixPartners global retail practice.
At the same time, consumers are also spending more, which means that for any retailer missing this power shift and not determining how to alter strategy accordingly, these dollars are theirs to lose. This upward trend in spending is here to stay; consumer spending has increased for the better part of the past decade (Figure 1).
What can companies do to understand and confront this new consumer?
- It’s up to the companies to meet the Me-centric consumers where they are, not the other way around. Otherwise, consumers will take their dollars elsewhere. To be successful in the Metail economy, companies must restructure their entire business model around serving the collection of Me’s who matter to them most. The entirety of the company needs to be evaluated through this lens. But this also means you have the opportunity to build a lasting relationship with your consumers.
- Businesses must never again think of consumers or their tastes and needs in terms of static demographic groups. Instead, they should focus their resources on establishing an intimate and personal understanding of their brand’s unique assortment of consumers and building new relationships with them. You need to ask not only “Would a customer like this?” but “Would our customer like this?”
- In the Metail economy, there is a set of six models that can be used to cultivate and serve the customer, or the six Cs for success: cost, convenience, category expertise, curation, customization, and community. Companies must choose one or more and then truly commit to them. As you adapt the Cs to your own model, you will be catering to this sophisticated, powerful Me in ways that are smart, focused, and efficient, with limitless possibilities for growth.
- Focus your investment, resource, and energies into the right areas in order to maximize your customer relationships in the Metail Economy. When making strategic changes, plan for regular check-ins to ensure everyone is on track. Frequently communicate with your internal and external stakeholders.
- This is about the creative destruction of the old ways of doing things. Think through all your costs and ask why, and why again. This part will be painful, but there is no way around it. You need to rethink every single practice, policy, procedure, and person from the lens of having to pay for your Metail transformation journey.
To survive in today’s marketplace, consumer-focused companies must understand how their organization is viewed and valued by your customers so that they can focus investment, resources, and energies into the right areas. This power inversion is perhaps the greatest change to our consumer economy in centuries. Companies that do not understand this shift and refocus their investment, resources, and energies to maximize their customer relationships will struggle in the new world. There is no safe haven from the powerful, new consumer no matter what business you operate in.
The Metail Economy is available for preorders now. Read an excerpt from the book here.