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The Insurgent Consumer

The consumer today is in open rebellion.

He doesn't listen to advertising anymore. He no longer trusts corporate spokespeople or their messages. In fact, according to the 7th Annual Edelman Trust survey released just last week, people now say their most credible source of information about a company and its products is “a person like me” -- a trust level in peers that has skyrocketed from only 20 percent three years ago to 68 percent today (versus a trust level for corporate CEOs that has now plummeted to only 28 percent).

This lack of trust, of course, has major bottom-line consequences. More than 80 percent of people surveyed say they would refuse to buy goods or services from a company they do not trust. And new research also shows that negative consumer comments on blogs have a direct impact on corporate brands, earnings and share prices.

The fact is that consumers are no longer willing to put up with shoddy products, indifferent service, and lack of accountability and transparency. What's more, they are demanding a decision-making voice in shaping the products, services and media they consume. TiVo is one example of this new take-charge attitude on the part of consumers. Another is the fact that, according to a Pew Internet & American Life Project survey released earlier this month, half of all teens in this country -- and 57% of those who use the internet -- have created a blog or web page, posted original artwork, photography, stories or videos online, or re-mixed content into their own creations.

Indeed, the consumer now demands more of business -- and thanks to blogs and other new consumer-empowering technology and media, he can now get it. Companies who meet these new expectations are rewarded. Those that don't see their businesses punished as never before.

How should business leaders respond to this new insurgent marketplace? How can they use blogs and other new "voice of the customer" media to develop a new and more democratic relationship with customers -- one that leverages customer insight and initiative to create more effective marketing, branding, product development and public relations strategies that materially enhance firm success?

Richard Edelman, CEO of the world's largest public relations agency, took the lead in answering this question when he posted what amounts to a new mission statement for his firm last Friday: As he noted, the traditional approach to corporate communications has always been a controlled process of scripted messages delivered by the firm to investors and consumers. But this top-down corporate communications model is now being supplanted by a peer-to-peer, horizontal discussion. And as a result:

"The consumer has become a co-creator, demanding transparency on decisions from sourcing to new-product positioning."

How to do business when the customer increasingly calls the shots is fast becoming a strategic issue for the executive suite.

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Comments

This should come us no shock. The economy has taken a turn for the worse on the middle class and politicans have increasingly turned their backs on the american consumer.

the only place to air these greivances are in the marketplace. and big business, who for so very long made boat loads of the apathetic nature of americans, are now being held accountable for past aggressions.

I'm not convinced that's the reason. After all, business has been screwing consumers for years.

What's new is that technologies are now available that enable consumers to make more informed decisions about products and to communicate with each other about those products.

When you consider that consumer trust in "their peers" as the most credible source of information about companies and products has skyrocketed from only 20% 3 years ago to 68% today, it's clear that people have learned quite quickly to trust themselves.

David

I think you're very effectively stating a trend that is just not there. At least in the context of how you say it. And at least not yet.

Advertising - even the 30 second spot, can spur someone to then ask a friend or a co-worker about a product. The friend may just tell them what they've 'heard'. That friend may, for that matter, have heard the info from a blog - or that same TV commercial.

Open revolt? No. Many customers are still reduced to Acct # 68000974591-A. "Enter your account number followed by the pound sign."

You said, "The fact is that consumers are no longer willing to put up with shoddy products, indifferent service, and lack of accountability and transparency. What's more, they are demanding a decision-making voice in shaping the products, services and media they consume."

Many people, in their hectic day-in and day-out lives of raising the kids, paying the bills, don't have time to join that open revolt. So they may, for the time being, accept that shoddy product or poor service. They may not be digital driven.

Sure, times are a changin', but not to the extent that you state. Our society hasn't changed enough just yet.

I agree with your main point, Jonathan -- that most people (me included) still put up with getting the shaft one way or another as consumers.

But my job as an author is to spot an emergent trend with significance, and try to analyze its meanings.

The consumer empowered by new attitudes and new technologies -- the consumer that CAN hit back, that CAN demand better quality products or service and CAN now receive it -- I do believe this is an emergent trend. And there are countless pieces of evidence for it. Just ask Dell, Sony, PriceRitePhoto or Kryptonite about the power of blog-enabled consumers to hit back and force changes in business behavior.

To be sure, I should caveat my description of the empowered consumer. Capital still has the upper hand over consumers and over labor. That's just a fact under capitalism. But unlike in the past, when the only recourse a consumer had for mistreatment was to write a letter to the company and never hear a word again, now consumers have a voice with more power -- and the potential for much more.

Even more interesting (to me anyway) is the challenge this presents to business leaders. When up to 90% of all new products fail in the marketplace -- the result say R&D; managers, of their inadequate understanding of the "voice of the customer" -- smart managers will want to leverage direct contact with customers (via blogs or other means) to turn them into partners in improving product quality. Some companies are doing just that.

So, point well taken (at least as I understand your point). But I do think I'm onto something important here, and a good number of executives and trend spotters I've spoken with agree.

David

Believe me, I do agree you're onto something. The experiences that the companies that you mention prove that.

It's my guess that we'll see this change or relationship between company and client in industries that have 'early adapters/adopters' as a solid chunck of their customer base (as in Dell). And then there is the odd/fun/interesting 'news you can use' angle like the fact that you can open up a Krytonite lock with a Bic pen.

What I find incredibly interesting is the idea of companies working with their customers via blogs and other types of social media for product development and improvement. Companies that practice that show a respect for their customer base that is unheard of.

I feel the same way about companies that use blogs to get customer input on product design. They're in the vanguard of savvy firms.

Some people think there's no future in this. I mean, what's a few blog comments compared to "scientific" market research and quantitative number crunching of customer data?

But I think those who can derive relevant qualitative meaning from even a small sampling of customer blog comments -- which, because they're free form and narrative, tend to get at not just what people want but *why* they want it (which is the most fertile ground for brand building) -- will have increasing value for business.

An interesting example of this is when GM's Bob Lutz forwarded a customer comment on the Fastlane blog about the ugly appearance of a low-hanging muffler on one of their models to the VP of design for that model. That comment fit with other little snippets of info about this issue Lutz had picked up. So even though he didn't have quantitative evidence that a large number of customers felt the same way, he intuitively believed that the customer was right on that issue. And that's one of the jobs of a leader isn't it -- to use his instinct and intuition to make good business decisions? So he sent it on to the VP of design, where presumably the muffler is now being re-designed.

Maybe the era of the Database Miners is coming to an end, and the qualitative may once again supersede the quantitative.

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