The New Consumer
Tuesday, 30 March 1999 - Stockholm, Sweden
An address to the VISA EU Member Conference. The banking environment of the last thirty years has been obliterated. Consumers now hold the power to drive change through the choices they make. Banks must respond with a new attitude if they are not to succeed.
Hello. I’m from your future.
I’m from New Zealand where the world starts everyday. Right now it’s tomorrow night, 7pm over there.
You can see the future in New Zealand. We’re becoming a cashless society. New Zealand has the highest penetration of point of sale electronic funds transfer terminals of anywhere in the world. New Zealand is one version of the future which you can take heart from because banks are a big part of it.
But unfortunately that’s not the full story. Look other places and you see banks being bypassed by smarter, faster companies.
The banking environment of the last thirty years has been obliterated. Where are the models to help us understand this complex world which might give us understanding of what lies ahead?
Biology – the hottest of today’s sciences – helps explain change in our complex world through evolutionary theory. The theory of Punctuated Equilibrium explains the nature of change in evolution. How you shift from one species to another. It says that there are long periods of stability when a successful species thrives. But then changes in the environment make it less perfectly adapted. Somewhere on the fringe of the species’ range is a new form. A chance genetic mutation that just happens to be more perfectly adapted to the new environment. So it takes over. Fast. New forms move in and wipe out the old forms in startlingly quick time.
Look to the fringes of your industry. Somewhere out there is a financial services company which is going to prosper and possibly dominate beyond belief – and will likely become a model for the structure of the entire industry in the next era of banking.
I don’t know enough about financial services to figure out who those guys will be but I do know who they will sell to. The new consumer. I was asked to talk about the new consumer so here goes.
First of all, the new consumer is one of those hip terms that really can mean anything. There never has been an old consumer. The biggest change in the world today has been an increase in the complexity of everything, including our increasingly sophisticated knowledge of consumer behaviour and our techniques for communicating. The result is that our understanding of consumers is now more multi-dimensional than ever before.
The closest I can get to describe the new consumer is that he or she is living through an era of the most rapid and fundamental technological change the world has ever experienced.
We have used that technology – telecommunications, cable TV, the Internet, 500 TV channels, digitisation, fibre optics – to globalise finance, the media, consumer markets and popular culture.
The ground rules of business will continue to alter forever. But we will reach a new equilibrium, a point where the basic rules of the game have been clearly redefined and the structure of the dominant companies of the new era will be established.
One ground rule is already clear – the massive transference of power from producers to the new consumer. From here on in, companies, brands and services that aren’t loved by consumers are not going to succeed.
We will know more about where we are going when we understand the potential of e-commerce – when we understand what consumers want to buy on-line and how they want to use credit cards, e-cash, bit bucks and electronic checks.
It’s not technology that will give us these answers, it is consumers. Change in our markets isn’t driven by the growth of Internet bandwidth, or the digitisation of cash, or the micro chips in smartcards. Consumers are the agents of change. We present consumers with choices; their reaction to those choices is what makes things change.
One ground rule of the new economy that we do understand is that the first to market gets most market share. Ask amazon.com and barnesandnoble.com. Amazon got there first. No doubt who gets my business – the originator, not the follower.
That means that if you don’t want to be roadkill on the autobahn, you better get out there and offer consumers the BFIs before anyone else.
That’s going to be hard for banks. Not all banks are naturally innovative. Banks are supposedly the experts at managing risk. They do that by being conservative, rigid, ruled by formulas.
That isn’t the recipe for success anymore. These days we are all managing a new kind of risk – we risk the consequences of being second.
Managing risk today means letting go of tired and conservative processes, freeing your imagination and using intuition to get to the future first.
It also presents a new risk management role for CEOs that has nothing to do with management and everything to do with leadership. As CEOs we all have one goal – to find the fastest road to the future. Along the way we have two strategic decisions to make: Where to direct the collective imagination and intuition of our organisations; and when to stop looking down blind alleys and turn our teams’ attention to more fruitful areas.
Call it a simplistic view. It is. Mind numbing complexity is the defining aspect of our world. Simplicity is what we must seek for ourselves, our organisations and, above all else, our consumers.
There is a lot of talk these days about the end of intermediaries. The one-to-one future and dis-intermediation made possible by the internet.
That’s the conventional view of the information age. Information is freely available and it empowers consumers.
Forget it. Consumers need intermediaries like banks to guide them through the jungle now more than ever.
The information age is over. This is the age of ideas. The winners in this age don’t have information that lets consumers bypass intermediaries. They are intermediaries with big ideas about how to connect with consumers.
We live in the Attention Economy. Information has become background noise that drowns out common sense. Making simple choices has become difficult for consumers. Instead of being empowered, consumers are at risk of being left helpless.
What this means for marketing to global consumers is that context is the answer, not content. Consumers want a point of view. They want ideas, not information.
To Walter Wriston’s words inscribed in the lobby of the Library of Science, Industry and Business in New York – “information about money has become almost as important as money itself,” I offer the following new consumer alternative – “Ideas are the Currency of the Future”.
Ideas about what consumers want and how to deliver it are defining this era of business. Inspirational ideas about how to operate your company. Ideas for new products. Unusual ideas that capture the precious attention of consumers and allow you to talk to them. Ideas that match up with consumers own thinking. Ideas that offer consumers a context to view the world in and make simplicity out of complexity. These things are more important than money.
The essence of a brand is ideas. Brand is the greatest commercial tool ever devised to offer consumers context. In an increasingly complex world, brands will become more of a lifeline to simplicity.
As banks merge, become bigger and more global, your brands must give a context for consumers in both global and local terms.
If your brand is able to offer context in an increasingly complex world, you’ll connect with consumers. All marketing is about making connections with consumers.
It’s useful to measure the connections you make with consumers on my love-respect axis. High love and high respect is the ideal quadrant. High respect or high love connects. High Love beats high respect everytime.
Making meaningful emotional connections with consumers, and shifting those austere perceptions is the desperate imperative for every bank today.
The Peak Performers among banks today are those who have embraced their customers and offered them innovative new financial services ideas. They have offered their customers new ways to interact with them, and new reasons to love them.
The comet heading for the financial services industry is choice. Consumers are getting more and more choices about who they buy their financial services from and how they interact with their financial services provider.
Products and services are becoming commoditised. That leaves brand as the only basis for differentiation and choices. Brand becomes the connector.
The simplest truth in connecting your brand with the new consumer in global markets like yours, is Be Global. Create a global strategy based on simple, universal, relevant, truths. Appeal to the common factors that unite us.
Global brand building is equally local as it is global. Develop your strategy with local relevance that may include product variations, benefit explanations and message modifications. Take into account local market environment: the competition, the nature of the local retail trade and the media options available.
This isn’t Think Global Act Local. This is Be Global and Be Local. Be Glocal.
You are all part of the Visa brand. That’s one great global brand that understands how to connect with global consumers. Through Visa, consumers invite banks all around the world to be a big part of their lives for the same reason.
Marketing to the new consumer is more about brands than ever before. But that doesn’t just mean make better ads. Sure, great advertising that makes emotional connections with consumers is an important part of any brand story. But only part. Advertise a proposition that you can’t deliver and you’ll only increase the disconnect between your brand and consumers.
Marketing and brand building today is bigger than advertising. It’s about becoming a better company.
We are living in a transaction perfect world. Perfection is a commodity. It has become the table stakes just to get into the game. Nowhere is that more true than in the banking industry.
The X-factor in business today is inspiration. Making connections with consumers through an inspirational brand that reflects an inspirational company.
That means becoming a change agent. Transforming your company from a high performing organisation – functional and faultless service – into a Peak Performing Organisation. Inspirational, exciting, imaginative, inclusive. First to the future. A company and a brand that inspire the competition to follow.
That’s not what the average bank is, and it certainly isn’t how consumers perceive their bank. Most banks are being left behind in the rush to connect with new consumers. They aren’t the first to offer consumers truly new ways of doing significant things. They aren’t making emotional connections that make consumers love them. They are not Peak Performers.
I’m obsessed by the concept of Peak Performance. I have been ever since my days as a rugby player. That obsession is the most valuable tool I’ve carried with me during my business career. I’m obsessed with making Saatchi & Saatchi a Peak Performing Organisation, and doing everything I can to help our clients’ brands achieve peak performance.
I would like to offer you a model for Peak Performance.
I’ve been involved in a study of the great Peak Performing organisations of the global sports world during the past two years. The result is a set of principles that offer a model and a gameplan for companies negotiating rapid change in highly competitive markets.
The Peak Performers of the sports world are models for peak performance in business. In fact they are more valid, because a central tenet of sport is fun. And that’s a central point of my business philosophy. Above all else it has got to be fun – For you, sure. For your company, without doubt. But more than any of these, it has to be fun for your consumers.
The analogy between the single imperative of winning which exists in sport and the need to be first to market in the most dynamic and lucrative business fields today, is undeniable.
We have sought to discover what it is that keeps the great sporting organisations of the world at the very pinnacle of achievement year after year.
Our team has been inside the great teams like the Chicago Bulls, Bayern Munich, Williams Formula One, the San Francisco 49ers, Team New Zealand – the guys who brought the America’s Cup home to New Zealand, and New Zealand’s national rugby team, the mighty All Blacks – a team I’m proud to be involved with personally.
The first of the Peak Practices of a Peak Perfoming Organisation we call Making Magic. It’s the freakish game winning plays, and the belief that the magic will return.
The second Peak Practice is that Peak Performing Organisations need Inspirational Players, the gamebreakers and the motivators.
Number three is Creating the Future. Building the team for next season and ten years time from the bottom up.
Peak Practice four is Community, an intense sense of belonging among all of the organisation’s members.
Five is Exceeding Personal Best – a deep commitment by each individual to personal stretch.
Next is Game Breaking Ideas. Each of the organisations we visited had a culture that removed the fear of failure and celebrated ideas generation. All ideas – the incremental improvements as well as the revolutionary leaps.
Number seven is Game Focus, understanding and pursuing goals and being able to quickly refocus if necessary. Maintaining and changing Game Focus is what separates leaders from managers.
Peak Practice eight Number eight describes the extraordinary ability PPOs have for Sharing The Dream – within the organisation and with the groups around them – the fans, the sponsors, the public.
The ninth Peak Practice is The Last Detail. The commitment and profound sense of responsibility among all the organisations members to getting every last detail right.
Any company that can incorporate all of those elements to achieve Peak Performance will prosper in an environment of uncertainty and change.
The imperative to become a Peak Performing Organisation is undeniable. Consumers demand it. The New Consumers’ choices will determine the future. They will choose a Peak Performing Organisation every time.
Financial services companies must achieve Peak Performance. You are playing in the premier league, and every day there are more companies wanting to compete with you. It’s not surprising. The prize for the bankers of today, the world cup of financial services if you like, is the central role in the economy of tomorrow.
So that’s it. The nine point plan to winning over the new consumers.
- The Consumer is King
- Get to the Future First
- Simplicity is the Key
- We’re in the Age of the Idea
- Glocal Brands make the Best Connections
- High Love beats High Respect
- Tomorrow’s X-Factor is Inspiration
- Transform your Company into a Peak Performing Organisation
- Go and Make Magic