11.192010

john gerzema on how to connect with today’s consumer

Today’s interview is sure to be an eye-opener.  John Gerzema,  author of The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It and Spend Shift: How the Post-Crisis Values Revolution Is Changing the Way We Buy, Sell, and Live, and President of Brand Asset Consulting, joins us to talk about how brands can connect with today’s consumer.

I had known John by reputation and through Twitter only until last year when I got to hear him speak at Brand Managecamp.  His talk then about the need for businesses to deliver both values and value was really provocative — and served as a foretaste for all the insights in Spend Shift which was just released a few weeks ago.

In this interview, John reports on extensive research he conducted for the book which led him to some key conclusions:

  • consumers are increasingly spending money with values — theirs and the businesses they patronize — in mind
  • consumers have realized they may be less rich but they have more power
  • companies can create paths to brand preference by connecting to consumers’ values

Take a listen and then follow-up by checking out Spend Shift and John’s site.

Hope you get as much out of the interview and book as I did!

other interviews:

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transcript:

Denise:  Hello, today you’re going to hear from a great guest, the author of “The Brand Bubble” and President of BrandAsset consulting, John Gerzema. I found “The Brand Bubble” fascinating, because it was one of the first books to talk about the changing attitudes in the recession and it actually was a favorite of a lot of people because it became a  best-seller and it was voted the third best on Amazon’s Best Business Books in 2008. And today, John is going to be sharing insights with us on his new book, “Spend Shift: How the Post-crisis Values Revolution is Changing the Way We Buy, Sell and Live” and that book was just released a few weeks ago and so it’s a great honor to have you here with us John. I’m glad that you are with us, and I should mention that “Spend Shift” is already on the best-sellers list for the Wall Street Journal and The Washington Post so you definitely onto something, John.

John: Denise, how are you?

Denise:  I’m doing well, thanks so much for being here.

John: Sure, I’m excited to.

Denise:  Good, well let’s start talking just about how new consumer’s values effect the value they place on brands. I’m a brand person so I’m always interested in how consumers are viewing brands and how their valuing brands. How is that changing?

John: Sure, well, you know I oversee Brand Asset Consulting which is the consulting unit that has Brand Asset Valuator, and we have the world’s largest continuous database of brands that’s all tied to financial return and financial brand metrics so we’ve got like 40,000 brands in our study. We’ve been tracking sort of the performance of brands and customer consumer attitudes and values during the crisis and there’s been a significant erosion. There’s been sort of a trust and decline of brands by about 50%, but at the same time there’s been these interesting value shifts that are emerging in society based on the brand measures that we track and the consumer spending habits that we track as well, and that’s sort of the basis of the book, this idea called “Spend Shift”.

Denise:  Tell us a little bit more about the spend shift, what is that?

John: Well, so the crisis clearly was a national and an inclusive event, and what we uncovered were this group of people in America, about 55% of all Americans that are sort of part of this segmentation, but it’s a group of people for whom they are increasingly spending money with their values in mind, and when you use the word values in America it often gets very politically loaded. These were more sort of common sense, Main Street values, things like community, trust, empathy, respect, hard work, self-reliance. These are the things that are more important to people coming out of the crisis, and their actually spending their money against these values. In fact, 71% of all Americans believe that they actively support companies whose values match their own, while 2/3rd’s avoid them. So, this idea of values has become an interesting new form of consumer power.

Denise:  Well, and it strikes me that there may be certain segments that are more inclined to vote with their pocketbooks in terms of their values than others, or is that not the case?

John: Well, what was interesting is that when we started to dissect the 51%, I was amazed at how equally representative they are of sort of a portrait of Main Street America. You’re just as likely to be Democrat, a Republican, or an Independent or to make over or under $75,000 a year, and yet at the same time the biggest leaders of the group were Millennial, the generation sort of the twenty-somethings that are coming of age today. Their values, Denise, were most like the Greatest Generation, the Seniors. So, it was very interesting to see how were actually returning to these core values of thrift, empathy, respect and at the same time we’re actually turbo-charging those values with new technologies and social media. That’s really the basis of a lot of the chapters of the book. We interviewed 50 different businesses from Etsy to Groupon to Hulu to Cogi and a whole bunch of these we started to see these themes of values that were sort of emerging in their business models and in their ideas.

Denise:  Interesting. So I started by introducing you by talking about your last book “The Brand Bubble” because it was just so impactful on me. I’m curious as to if you can connect the dots for me between the insights in “Spend Shift” and the points in “The Brand Bubble”, you know particularly, I think “The Brand Bubble” talked about how these kind of tried and true methods for brand building had really become quite irrelevant and ineffective and so help me understand what you’re learning in “Spend Shift” that either furthers that point or maybe modifies it?

John: Sure, I mean, “The Brand Bubble”, we wrote in 2006 when the market was just roaring right along and we had seen this significant erosion in consumer’s perceptions of brands and we saw that there was this big difference between how Wall Street value brands and how the market place did, Main Street rather, shoppers. We kind of signaled that without warning and the good news and the bad news was we were right. The bad news was we launched a book in the middle of the worst recession in 50 years. But, the connection between the two really is about what the shopping public is looking for now out of companies and brands. Some of the things we noted that now drive the spend shift, talked a bit about values, but there’s this huge emphasis on sort of kindness and empathy. People now are demanding that companies have sense of gestures and sense of understanding of the plight of the shopper that they wish to target. We saw kindness and empathy go up 391% in our data, and it was the biggest shift we’d seen in any brand attribute of what people were looking for from a brand.

So I think it’s an evolution really, in terms of a shift in, my belief, from defining our target audiences as marketers from consumers to customers and I think consumer is a symbol of the old world. It’s a symbol of soft of a mindless, gobbling beast of indifference that’s going to ingest anything you throw out there and a customer is someone to be treated with respect, with equal respect as its shareholders so I think in this new age it’s really about understanding that we don’t have consumers, we have customers, because we’ve moved from this place of mindless consumption to something that’s more mindful.

Denise:  Wow.

John: It’s really, you know, this idea that even though we find ourselves less rich from a spending power point of view, we actually have more power, and that’s sort of the message in the book is that there’s this sense of people realizing that there stronger together, cooperative consumerism was a big trend that we talk about in the book as we travel the country. We interview Andrew Mason, as I said, from Groupon, and his business has exploded to almost 400 million valuation on the basis of people coming together to get deals which was also these carrot mobs we followed around in Tamp. You know, a boycott’s a stick, a carrot’s an incentive. Carrot mobs to me are really interesting because people want to align brands and businesses with the values they seek, so if you just put those two ideas together you could start to see the potential scaling effect of consumers and what challenge and opportunity they offer for brands in the future.

Denise:  And do you feel like business as a whole are getting it and moving in that direction, because it seems like your research covers some of the companies that I would consider to be kind of on the forefront, or kind of leading the way. Do you think everyone else is going to follow or can you make any predictions about how successful most companies are going to be in making their own shift?

John: Well that’s the real interesting opportunity, the message of the book, on sort of personal level is about reinvention and hope and optimism and entrepreneurialism. We saw it in how people were adjusting to the crisis in their daily lives, but we also saw these amazing business that were kind of creating these values led innovation into their business models, into their cultures, and realizing that people needed to have this sense of integrity in their business as a basis for selecting it. But, you know, there are lots of small interesting companies that we tracked, kind of a really interesting experiment to kind of interview all these different guys from Etsy to a company like Blue Homes. Which is manufacturing very interesting, sort of anti-McMansion pre-fab homes that are just beautiful and then “Dwell Magazine” but their modular so you grow into them over time. Or we interviewed Alice, which is basically gathering customer information and connecting ordinary households with manufacturers to dis-intermediate retailers.

So a lot of really innovative business models that are all about customer respect, customer decency, and the transaction and realizing that you need to have both of those. But we also interviewed a lot of really big companies, and you know, part of it is based on whether or not you’ve got a strong sort of social force in your business. We interviewed Scott Monte, from Ford, he’s head of Social Media, and he talked about all the programs that he’s doing to improve transparency and to create sort of customer participation and product roll out just like the Ford Fiesta. Or we interviewed Tony Hsieh, the CEO from Zappos, who has his own fabulous book out right now called “Delivering Happiness” and Tony talked a lot about culture driving customer service, that when you treat people with respect you get unparalleled differentiation and emphasis on customer service, all the way down to Wal-Mart. We interviewed the folks, John Andrews there, who runs the Wal-Mart 11 Moms Program. Which is an insight into collecting 11 of the top mommy bloggers out there and basically using as them as customer advisory board for the folks in Bentonville. I think there are lots of big companies that are getting it as well, and the message in the book is just realize that this shift has happened, that there’s spending power out there that businesses can seize if they are truly leveraging their values and their business model and connecting to this new sentiment.

Denise:  Do you think that because of this emphasis or this desire for respect and decency that we will see changes in the way companies advertise and communicate with people so maybe less offensive, less antagonistic, less negative and maybe more optimistic, positive hopeful messages, or is that taking it too far?

John: No, I mean I absolutely believe that. I mean, I expected this book, Denise, to kind of come out and be a portrait of frugality and the guarded consumer, and I actually found that really interesting data that we talk about in the book. You know, 2/3rd’s of people are happier with a simpler, more down to earth lifestyle yet at the same time 48% of Americans feel like there’s greater opportunity now than there was before to create new businesses because of all the technology and the opportunities that level the playing field. So, there was definite optimism, and chapter one of our book we call the New American Frontier. It’s based in Detroit where, you know, the average price of a house is $14,000 and they sold the Pontiac Silverdome for $543,000, not even the price of an apartment in Manhattan, and yet we found these amazing entrepreneurs that were building new businesses, that were creating urban farms, that were inventing new ways of creating innovation and yet they were doing it in such a streamlined, fast way because there was no interference at the local level because of the lack of infrastructure that was allowing them to amplify their voice and their business and move fast.

 

I felt like with Detroit it was a huge inspiration to me to spend some time up there and as you think about Detroit as sort of a microcosm or a lens into the American experiment after the crisis, you know, I found a tremendous degree of optimism and excitement in a place that’s been so battered for so long that they’re really rethinking what their American city is, and I would definitely not short Detroit.

Denise:  That’s great, I mean that’s a great message of hope, I think. Let me ask you one final question, and it’s maybe taking a step back and kind of thinking about both of “The Brand Bubble”, as well as “Spend Shift”. In both cases I feel like at least in reading them there is a sense that there are these big shifts that are going on in consumer’s values, and its businesses responsibility to shift with them and to kind of catch up with them. I’m wondering if there are opportunities for companies to actually lead more and to influence the cultural shift, which affect what exactly consumers value. Is there room for companies to say “hey, this is what we think should be important”, or “these are our values” and maybe shining as a lighthouse and saying “here’s where we’re focusing, as consumers, will you come with us there”?

John: Yeah, I absolutely believe that. I mean, I think there are some very notable companies that are realizing that were entering an age of corporate responsibility 2.0 and I think the first phase of it was programs and tactics initiatives. You ever notice how CSR is followed by the word initiative, which just kind of sounds like a temporary tactical program but it was also like we do good things people, and it’s like a megaphone versus sort of actual demonstration of taking those ideals and putting them into your culture and into your business model and letting those programs evolve and letting people shape them and be part of them, and one example of that from the book, from “Spend Shift”, was Microsoft’s Elevate America program. Here you have Microsoft vowing to retrain 2 million American’s with I.T. training, a very necessary social project given the state of employment and where the jobs are going and how they’re evolving and yet you start to see Microsoft embodying that sense of “we’re really good at something” which is technology, ‘how can we apply that to the better good’. Walmart did the same thing with logistics during Hurricane Katrina and outperformed FEMA, and so I think you’re just going to start to see more of those companies leading the way, not separating their corporate responsibility from their brands and their marketing and being proud of what they do and realizing that that’s all sort of part of the brand, and that there are long term value to that in terms of not only building corporate reputation but actually sort of creating paths to brand preference because people feel strongly about the integrity and values of those companies.

Denise:  Well, good, I’m glad to hear that there is that opportunity and so, John, this has a great discussion. Thank you so much for sharing your insights with me and my listeners. And for my listeners, I wanted to let you that if you would like to learn more you can contact John directly either through email or twitter and I’m going to tell you how to spell John’s last name Gerzema, so actually its J-O-H-N, and then Gerzema, G-E-R-Z-E-M-A. His email address is John.Gerzema@YR.com which is Young & Rubicam and then his twitter handle is @JohnGerzema and of course, be sure to get a copy of “Spend Shift” so you can dive in more, and I also encourage you to go John’s website, JohnGerzema.com, it has a bunch of other information for you access as well. So again, John thank you so much for being with us, I really appreciate it, and I look forward to hearing feedback from everyone on your new book.

John: Thanks Denise, it was great to talk to you, and hope to see you soon.

(transcript by Speechpad)

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