The Evolving American Consumer
More Choice in Rewards Attracts New Consumers
By Juli Spottiswood
To take advantage of this new trend, marketers must truly understand the new consumer that has emerged: The American consumer lifestyle is evolving, and purchasing decisions have seen unprecedented change in recent years. The recession has created a paradigm shift in consumer spending. Interestingly, even though signs of recovery from the financial crisis are evident, consumers' more conservative and thoughtful buying habits have endured. Retailers are struggling to lure consumers who think about needs versus wants and are willing to make an extra effort for the best bargain—whether that means waiting for a sale, switching brands or traveling to a store that is further away. The key insight for marketers: This new consumer must be absolutely convinced of value and also requires increased incentive to purchase.
In addition, most consumers now are using the Internet not only to shop, but to seek out deals, and this practice also has forced an evolution in purchasing behavior. The technologically revamped consumer spending practice means that consumers now demand better communication, ease of use, interactivity and speed from their brand experiences. Additionally, social networking has proliferated rapidly among consumers seeking deals amid the lagging economy, and people are looking less at circulars, and more at blogs. This translates to today's shoppers demanding customization and immediate gratification.
In order to reach the new consumer, marketers must realign their strategies to deliver on the shift in economic and purchasing behaviors. One old-school tactic that has come back into vogue due to this new consumer profile is consumer incentives. According to consumer research conducted by Parago between December 2009 and March 2010, this new consumer not only wants rewards, but wants rewards and other incentives that fit into a hyper-connected, fast-paced lifestyle. Specifically, they demand:
- Value: 83 percent are proactively seeking out rebates, 79 percent have changed their shopping habits due to budget constraints, and 60 percent always look for the best price.
- Convenience: 58 percent prefer online submissions, and 48 percent of consumers would choose an offer with an online submission over a mail-in.
- Choice: 84 percent of consumers prefer the ability to choose their reward, and a majority of respondents value a choice in reward across categories such as merchant or group gift cards, Visa or MasterCard prepaid cards, merchandise, PayPal or direct deposit.
Marketers who can deliver programs that allow the intersection of value, choice and convenience will form a stronger relationship with the consumer, driving long-term satisfaction and loyalty. Unfortunately, many existing consumer promotions haven't caught up with the new consumer demands, and don't deliver on these three crucial variables. For example, a consumer might be excited to claim a $500 rebate for an electronic purchase, but if the experience of getting the payment in hand is cumbersome, it will do nothing to encourage brand loyalty.
While value and convenience are critical pieces of the puzzle, what is relatively new and increasingly more important to the new consumer incentive process is choice. Customized offerings for consumers have been growing in popularity over the past couple of years as consumers demand choice, and technology has made it simpler and more affordable for marketers to offer.