I often preach “ignoring the competition.” This isn’t advice I take lightly or a position I came to quickly. It was based on years of analyzing my clients and their competitors. In many cases, I’ve worked with companies that were obsessed with their competitors’ advertising. More than once, I’ve had to convince a client not to copy a competitor’s plan. No, they don’t necessarily know something you don’t!
Success is often based on sales growth. For mature categories, growth can only come from stealing share from a competitor. But, this assumes flat or increasing demand for your product or service.
America is built on “more.” More customers. More demand. More sales.
We’ve all come to expect the normal ups and downs of the economy. A recession hits and demand decreases. But, we also take for granted that the rebound is inevitable, and sales will eclipse the former highs.
For example, a few years ago gas prices were almost $5 per gallon. Gas-guzzling SUVs were piling up on car dealers’ lots. Everyone would be driving electric cars. Some couldn’t imagine that market would ever recover. Once again, recession, decreased demand and the inevitable recovery.
But what if this is changing? What if the biggest threats to your sales are no longer your competitors or the normal economic cycle, but a permanent change in attitudes about spending and saving?
Since 1940, the Gallup organization has been asking Americans, “Are you the type of person who more enjoys spending money or who more enjoys saving money?”
In 2005, it was basically a 50-50 tie. The savings rate bottomed out at 2.6 percent. But, since then the spread has grown dramatically. Today, only 33 percent of respondents said they prefer spending, and the savings rate has doubled. Economists would have expected a return to a 50-50 split as the economy recovered. But it didn’t.
Want more bad news? The shift in attitudes among 18 to 29-year-olds was even more dramatic. They used to be the least interested in saving. Now, they’re the most interested of any age group. That’s right, your customers who traditionally saved almost nothing now prefer saving to spending. Imagine that! Younger people are thinking about the future – not just living in the moment. So much for YOLO.
This all adds up to a new challenge. Your biggest competitor is now “not buying at all.” Longer replacement cycles will be the norm.
This requires your company to be best in class in everything. The winners in this new world will provide the best products and services at the best prices with the best marketing and customer service. You’ll need to operate on all cylinders all the time. Anything less will drive potential buyers to your competitors and threaten your very existence. There will be winners and losers in this new norm. You’ve been warned.