The Era Of The Conscientious Consumer: What Younger Consumers Want From Your BrandAdd bookmark
As the ancient Greek philosopher, Heraclitus once said, “Change is the only constant in life.” The rate of change, however, is not. And you don’t need to be an ancient Greek philosopher to know that the rate of change happening right now is moving fast.
As WSJ and NYT bestselling author and CX and customer service influencer, Shep Hyken, recently told me:
“The adoption or adaption of existing technologies, depending upon how you look at it was thrown three to five years in the future… We would have gotten around to a lot of what we’re using now that we didn’t use much of before at the level we’re using now but it might not have been for another few years so we’re moving at high speed.”
In the era of Uber Eats, Apple Pay, and Zoom, modern consumers are finding themselves in an exponentially changing environment, adopting new communication and purchasing behaviors as a result of shifting societal norms – many of which will become more permanent, many of which won’t. Businesses that have the technologies and insights to see these shifting societal norms and trends before consumers are the ones that get their spend. So let’s identify a few consumer behavior trends, and more importantly what you should do about them.
Prioritize customer retention over acquisition
As is the case with any shock to the economy, consumers are adopting new behaviors that put the health and priorities of their families first, as one would hope. Jobs have borne much of the brunt of the economic impact of the COVID-19 era, of course. Unemployment has reached record levels as over 20 million positions have been terminated as a result of the crisis, while millions continue to get laid off or furloughed each week.
However, according to CCW Digital consumer research, nearly 50% of consumers are buying more online as a result of COVID-19. Other than how they’re buying their products and services, what exactly they’re buying and the cost they’re willing to pay is changing as well.
With so many consumers unsure of their economic future, they're unsurprisingly cutting back on spending for more expensive or luxurious products and services. According to EY, the majority of consumers will cut their spending on discretionary items such as clothing and leisure experiences. And brands that prioritize customer retention over customer acquisition will have the competitive advantage.
According to the Harvard Business Review, loyalty leaders—companies at the top of their industries in Net Promoter Scores or satisfaction rankings for three or more years—grow revenues roughly 2.5 times as fast as their industry peers and deliver two to five times the shareholder returns over the next 10 years. Not to mention, attracting new customers will cost your company 5-25 times more than keeping an existing customer.
While consumer spend is low in many industries, now is the time to invest in customer retention, prioritizing quality customer experiences with existing customers in non-luxury markets over acquiring (or costly marketing) to new ones.
Be conscious of conscientious consumption, especially with Gen Z
Similarly to any recession or financial crisis, many consumers are slowly developing a more pessimistic outlook for the near future. As a result, customer behavior after the pandemic will be mostly shaped by hyper-conscious consumption. This is not to say that consumers will necessarily be as careful in the amount they spend as they were after the Great Depression, because they will not be. However, they may be as careful as where they’re spending. In other words, items seen as luxuries could be cut from monthly spending as individuals and families (from a macro perspective) try to get back on their feet in the aftermath.
By 2026, 61% of the luxury market will be composed of Millennials and Generation Z, and their perception and attitude toward brands are being shaped now by the COVID-19 pandemic, as well as the sensitive marketing tones and behaviors that are correlated.
From saving more money to spending more time digitally communicating with friends, there are significant shifts in how Gen Z and Millennial consumers plan to live and spend their time after the pandemic. This desire for more in-person connections and experiences is notable in many studies. So, while the world becomes more comfortable with digital experiences, the backlash of connecting in person, in the “real” world, will soon matter more than ever when the pandemic is over.
Even more notably, brand purpose will grow stronger in the future. Having an innovative or attractive product doesn’t cut it anymore. We’re finding that younger generations are looking for companies that embody a clear purpose and positive social mission, which is where consumerism will see arguably the most interesting change.
“Whenever you’re in a crisis mode, in this particular case it’s been the pandemic and COVID-19, the personality of a company becomes magnified” - Shep Hyekn.
Younger generations have the largest magnifying glass.
Nearly one-third are now less trustful of brands. In an era when consumer trust in brands, media, advertising, and political agendas and institutions become more skeptical, consumers will continue to become increasingly conscientious, highlighting two important factors to note. First, the perceived customer experience becomes a key differentiator. In fact, according to our research when we asked consumers “Following COVID-19, do you care more or less about the customer experience when deciding which companies to support and buy from?”- nearly 60% care more. Roughly 65% will now switch to a competitor after just 1-2 poor experiences and 88% will now switch to a competitor after 1-3 poor experiences, according to our consumer survey.
Second, the products and services we sell have to socially align with our target market, and in some cases, a smaller or niche audience, as you’ll see later. Unless you’re Zoom, there is no longer a one-size-fits-all approach to consumerism. Rather a conscious approach to conscientious consumption, ideally at niche target markets that align with our brand values will win the increasing spending power of the future consumer.
Supply the demand for ethically driven brands
The demand for indie brands (niche-driven brands) is surging, where consumers can have an emotional connection to the products and the founders behind them. For example, several fashion houses such as Gucci have recently taken steps to slow their luxury design and production cycles in the name of sustainability and creativity, prioritizing the ethics that their consumers also prioritize.
Further, tech brands like Microsoft — which committed $150 million to programs that will diversify its workforce, suppliers and partners — are making their mark and gaining support as well.
Most notably, looking at Ben & Jerry’s and its response to social issues, it’s no secret this particular brand is a media and consumer darling, and for good reason.
Jerry Greenfield Co-Founder of Ben & Jerry’s summed up the brand’s marketable and socially ethical mission in a candid story of their foundation at our live event series Customer Contact Week back in January - before the pandemic took place (and brands were put under the consumer microscope).
“We’re going to grow our business. We want to do it in a way that’s consistent with our values… Normally public offerings are reserved for simple [yet] sophisticated investments that have several [hundred] thousand dollars but that’s not what we were looking for. We were looking for our neighbors... At the end of the offering… we raised 750 thousand dollars. One out of every 100 families in Vermont had become owners of Ben and Jerry’s.”
“We [then] established the Ben & Jerry’s foundation which would receive seven and a half percent of the company’s pre-tax profits and that was the highest percentage of any publicly owned company. The corporate average is around one and a half percent. And the reason we chose such a high percentage was that our feeling at the time was that a business is essentially a machine for making money so that if we want to be as much benefit to the community as possible, we should give away as much money as possible… And in no time at all the foundation was overwhelmed with brand requests from non-profit organizations…”
There’s power in ethical genuity, now more than ever. And in sensitive and emotional times, ethical genuity becomes one of the greatest marketing differentiators. Says who? The modern consumer.
The challenging times brought about by the pandemic have highlighted ethical concerns for consumers, and marketable opportunities for brands, many of which (such as Ben & Jerry’s) had already identified. The Future Consumer Index by EY found that 23% of consumers will pay more for ethical brands as they are paying greater attention to their consumption choices and the impact they have on the world, and 34% of consumers would pay more for local products, as the Ben & Jerry’s Vermont case shows.
While ethical consumer trends emerge, it’s not a new one. Last year, one study revealed that “69% of [Gen Zers] are more likely to buy from a company that contributes to social causes, while 33% have stopped buying from a company that contributes to a cause with which they disagree.”
Sixteen percent believe that we are in this together and should collectively engage in activities that work towards the greater good. Seventy-three percent of these people are prepared to make changes in their lives to benefit society and prefer to buy from organizations that reflect that same attitude.
Up to 75% of Americans have bought from retailers beyond their preferred brand and/or retailer due to COVID-19, with many turning to different brands and shopping on new websites for basics. More than 70% of consumers surveyed expect to continue integrating their new choice after, truly showing how brand perception is being shaped by younger consumers right now.
While brands are put under the microscope, consumer behavior trends are merely expedited years into the future. This is a great opportunity for brands to earn loyalty in the future by investing in consumer preferences now.
This is a time when the world is vulnerable, where every person and organization is adapting to life with a live virus in their midst, where no one is operating from a best-in-class pandemic playbook to survive modern financial Darwinism. Brands, including marketers and customer service departments must become the very people they’re trying to reach. This means that among innovation, compliance, time and technology, humanity must become the greatest application.
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For media coverage, lead gen, and digital marketing inquiries, (or to say hi), contact me at email@example.com, or connect with me on Linkedin at Matt Wujciak. And remember, identifying consumer behaviors before they become trends is how brands deliver competitive customer experiences.