What tips stock markets into freefall isn’t economic data, its sentiment. Bull markets ride right over the top of bad data if people are feeling confident, but as soon as confidence begins to waiver, markets become volatile, and then when confidence evaporates, they go into freefall. There is a clear difference in prevailing psychology in bull vs bear markets. These changes are also true in consumer markets. It’s why consumer confidence is so important in predicting economic outcomes.
Pre-Confinement, consumer confidence was high, all markets were performing well, truth be known the underlying economy was not doing so well, but people believed it was and they felt wealthy and secure. Post-Confinement, all of that confidence has evaporated. This changes what people buy, why people buy, when people buy and how people buy. All of our marketing over the past 10 years has been oriented to the ‘bull market’ psychology. Confident consumers, who felt comfortable consuming, who saw consumption as a competitive right. What motivates sales conversion, is not a constant, it changes depending on the environmental conditions.
For several years we have been using behavioural tools to frame propositions to increase conversion. Here are the ones that we have found most effective, and what I think they might morph into in the medium term.
Dusting off old strategies to create sales conversion is a mistake, old promotions will surely be less effective. The trauma of the COVID-19 lockdown will leave an indelible mark on the consumer psyche, so unless you were in marketing after the depression or the second world war, we all have a lot to learn about this brave new world. It’s going to be tough, every sales dollar is going to be harder to get and harder to keep. We will need to be prepared for new ways of marketing and managing that marketing. Consumers may become timid, but we as marketers need to be bold and break our own moulds if we are going to succeed.
by Regan Yan, the CEO of Digital Alchemy.
Regan is a subject-matter expert in analytical database marketing and customer relationship marketing, as well as an in-demand presenter and keynote speaker at national and international events. He also authors thought leadership pieces on data-driven marketing that can be found on the DA Blog.