As if the shock of the past six to nine months was not enough. Those of you who have been working in sales and marketing positions for 20 years or less—during the age of unbridled U.S. consumer spending—are about to get another rude awakening, especially as budgets are reevaluated for the remainder of the calendar year.
A newly published McKinsey study consulted in March 2009 finds that almost 90 percent of U.S. households have adjusted their spending since the recession started, about one third of them "significantly." The survey covered three different sets of U.S. households, ranging from mass market to middle affluent. The age range of those surveyed was from 36 to 65.
The data probably is not really a shock. But did you know that more than half of U.S. consumers responding to the McKinsey survey plan to keep their expenses and spending in check even after things turn around? This suggests that companies hoping for a return to the status quo after the economy turns around may be disillusioned. The fact is, the last 20 years have pretty much bucked the status quo, which means you might have to set aside your preconceived notions of what has worked for the past two decades and start afresh.
What's more, the McKinsey survey notes that respondents are attempting to save more than they have in the past. The personal savings rate was roughly 5.7 percent of disposable income in March 2009—compared with almost zero just 12 months earlier. The post-World War II average has been about 9 percent.
The article's conclusion: Spending isn't about to boom again, even if the recession ends quickly.
Here's the entire feature article about consumer spending from the McKinsey quarterly.
This article from Time magazine also provides a pretty realistic picture of why you just cannot assume that consumer spending growth will magically boom again when this recession leaves us.
So, what can your sales team do this summer vacation? The smart ones will spend more time thinking about these three fundamental issues:
- Getting realistic about where consumers are likely to spend and where they HAVE to spend.
- Assessing the true cost of acquiring a new customer and how customer service/support policies can make existing customers more likely to be repeat ones.
- Understanding which business to business relationships can aid sales efforts and ensuring that existing partnerships are in the best interest of both companies—with the ultimate goal of doing what's best for the consumer.
This post was originally published on Smartplanet.com